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Wednesday, September 22, 2021

EU proposes new law to speed up in global chips race

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The European Union aims to turbocharge its microchips industry to catch up with rivals like the U.S. and China via a new “Chips Act,” Ursula von der Leyen announced on Wednesday.

The initiative would seek to link up research and design in different countries, coordinate funding among EU states and jointly create a “state of the art ecosystem” of microchip companies, the European Commission president said during her State of the European Union speech in Strasbourg.

The EU needs to “be bold again” if it wants to build a competitive semiconductor industry, she said, adding that doing so would be “a daunting task.”

Von der Leyen’s gambit on microchips comes after Europe suffered chip shortages linked to disruptions in global supply chains.

Europe’s carmakers, who rely on chips, have been forced to pause production lines several times in the past year, while production of consumer technology like headphones, TVs and video consoles has also been disrupted by the shortage.

To avoid being caught flat-footed again, global powers are funnelling public money into microchip projects.

Last year, U.S. lawmakers proposed pouring tens of billions of dollars into the sector in a bill called the Chips for America Act. Countries like China and Japan are already investing heavily in the technology, aware that much of the world’s supply is linked to production facilities based in Taiwan.

So far, the EU has yet to pledge any specific amount of money toward chip design and manufacturing.

The European Union has said it wants to boost its share of the global chips market to 20 percent by 2030, but critics have argued the bloc lacks a credible industrial policy and public subsidies to match U.S. and China’s programs.

While EU leaders have said they want to emulate the U.S.’s Chips for America scheme, they still need to put together tens of billions of euros in public and private funding in order to compete.

More than a dozen European countries are putting together an industrial investment plan called an Important Project of Common European Interest (IPCEI), which would use funding from the EU’s pandemic recovery funding and long-term research funding as well as national and private funds.

Officials in France, Germany, the Netherlands and Brussels are talking to chips giant Intel to help it set up a new European manufacturing site, potentially worth €80 billion, in the next decade.

For Thierry Breton, the EU’s commissioner responsible for industrial policy, von der Leyen’s proposal would ensure a unified approach to the chip challenge.

The “Chips Act” would make sure “national efforts can be integrated in a coherent European vision and strategy” and “avoid a race to national public subsidies,” he wrote in a blogpost Wednesday, adding that Europe should consider setting up a “dedicated European Semiconductor Fund.”

Chipmaking is at the heart of Europe’s broader bid to regain its “technological sovereignty,” or independence from foreign providers and powers in tech-related matters.

Earlier this year, the Commission launched two industrial alliances to help companies coordinate investments in microchips and cloud technologies. It is also considering blocking a major acquisition of U.K.-based chips firm Arm by U.S. giant Nvidia — a move the Commission fears would further strengthen the U.S.’s grip on the sector if completed.

Building up the chips sector in Europe is “is not just a matter of our competitiveness. This is also a matter of tech sovereignty,” von der Leyen said in her speech.

Clothilde Goujard contributed reporting.

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