Boosting semiconductor demand is a key new feature in the new EU Chips Act, which the European Commission outlined on Wednesday. The Chips Act 2.0 will also recommend that the Commission be allowed to invest in large, cross-border projects directly, offering a simpler way for companies to get public funding than applying for national subsidies. The Commission is eyeing 120 billion euros in public-private investment to prop up the bloc’s semiconductor industry.
The first EU Chips Act aimed to lift the union’s market share in semiconductor production from 10 to 20 percent by 2030 – a goal that has proven far too ambitious. “The initial Chips Act was predominantly supply-driven, but the Chips Act 2.0 places greater emphasis on demand-side measures. The two dimensions are mutually reinforcing: Cultivating robust local demand helps strengthen local semiconductor supply,” the proposal reads. Demand-side proposals include public procurement and consumption incentives to stimulate the market.
On the supply side, the second time round the EU’s efforts focus on strengthening Europe’s existing semiconductor supply chain while taking a more bottom-up approach to promote diversification. This includes boosting mature semiconductor manufacturing, bolstering chip design capabilities and initiating (pilot) production and 3D packaging of leading-edge chips. A broader range of first-of-a-kind initiatives will be eligible for state support, rather than just front-end production. This includes manufacturing equipment and specialty materials. Integrated photonics is added to the Chips Act’s scope as a key enabling semiconductor technology.
Other topics covered by the proposal, which will form the basis for negotiations with member states and the European Parliament, include efforts to improve conditions for investment and competitiveness as well as increasing resilience against supply disruption.
