ECONOMY

Chips, please: EU plan to pump billions into semiconductors presented

EU Commissioner for Internal Market and consumer protection, Industry, Research and Energy, Thierry Breton. Photo: Aurore Martignoni/EU Commission.
The aim is to mobilize more than €40 billion, including €12 billion for research and development, and €30 billion to help establish huge manufacturing plants

The European Commission is to present a legislative package on Tuesday aimed at beefing up its 10% global market share of strategically important - and currently scarce - semiconductors.

The aim is to mobilize more than €40 billion ($45 billion) including €12 billion for research and development, and €30 billion to help establish huge manufacturing plants, European Internal Market Commissioner Thierry Breton said at a press event in the Belgian town of Leuven on Monday.

This should quadruple EU production capacity and double the market share by the end of the decade, according to commission draft documents.

The EU executive branch announced its plans for a 'European Chips Act' to "put Europe back in the tech race" last year, prompted by a shortage crisis unleashed by Covid-19 lockdowns in early 2020 and expected to last for many months to come.

European car manufacturers have been particularly affected. Big names like Volkswagen repeatedly reduced working hours at production sites due to the scarcity of electronic components.

China, US

The United States and China are also investing huge sums in the production of chips, which are crucial for everything from consumer electronics to vehicles.

While a leader in research, the European Union has a semiconductor global market share of only around 10%, the commission documents state. The bloc is highly reliant on third countries, particularly Asian states like Taiwan and South Korea.

To build up autonomy, the EU executive branch therefore wants to further consolidate the bloc's semi-conductor research industry, build up its own production capacity and diversify its supply.