The European Commission has proposed a European Chips Act, which is also set to strengthen European research and innovation in the semiconductor industry.
On 8 February 2022, the European Commission (EC) proposed a set of measures to strengthen Europe’s role in the semiconductor industry, as well as ensure the supply of microprocessors. This “European Chips Act”, which was first announced back in 2021 by Commission President Ursula von der Leyen, is in line with the EC’s priority “A Europe fit for the digital age” and contains multiple goals such as Europe reaching at least twenty percent of the market share in the semiconductor industry by 2030. The global pandemic and the resulting shortage of microchips have played a key role in the development of the European Chips Act. Since production in European industries (especially the automobile industry) has slowed down due to the shortage of microchips, the EU saw the need to depend less on foreign supply and instead boost their own skills and technologies in this field. Moreover, the European Chips Act is also well aligned with the ambition of the French Presidency of the Council of the EU of “A new European model for growth”, supporting innovation and growth in the digital sector (see SwissCore article).
The European Chips Act contains multiple components: firstly it will redirect EU funding in research, innovation, and technology deployment through the “Chips for Europe” initiative, secondly it will facilitate access to risk finance for start-ups and investments across the value chain, and, thirdly it will create a new coordinating mechanism between EU member states and the EC. The EU hopes that €43 billion public and private investments can be mobilised for the European Chips Act. The main EU resources will be provided through the so-called “Chips for Europe” initiative, pooling resources from the EU budget, Member States and third countries associated with the existing Union programmes, as well as the private sector. The EU budget will support the Chips for Europe initiative with a total of up to €3.3 billion, including €1.65 billion via the Horizon Europe programme and €1.65 billion via the Digital Europe Programme (DEP), which will be enlarged by a new sixth objective, and funds reallocated from Horizon Europe and the Connecting Europe Facility (CEF). Through these instruments and the corresponding EC proposal for a Council Regulation for a Chips Joint Undertaking (JU), the EU intends to strengthen existing research and innovation and further boost the manufacturing of microchips.
Out of the total amount of EU money allocated towards the Chips for Europe initiative, €2.875 billion will be implemented through the Chips JU. This reinforced public-private partnership would result from a “strategic reorientation” of the already existing Key digital Technologies (KDT) partnership, a JU itself, funding the development of electronic components and systems. The KDT JU was only just established with a Regulation from the Council of the EU on 19 November 2021, and will now need to be amended. Through this partnership, the EU and participating states will provide support to European industry, SMEs and Research and Technology Organisations (RTOs). In the KDT JU, RTOs are represented by three industry associations (AENEAS, INSIDE Industry Association and EPoSS e.V.) that each have their own seat with voting rights on the Governing Board of the KDT JU. The Governing Board – the decision-making body of the JU – is further comprised of representatives of the participating states and the EC, and it is responsible for the strategic reorientation of the KDT JU as well as supervising the implementation of its activities. Even though the KDT JU was only recently established, the European Commission argues that since the new Horizon Europe partnerships are “flexible to adapt to changing technology, market and policy environment”, the proposed amendment of the KDT JU into the Chips JU is necessary to respond to “urgent needs”.
Only the EC and public authorities from EU Member States would be involved in “the definition part of the work programme related to capacity building activities and research and innovation activities and the selection of projects related to these activities” in the now proposed Chips JU. However, Swiss entities would still be able to participate in calls for the Chips JU, assuming that the eligibility criteria for the Chips JU remain in line with the Regulation of the EU Council establishing the Joint Undertakings under Horizon Europe. Much as in the case of most Horizon Europe collaborative projects, Swiss researchers and innovators would not be entitled to directly receive funding from the EU, this funding being covered by the relevant Swiss public agency (see the current status of Swiss participation in KDT here).
In a next step, the European Parliament will be consulted on the EC’s proposal of the European Chips Act. If the Regulation is then adopted by the Council of the EU, it will be directly applicable across the EU. However, the EC encourages Member States to already start coordination efforts until the Regulation is adopted as a sort of transitional period where they can anticipate potential disruptions of the semiconductor industry and take corresponding measures to cope with the current shortage of microchips.