The plan is intended to make it easier for EU countries to provide funding for first-of-a-kind factories and is being described as a major boost for the region’s domestic chip industry.
With ongoing chip shortages impacting almost all sectors of the global economy, the EU’s plan marks a significant move that mirrors that of the Biden Administration which unveiled a $52bn plan to push investment in a national chip-producing sector to make sure more production occurs in the United States. Both decisions highlight how the pandemic has reshaped the world economy.
Speaking at the announcement of the plan, the European commission president Ursula von der Leyen said, “Chips are at the centre of the global technological race. They are, of course, also the bedrock of our modern economies.
“The pandemic has also painfully exposed the vulnerability of its supply chains. We have seen that whole production lines came to a standstill. While the demand was increasing, we could not deliver as needed because of the lack of chips.”
Von der Leyen said a “chips act” would link research, design and testing and coordinate EU and national investment. The plan looks to pool public and private funds and allows for state aid to get the massive investments off the ground.
Disruption to supply chains is expected to continue for some time with the Omicron variant continuing to have an impact - from suppliers and distribution to retail.
The European Chips Act will enable $17 billion in additional public and private investment by 2030 and is in addition to the public investments already planned from NextGenerationEU, Horizon Europe and national budgets.
Von der Leyen said the bloc would also look to ease its state aid rules and allow - for the first time - public support for European 'first-of-a-kind' production facilities.
Intel, which is looking to open new facilities in the EU, welcomed the EU chip push, urging authorities on both sides of the Atlantic to join forces.
"We are currently considering a significant increase in our European footprint, and we expect that the EU Chips Act will facilitate these plans," the company said in a statement.