A €43 billion plan to secure the EU’s semiconductor supply has been outlined by the European Commission.

The European Chips Act sets out measures to prevent, prepare, anticipate and respond to future supply chain disruption, and enable the EU’s ambition to double its current market share of semiconductor production to 20% by 2030.

It aims to bring about a thriving semiconductor sector from research to production, create a resilient supply chain and develop new markets for European tech.

Also this week, the Commission adopted implementing decisions to ensure the EU's radio spectrum policy meets growing demand for broadband and innovative digital applications.

This initiative makes 900 MHz and 1800 MHz bands also available for use by 5G applications, enabling better connectivity for critical applications in health monitoring, diagnosis, and care.

WHY IT MATTERS

Digital transformation accelerated by the COVID pandemic has driven a significant surge in demand for chips. Audit and assurance consultancy firm Deloitte predicts the healthcare industry’s semiconductor use is likely to grow, as regulators approve more connected home healthcare devices such as wearables and smart patches.

Recent global semiconductor shortages forced factory closures and production standstills in several sectors including healthcare devices, illustrating the importance of chips for European industry. The European Chips Act aims to anticipate and address future chips crises, bolster Europe’s competitiveness and position Europe as a technology leader.

THE LARGER CONTEXT

Commission president Ursula von der Leyen first announced an EU Chips Act in her State of the Union speech in September. It forms part of Europe’s Digital Decade ambition to digitalise public services and businesses, while creating sustainable digital infrastructures. Improved and advanced connectivity is also a key target of the plan.

Last month the Commission formally adopted the new €835 million EU4Health work programme. This includes around €77 million for digital investment, to help establish the European Health Data Space.

ON THE RECORD

Margrethe Vestager, executive vice-president for a Europe Fit for the Digital Age, said: “Chips are necessary for the green and digital transition - and for the competitiveness of European industry. We should not rely on one country or one company to ensure safety of supply. We must do more together - in research, innovation, design, production facilities - to ensure that Europe will be stronger as a key actor in the global value chain.”

Mariya Gabriel, commissioner for innovation, research, culture and youth, said: “The future initiative will offer a great opportunity for our researchers, innovators, and startups to lead on the new wave of innovation that will develop deep tech solutions based on hardware.”

Trade association DIGITALEUROPE’s director-general Cecilia Bonefeld-Dahl said: “The EU attracted just 3% of global investment for chip factories in 2020 and a lot of work is needed to push this figure upwards. To achieve the target of 20% of global chip production by 2030, bolder efforts need to be made.”