European Commission to ease funding rules for plants to boost chip industry
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According to proposals unveiled Tuesday, the European Commission will relax funding requirements for innovative semiconductor factories to reduce reliance on US and Asian supplies.
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The European Commission in Brussels, Belgium
Global chip shortages and supply chain bottlenecks have affected the automotive, healthcare, and telecom industries, among others. In an effort to lessen its dependence on US and Asian supply, the European Commission announced it will ease funding rules for innovative semiconductor plants on Tuesday.
The regulations aim to prevent unlawful and unjust subsidies given to corporations by EU members for innovative chip manufacturing.
In a statement, Commission President Ursula von der Leyen divulged that the European Chips Act will "enable 15 billion euros ($17 billion) in additional public and private investment by 2030."
In reference to ongoing projects within the EU, von der Leyen added "This will come on top of 30 billion euros of public investments already planned from NextGenerationEU, Horizon Europe, and national budgets. And these funds are set to be matched by further long-term private investments."
"We are, therefore, adapting our state aid rules, under strict conditions. This will allow - for the first time – public support for European 'first-of-a-kind' production facilities, which benefit all of Europe."
EU digital chief Margrethe Vestager said factories may be permitted to receive more funding from the state, as the bloc seeks to double its global market share to 20% in 2030.
In a news conference, Vestager said the facilities " would not exist in Europe if we do not do something. It may be justified to cover up to 100% of the proven funding gap with public resources."
She also warned EU governments against unjust methods to attract investments.
"Because we cannot just authorize any subsidy where one is higher than the other. We have always been sort of very attentive to the fact that it should not be for one government to try to lure investments in one territory by jacking up the state aid promises," she said.
A subsidy race will favor corporations in larger countries
According to an EU ambassador, smaller EU nations have expressed concern about the weaker regulations, anticipating a subsidy race that will favor corporations in larger countries like France, Germany, the Netherlands, and Italy.
EU nations are currently vying for the attention of US chipmaker Intel which is yet to decide on a European factory.
In a statement, Intel disclosed that it is "currently considering a significant increase in our European footprint, and we expect that the EU Chips Act will facilitate these plans."
The European Chips Act, which must be approved by EU governments and EU legislators before it can become law, also includes a toolkit that allows the Commission to order corporations to supply critical chips during a crisis.
