The European Union Council approves the Chips Act
The European Union Council has approved a €43 billion bill dubbed the Chips Act to support the EU’s Semiconductor manufacturing efforts. The bill aims to reduce the region’s reliance on foreign-made semiconductors and foster a European industrial base for Chip manufacturing. The measure is part of a broader international effort to protect supply chains and strengthen domestic chip production.
The €43 billion Chips Act
The EU’s €43 billion Chips Act is named after the semiconductor, or chip, which is a small electronic device used to process information. The bill aims to support investment, education, research, and development in the European chip manufacturing industry. The funding will be part of the European Innovation Program for Research and Development, or EIP-R.
Spanish minister for industry, trade, and tourism Héctor Gómez Hernández believes that the EU’s move will help the region to become a frontrunner in the global semiconductor race.
“Today, we are making a very important step in the international competitive scenario with this initiative that will allow us to become a leader in the design and manufacturing of semiconductors,” the minister says.
Just this month, Intel signed a €30 billion deal with the German government to expand chip manufacturing in Magdeburg, Saxony-Anhalt. The company will use the funding to build out its 10nm production lines at the site.
Meanwhile, TSMC is also expanding in the USA, but is reportedly having trouble finding skilled workers.
EU chip funding
The EU’s Chips Act is just one part of a larger global trend to secure domestic chip supply chains and prevent disruptions like those caused by the Covid-19 pandemic.
The desire for domestic chip supply is seen across the world, particularly among developed nations. This is partly because countries want to keep their most important tech secrets in-house, particularly in areas like AI, robotics, and automation.
The ongoing US-China tech war is perhaps the most prominent example of this trend. The US has placed a number of restrictions on Chinese companies as part of sanctions related to its invasion of Ukraine. As a result, China faces chip sales restrictions, among other things.
Countries also want to maintain the kind of stable chip supply that is seen as crucial for national security. This is particularly true for military applications, like defense technology.
Russia, for example, has been looking to strengthen its domestic chip production as part of a broader effort to reduce its dependence on foreign technology. The country has reportedly been in talks with Taiwan’s TSMC to build out local chip manufacturing, as reported by The Next Platform.
It’s unclear how advanced these negotiations are, but the move highlights Russia’s desire to have at least some of its own chip supply in the event that it faces chip sales restrictions as part of the Ukraine sanctions.
This kind of risk is also something that other countries are keen to avoid, particularly the USA, which relies on Taiwan’s TSMC for a significant chunk of its semiconductor needs. A conflict or natural disaster could disrupt global chip supplies, putting the USA and other nations at a major disadvantage.
But that’s not the only thing that could lead to such a disruption. The global tech war between the US and China also highlights the desire to control advanced technologies and prevent their transfer to rival nations.
The US, in particular, has placed restrictions on Chinese companies that have led to the creation of ‘impossible agreements,’ which are deals that can’t be kept because they demand too much of a company.
