In order to spur innovation, small and medium-sized businesses will also profit from increased support, particularly in the field of chip design.
The European Parliament on Tuesday approved proposals to increase production and innovation, implement emergency measures to prevent shortages, and secure the EU’s supply of chips. By accelerating permitting processes and recognising their critical importance through a so-called “highest national significance statute,” the new law, the European Chips Act, which has already been approved by both Parliament and the Council, aims to create a favourable environment for chip investments in Europe.
In order to spur innovation, small and medium-sized businesses will also profit from increased support, particularly in the field of chip design.
The legislation will support initiatives that, by luring investment and increasing production capability, improve the EU’s security of supply. In their discussions with the Council’s representatives, MEPs managed to secure €3.3 billion for chip-related research and innovation. In order to address the EU’s skills gap and entice fresh talent for research, design, and production, a network of competence centres will be established.
A crisis response system will be established, and the Commission will use it to evaluate the threats to the semiconductor supply in the EU. An alert about a shortage in the EU will be sent out based on early warning indicators in the member states.
With the help of this mechanism, the Commission will be able to take immediate action, such as prioritising the supply of goods that are particularly affected by a shortage or organising joint purchases among the member states.
The plan was further enhanced by MEPs by the addition of a mapping tool that will aid in the identification of potential supply bottlenecks. In the event of a crisis in the semiconductors industry, these actions will only be taken as a last resort.
The European Chips Act aims to strengthen the EU’s position in the global semiconductor landscape and address supply chain vulnerabilities. It secures €3.3 billion for research and innovation, boosting technological capacity, and implementing measures to combat potential shortages.
The Act prioritizes strategic autonomy, security, and a favorable business environment, ensuring competitive advantages and protection for the EU sector.
The bill was approved by a vote of 587 to 10, with 38 abstentions. It must now be approved by the ministerial Council in order to become a law.
A study conducted by the European Parliament indicates that less than 10% of the world’s semiconductor production capacity is located in Europe. The legislative proposal aims to increase it to 20%.
According to a subsequent analysis by the Parliament from 2022, one instance of how the pandemic has exposed long-standing vulnerabilities in global supply chains is the unprecedented shortage of semiconductors. It depicts potential developments in the future. These shortages not only result in other issues like rising costs for businesses and higher prices for consumers, but they have also slowed Europe’s economic recovery.
The European Chips Act is the MEPs’ response to citizen proposals resulting from the Conference on the Future of Europe’s conclusions. By encouraging the development of European technology as a strong substitute for foreign counterparts, this Act responds to proposal 11(5).
Additionally, it responds to proposal 12’s recommendations for improving manufacturing and supply security in Europe (12).
The Act supports stronger EU supply chains through strategic investments and improved inter-member state cooperation to manage supply chain risks, echoing the positions taken in proposals 17(3) and 17(7). The Act lays out steps to prevent future supply chain disruptions and respond quickly to them, with over €43 billion in public and private investments mobilised.