EU officially passes "Chip Act"

The EU Parliament has approved the Chip Bill. 43 billion euros will be mobilized to boost domestic microchip production and become more independent from other markets.

Industry Commissioner Thierry Breton is clearly satisfied, as are MEPs: Europe wants to regain lost ground and get a better position in semiconductor production, which is very important for the future of industry.

Smartphones, cars, heat pumps, home and medical devices all run on highly developed chips – and in the future they will no longer come almost exclusively from the United States, South Korea and Taiwan. The EU Parliament passed the corresponding law by a majority vote.

We are investing in the future, Breton promised: “So, with the CHIP Act, we are helping to reindustrialize Europe’s semiconductor industry across the entire value chain, so to speak.”

They do this for two purposes: They hope to gain 20% of the world market - currently 9%. and manufacture Europe's most advanced semiconductors. "Because this will determine the geopolitics and industrial strength of tomorrow." Breton said that this law, the so-called "Chip Law", has already taken effect. Since the EU launched the project, more than €100 billion of public and private investment in the sector has been announced.

15 Member States reported 68 specific and strategic financing projects amounting to €22 billion.

"Given the new geopolitical situation, Europe must assert itself as an industrial and technological power," Breton added. When it comes to semiconductor production, it's a matter of competition. “But it’s also about security and technological sovereignty.”

The EU hopes to use the law to simplify the approval process for chip factory construction and promote state aid. This should attract more manufacturers to Europe, but also affect foreign companies that want to produce in Germany: Intel in Magdeburg, Wolfspeed in Saarland, Infineon in Dresden and TSMC.

Emergency mechanisms, including early warning systems, should be in effect when supplies are short again, as has been the case during the COVID-19 pandemic. The Commission can then direct companies to manufacture certain semiconductors or purchase them centrally on behalf of member states.

According to the European Commission, the EU wants to increase public and private investment by a total of 43 billion euros. Member states shall obtain a majority vote. Funding from the EU budget is relatively small.

"We are now calling on the EU semiconductor industry for around 3.3 billion euros in funding, which unfortunately is not new money," Green MP Henrike Hahn stressed. “Going forward, we need a clear commitment in the Council to better support European businesses with our own resources.”

Hahn welcomed the prospect of funding not only large-scale projects in the future, but also small and medium-sized companies and start-ups.

“The era of Europe investing solely in research and outsourced manufacturing is over,” Industry Commissioner Breton stressed. "I've made it very clear. The CHIP Act allows for massive investment in a competitive European industry across the entire semiconductor manufacturing process."

For Social Democrat Tiemo Wölken, it is also important to produce more semiconductors in Europe. But he also cares about advancing product development. He was delighted to find a regulation that would make it possible to design future chips in Europe. "This will make us less dependent on the supply chain and we will no longer be just a workbench but move towards technology leadership."

From Wolken's perspective, the law is a nice boost for a much-needed race to catch up. Once approved by member states, the CHIP Act will come into effect.