EU agrees €43 billion plan to kickstart green industrial revolution

EU Chips Act aims to double EU market share of semiconductors and reduce reliance United States and Asia.

The EU announced yesterday that it had reached a provisional political agreement on the terms of the EU Chips Act.

The act has been drafted with the objective of doubling the EU's market share in semiconductor development, manufacturing and supply from 10% to 20% by 2030. The agreement is built on three pillars. The first is a "Chips for Europe Initiative," to support and subsidise the manufacturing capacity necessary. The second is to attract the investment necessary for resilience of supply and the third a monitoring and crisis response system which can anticipate supply shortages and respond accordingly.

Whilst the need for the EU to secure its role in the decarbonised economy of the future is vitally important, the agreement is also strongly driven by a need to secure chip supply. At present the EU is far too reliant for comfort on fabs outside of its jurisdiction, particularly in areas vulnerable to political turbulence. As the European Commission stated:

"Currently, Europe is too dependent on chips produced abroad, which became more evident during the COVID crisis."

The agreement should also be viewed in the light of the United States enacting it's own Chips and Science Act last year, which will subsidise domestic semiconductor and other high-tech industries to the tune of $53 billion.

Since the announcement of its chips subsidies plan last year, the EU has already attracted more than 100 billion euros in public and private investments, an EU official said.

There is certainly evidence available that chip manufacturers have been anticipating the EU Chips Act. Intel announced last year that it plans to invest as much as 80 billion euros in the European Union over the next decade along the entire semiconductor value chain with an initial plan semiconductor fab in Germany, and further R & D and manufacturing facilities across multiple EU countries.

The UK was supposed to be announcing its own semiconductor strategy this week, but this announcement has been delayed while the government establishes how to cover Secretary of State for Science, Innovation and Technology Michelle Donelan's maternity leave