EU countries agree to implement chip bill plan to invest 45 billion euros to support local supply chain
On November 23, according to Reuters, Bloomberg and other reports, EU member states agreed to invest 45 billion euros (46.6 billion U.S. dollars) in the development of the chip industry, aiming to support the local chip supply chain and reduce dependence on American and Asian manufacturers.
The agreement was endorsed by EU ambassadors on Wednesday, according to people familiar with the matter. It would expand the scope of state aid for chip factories, but would not allow all automotive chips to qualify for funding.
The latest version also adds more safeguards on when the bloc's executive body can trigger an emergency and intervene in a company's supply chain.
One of the most contentious issues is the use of EU funds. Member states agreed on Wednesday not to reallocate 400 million euros in research funding for semiconductors, after countries with small chip industries feared the money would only benefit big countries such as Germany with larger businesses. EU ministers are expected to negotiate the deal at a meeting next month.
In February this year, the European Union officially announced the "European Chips Act" (A Chips Act for Europe). According to the bill, the EU will invest more than 45 billion euros in public and private funds to support EU chip manufacturing, pilot projects and start-ups, so as to increase Europe's share in the global chip manufacturing market and reduce its dependence on Asia and the United States. According to data released by the European Union, a total of 1 trillion microchips will be manufactured globally in 2020, of which less than 10% will be manufactured in Europe, which relies heavily on chip manufacturers in Asia.
In particular, with the challenges brought about by the new crown epidemic and the Sino-US technological war on the security of the global supply chain, the EU has to find ways to strengthen its own chip manufacturing capabilities. The EU report even stated that if the global supply chain is severely disrupted, the chip reserves of some European industrial sectors may be exhausted within weeks, which will bring many European industries to a standstill.
Therefore, since last year, the European Union has been actively seeking leading foundry manufacturers such as TSMC, Intel, Samsung, and GlobalFoundries to set up factories in the EU. But for these manufacturers, building a new fab means that tens of billions of dollars of investment may be required, and naturally the input-output ratio needs to be considered. Especially in the context of the United States and Japan actively providing large subsidies to attract chip manufacturers to build factories, the EU must also follow up and provide corresponding subsidy policies in order to better attract chip manufacturers to build factories in Europe. In addition, Intel CEO Kissinger has publicly stated that he hopes that the EU will provide 8 billion euros in subsidies to support its establishment of factories in Europe.
According to the "European Chip Act", the EU will add more than 15 billion euros in additional public investment by 2030 on the basis of the 30 billion euros of public investment already committed in the "Next Generation EU Program", "Horizon Europe" and other EU budgets. Public and private investment, making the overall investment will reach 45 billion euros. Among them, 11 billion euros will be used to strengthen existing research, development and innovation to ensure the deployment of advanced semiconductor tools and pilot production lines for prototyping, testing, etc. In addition, advanced technology and engineering capabilities will be established in quantum chips. The goal is to increase the EU's share of global chip production from the current 10 percent to 20 percent by 2030.
