The European Parliament and EU member states on Tuesday reached an agreement on a plan to boost the supply of semiconductors in Europe as the bloc races to reduce its dependence on Asian suppliers.
The EU has prioritized local chip production after the COVID-19 pandemic triggered supply chain shocks that led to significant shortages.
Asian industry, especially firms in Taiwan and China, dominate semiconductor manufacturing and exports.
Photo: AFP
European Commission President Ursula von der Leyen said that the deal “will allow for a competitive chips industry and build the foundation for a global market share.”
“It will power a clean tech industry made in Europe and strengthen our digital resilience and sovereignty,” Von der Leyen added.
Under the provisional political agreement, the EU aims to double its current global market share to 20 percent by 2030 and mobilize more than 43 billion euros (US$47.2 billion) in public and private investments to feed Europe’s growing appetite for chips.
Europe would need to quadruple its production to meet the target.
Funding would be from the EU’s budget and the deal would also loosen state aid rules to spend money on developing centers to produce the components.
The EU would also mobilize 3.3 billion euros for research and development, and the deal includes a system to monitor supply shortages in times of crisis.
The legislative text also forms part of the bloc’s bid to produce more in Europe to reduce its vulnerability to geopolitical shocks such as the war in Ukraine.
“This will allow us to rebalance and secure our supply chains, reducing our collective dependence on Asia,” European Commissioner for Internal Market Thierry Breton said in a statement after the parliament and the European Council reached an agreement.
French-Italian chipmaker STMicroelectronics NV, US-based GlobalFoundries Inc and US tech giant Intel Corp last year said that they would pour billions into new plants in France and Germany.
With the plan, they would be able to seek state subsidies for their projects.
Brussels is racing to protect the bloc’s competitive edge in the face of threats from China and the US, which have plowed billions into green technology.
Last month, the EU’s executive arm published two proposals to push Europe to produce more clean technology including raw materials needed to manufacture batteries for electric vehicles.
“Europe aims to become an industrial powerhouse in the markets of the future — the digital and clean technologies that will allow us to remain a competitive export force, generate quality jobs and ensure our security of supply,” Breton said. “Because there will be no green or digital transition without a strong manufacturing base.”
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