EU’s Chips Act Said to Get Approval on April 18, Likely to Cut EU’s Reliance on US and Asian Semiconductors

The European Union’s EUR 43 billion (nearly Rs. 3,84,120 crore) plan to boost its semiconductor industry and catch up with the United States and Asia is likely to get the green light from EU countries and lawmakers on April 18, people with direct knowledge of the matter said on Wednesday.

The European Commission announced the Chips Act last year in a bid to cut EU reliance on US and Asian semiconductors following global supply chain problems that hurt European businesses from carmakers to manufacturers.

The proposed legislation, which aims to double the bloc’s share of global chip output to 20 percent over the next decade, came after the United States announced its CHIPS for America Act to compete with Chinese technology.

EU countries and lawmakers will meet at the European Parliament’s monthly session in Strasbourg on April 18 to negotiate details of funding for the Act and will likely clinch a deal, the people said.

Discussions have to date focused on a EUR-400-million shortfall, but the EU executive has managed to come up with the bulk of the funds, they said.

While the Commission had originally proposed funding only cutting-edge chip plants, EU governments and lawmakers have expanded the scope to cover the whole value chain, including older chips and research and design facilities, the people said.

Lawmakers had singled out Belgium-based IMEC, a world-leading innovation hub in nanoelectronics and digital technologies and with an ecosystem of more than 600 major industry players, as a key reason for ploughing more funds into EU R&D, they said.

Providing funding to the entire value chain also addresses complaints from the smaller EU countries about being left out after Intel, attracted by the Chips Act, picked Germany for its new mega chip manufacturing complex.

Franco-Italian company STMicroelectronics has also teamed up with GlobalFoundries to build a EUR 6.7 billion (nearly Rs. 59,860 crore) chip factory in France, drawing on funding from the government.

© Thomson Reuters 2023