European Commission Approves Plan for the Chips Act

Energy - August 8, 2023

The European Chips Act is an Initiative with the Objective of Strengthening the Semiconductor Industry in the Continent in the Name of a Fundamental Technological Independence

In the context of accelerated technological evolution, semiconductors represent an essential component for innovation and industrial progress. These tiny silicon devices serve as the “brains” for many electronic devices, from cell phones to autonomous vehicles, from artificial intelligence to the Internet to the most complex computer systems. With the growing demand for semiconductors and the strategic importance of this sector for global competitiveness, the European Union has introduced the CHIPS Act Europe, an ambitious initiative to strengthen the semiconductor industry on the continent, following as a guide, what has already been done by the United States, with the same goal.

The CHIPS Act Europe, with the aim of creating autonomous semiconductor manufacturing, is an initiative proposed by the European Union to address new technological challenges and exploit opportunities in the semiconductor industry and was developed in response to Europe’s growing dependence on external supplies and the global shortage of chips. The CHIPS Act Europe aims to establish an autonomous semiconductor supply chain within the continent, promoting local manufacturing, research and technological innovation.

The European semiconductor industry has long been considered one of the cornerstones of the continent’s digital and technological economy but, in recent years, this sector has been threatened by the growing dependence on semiconductor imports from other regions of the world, especially from Asia and the United States, creating inevitable uncertainties in supply chains and making Europe vulnerable to fluctuations in international markets.

Furthermore, the COVID-19 pandemic has exacerbated the situation, causing slowdowns in global production and logistics. Many key sectors of the European economy, such as the automotive industry, consumer electronics and healthcare, have suffered from shortages of semiconductors, undermining their competitiveness and capacity for innovation, in a particularly delicate historical period.

The CHIPS Act Europe emphasizes key objectives aimed at strengthening the semiconductor industry in the continent by stimulating investment in semiconductor manufacturing within the EU with the help of tax incentives and funding programs, trying to convince companies to invest in the construction and expansion of semiconductor factories in Europe. The CHIPS Act Europe foresees significant investments in the research and development of advanced semiconductor technologies, promoting innovation in a capillary way and maintaining Europe’s technological competitiveness in the sector.

To achieve the desired results, the CHIPS Act Europe also promotes the fundamental collaboration between the public and private sectors by leading European governments and institutions to work closely with continental technology companies to develop a common strategy and provide an enabling environment for investments. External dependency has raised concerns about Europe’s security and technological sovereignty, and the CHIPS Act Europe aims to reduce dependency on external supplies and ensure that the EU can meet its needs for semiconductors critical to national security and defence.

The implementation of the CHIPS Act Europe offers numerous benefits to the European Union, including the strengthening of the semiconductor industry to incentivize greater economic growth and subsequent employment, creating new opportunities for European companies and workers. By having an autonomous semiconductor supply chain, Europe reduces its dependence on imports and increases the technological sovereignty so coveted in such a significant digital transition period.

Investments in research and development of new semiconductor technologies drive innovation in several other sectors and allow Europe to stay at the forefront of emerging technologies. Europe is competing with other advanced regions in the semiconductor sector, such as Asia and the United States, which have already established a consolidated position through strategic plans similar to those foreseen by the European CHIPS Act. Creating an autonomous supply chain requires significant and long-term investments and therefore it will be necessary to involve both the private sector and the public sector to ensure the success of the initiative.