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Europe Approves $47 Billion ‘Answer’ to Biden’s CHIPS Act

The European Union has recently agreed to a groundbreaking new plan to boost the continent’s chip industry. The European Chips Act seeks to enhance the EU’s competitiveness in technology and secure control over the crucial technology behind the world’s electronics products and devices. 

Agreement is important for the ‘green and digital transition’

This agreement is of utmost importance for the green and digital transition while securing the EU’s resilience in turbulent times.

The EU Parliament and 27 member states agreed on the legislation earlier this week. They said the new rules would aim to double the EU’s global market share in semiconductors from 10% to 20% by 2030.

“The new rules represent a real revolution for Europe in the key sector of semiconductors,” said Swedish Energy Minister Ebba Busch.

The European Chips Act is a massive €43 billion ($47 billion) package of public and private investments to secure the region’s supply chains, prevent future semiconductor shortages, and promote further investment in the industry. 

The Chips Act has three main objectives: building large-scale capacity and innovation, ensuring EU self-sufficiency, and preparing the EU for potential future supply crises.

Credit: DepositPhotos

The EU Chips Act will invest €6.2 billion to promote the industrialization of innovative technologies, establish competence centers for skill development, and ensure access to finance, according to the European Commission, the EU’s executive arm. 

Furthermore, it will also incentivize investments in manufacturing facilities and provide a framework for integrated production facilities and open EU foundries for security of supply. The commission said member states would coordinate to monitor supply and forecast any potential shortages.

Semiconductors are effectively the brains of electronic devices, used in everything from smartphones to gaming consoles and even products like cars and refrigerators. 

Semiconductors, and the mainly East Asia-based supply chain behind them, have become a thorny issue for world governments after a global shortage led to supply problems for major automakers and electronics manufacturers. 

The COVID-19 pandemic exposed an overreliance on manufacturers from Taiwan and China for semiconductor components. 

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Europe seeks to reduce dependence on ‘foreign market players’

Europe has sought more control over its supply chain to reduce its dependence on foreign market players. The move is part of a push from the EU to achieve “digital sovereignty,” referring to the idea that they have more control over critical technologies. 

“The Chips act puts Europe in the first line of cutting-edge technologies, which are essential for our green and digital transitions,” Busch said.

However, the bloc has realized it can’t achieve this production ramp-up alone, as no European firms can currently manufacture leading-edge chips. The EU aims to attract funding from foreign companies into its market. 

Intel, the US chipmaking giant, is among the companies upping its investments in Europe, having committed over €33 billion to boost chipmaking across the EU. 

In the UK, chipmakers have been threatening to leave the country due to a lack of support from the government.

In conclusion, officials want more semiconductors to be developed within Europe so they don’t risk a big shortage or threats to national security.

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Byron is a writer and personal finance nerd. He has a keen interest in investing and The Stock Market. When he is not working, he enjoys watching sports and gaming online.