European Chips Act

Why do we need a European Chips Act?

Chips — also known as semiconductors — are the building block of all electronic products. They play a central role in our modern economies and our daily lives. Chips underpin the digital transformation and are essential to all industries, such as the car industry, communications, data processing, space, defence, smart devices and gaming, to name a few.

The recent global chips shortage has disrupted supply chains, caused product shortages ranging from cars to medical devices, and in some cases even forced factories to close.

The European Chips Act Regulation was proposed as part of a broader package of measures for strengthening the EU’s semiconductor ecosystem. It entered into force on 21 September 2023.

This package includes:

• a Communication outlining the rationale and the overall semiconductor strategy
• a proposal for a Chips Act Regulation
• a proposal for amendments to a Council Regulation establishing the KDT Joint Undertaking
• a Recommendation to Member States, promoting actions for immediate monitoring and mitigation of disruptions in the semiconductor supply chain

What is the European Chips Act?

The European Chips Act will reinforce the semiconductor ecosystem in the EU, ensure the resilience of supply chains and reduce external dependencies. It is a key step for the EU’s technological sovereignty. And, it will ensure Europe meets its digital decade target of doubling its global market share in semiconductors to 20%.

It focuses on 5 strategic objectives:

• strengthening research and technological leadership
• building and reinforcing Europe’s capacity to innovate in the design, manufacturing and packaging of advanced chips
• putting in place an adequate framework to increase production by 2030
• addressing the skills shortage and attracting new talent
• developing an in-depth understanding of global semiconductor supply chains

These objectives will be achieved through three pillars of action:

1. The “Chips for Europe Initiative” will support large-scale technological capacity building and innovation throughout the Union and enable the development and deployment of cutting-edge, next generation semiconductor and quantum technologies.
2. A framework to ensure the security of supply and resilience of the Union’s semiconductor sector will attract investments and enhance production capacities in semiconductor manufacturing, advanced packaging, test, and assembly. Under this pillar, the Commission published guidance for obtaining the the Status of integrated production facility and open EU foundry, which streamlines administrative processes and prioritises access to pilot lines for semiconductor facilities.
3. The European Semiconductor Board will serve as coordination mechanism between the Member States and the Commission for mapping and monitoring the Union’s semiconductor value chain as well as preventing and responding to semiconductor crises with ad-hoc emergency measures.

The European Chips Act's governance is overseen by the European Semiconductor Board (ESB), comprising representatives from Member States and led by the Commission. The composition of the board is documented in the Register of Commission Expert Groups and Other Similar Entities. The board continues the efforts initiated by the European Semiconductor Expert Group, as established by the Commission Recommendation on a common Union toolbox to address semiconductor shortages and an EU mechanism for monitoring the semiconductor ecosystem.

Other EU initiatives in the field of semiconductors

The European Chips Act complements EU initiatives already underway in the area of semiconductors, such as:

• The Alliance on Processors and Semiconductor Technologies
• Programmes and actions in research and development such as Joint Undertakings, Horizon Europe and the Digital Europe Programme
• The Important Project of common European interest (IPCEI) on microelectronics and communication technologies.

• Support via RFF funding - The European Commission approved the construction of a €292.5 million plant in the semiconductor value chain in Catania, Sicily under EU State rules.