What is the aim of the EU Chips Act?

With the Chips Act, the European Commission wants to make the EU a heavyweight in the semiconductor market again.

The Europeans lost this role to the Asians decades ago.

Above all, Taiwan plays a central role in production there.

In order to change that, the Commission wants to invest billions in research and the construction of new mega-factories, change the guidelines for state aid and issue new rules to be able to react to supply crises in the chip market.

What does that have to do with the current supply bottlenecks for chips?

Henrik Kafsack

Business correspondent in Brussels.

  • Follow I follow

Julia Loehr

Business correspondent in Berlin.

  • Follow I follow

Everything and nothing.

In the preparation of the EU Chips Act, the experience that entire branches of industry, above all the automotive industry, are standing still due to a lack of semiconductors played an important political role.

After all, that showed everyone how dependent the EU is on Asia.

On the other hand, the law will not change the current bottlenecks.

The first new factories will be ready in 2023 rather than 2024 at the earliest - and even that will require quick applications and approvals.

By then, the supply bottlenecks should be history.

How is the EU doing at the moment?

The EU accounts for 9 percent of chip production in the world.

The Commission wants to reach 20 percent by 2030.

Since the market is likely to double by then, that amounts to quadrupling production.

However, the EU should not simply produce more chips, but state-of-the-art, energy-efficient ones and those with the smallest structure sizes of 5, 3 or 2 nanometers.

That's thousands of times finer than a human hair.

Beyond pure chip production, the EU is not doing badly at all.

It is strong in research and manufactures important products such as robots or optics that are needed in chip factories elsewhere.

How much money does the European Commission want to invest?

To put it bluntly, it's about 45 billion euros.

Sometimes there is also talk of 43 billion euros.

A sum of this magnitude was important to the Commission because it roughly corresponds to what the United States wants to invest in the semiconductor industry with its "Chips Act".

However, while the money is supposed to flow there until 2026, the EU is taking its time until 2030.

Above all, however, the Commission has included the funds from the budgets of the EU states that have long been reserved for the expansion of the chip industry in these 45 billion euros.

Fresh money is only 11 billion euros, which should come from the EU budget and national budgets.

These, in turn, should attract at least 4 billion euros in private investment.

What is to be done with the money?

The "fresh money" is to flow into a new program called "Chips for Europe".

With this, the Commission wants to promote pilot projects, the design of state-of-the-art chips, quantum chips or test centers.

A fund set up with the European Investment Bank is also intended to support start-ups.

The money from the member states, in turn, should not least be used to promote the construction of state-of-the-art chip factories - so-called mega-fabs.

EU Internal Market Commissioner Thierry Breton hopes to build two to four of them.

So it's about subsidies for factories.