EU adopts plan to join chips race, allocates shy funds

By Al Mayadeen English
Source: Agencies
19 Apr 2023 00:11

Europe's plan aims to double global market share of chip imports to 20% by 2030.

An illustration of a semiconductor embedded on a board (Adobe Stock)

The European Union reached an agreement to develop the domestic chipmaking industry as the bloc struggles to keep pace with the tech race between the US and China, AFP reported on Tuesday.

Following the disruption of global supply chains during the Covid pandemic, which led to dramatic shortages of various products, especially semiconductors, the EU moved toward boosting local manufacturing of the critical tech component.

Currently, China and Taiwan have the dominant share in the global market of chip exports, but the new plan adopted by the EU aims to double Europe's market share to 20 percent by 2030 and allocate 43 billion euros ($47.2 billion) in public and private investments to fulfill the continent's growing demand of semiconductors.

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," EU President Ursula von der Leyen said on Tuesday.

Europe will need to increase its production four folds to meet this target.

The bloc will also invest 3.3 billion euros in research and development, in addition to building special facilities for the project and a monitoring system to deliver an early warning in case of supply shortages to prompt the EU in reacting quickly and efficiently.

"This will allow us to rebalance and secure our supply chains, reducing our collective dependence on Asia," Thierry Breton, the EU's industry commissioner, stated after the EU parliament reached an agreement.

The chip race

The United States, Japan, and South Korea have already initiated plans to increase chips productions and develop their tech sector. Washington passed the Chips and Science Act last August which will allocate $52 billion to boost the sector, while its Asian allies also released multi-billion dollar projects to keep track.

STMicroelectronics, US-based GlobalFoundries, and US tech giant Intel announced plans last year to invest billions of dollars into new production facilities in France and Germany, where they will be able now to receive subsidies for their plans under the new European agreement.

Washington has leaned on allies including Japan and the Netherlands this year to curb exports of semiconductor technology to China, much to Beijing's chagrin.

"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 noted.

"Because there will be no green or digital transition without a strong manufacturing base."