The European Union has taken a significant step towards reducing its reliance on Asian suppliers by reaching an agreement to enhance semiconductor production within Europe. The deal, known as the EU Chips Act, was reached between the European Parliament and EU member states in response to the supply chain disruptions caused by the COVID-19 pandemic.
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The economic aftermath of the pandemic led to shortages and revealed the vulnerabilities of Europe's semiconductor supply chain. Currently, Asian companies, particularly those in China and Taiwan, dominate the global market for semiconductors. In an effort to address this issue, the EU has prioritized local chip production.
There's no choice
The Swedish presidency of the EU declared that the Chips Act would strengthen Europe's competitiveness globally by fostering the semiconductor ecosystem in the region. The objective is to double Europe's current global market share to 20 percent by 2030. To achieve this, the EU plans to mobilize over 43 billion euros in both public and private investments to meet the growing demand for chips in Europe. Quadrupling production will be necessary to reach this ambitious target.
German MEP Henrike Hahn highlighted on Twitter that the agreement includes an allocation of 3.3 billion euros to support the development of technological capacity and innovation in the semiconductor sector across the EU.
Time for independence
Furthermore, the Chips Act aligns with the EU's broader strategy of increasing domestic production to reduce vulnerability to geopolitical shocks. Following the war in Ukraine and Russia's invasion, the EU swiftly sought alternative energy sources to mitigate its reliance on Russian fossil fuels. Similarly, the Act aims to rebalance supply chains and lessen dependence on Asia.
Thierry Breton, the EU's industry commissioner, emphasized the Act's significance in securing supply chains and reducing collective dependence on Asia. This agreement marks a crucial milestone in Europe's efforts to strengthen its semiconductor industry, enhance its competitiveness, and establish greater resilience in the face of future challenges.
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