The European Commission intends to present, Tuesday 8 February, a new regulation to strengthen the European semiconductor ecosystem, a recommendation anticipating the key measures provided for in the proposed regulation and an amendment to the regulation establishing the Horizon Europe Joint Undertakings, according to two draft documents (the communication and the recommendation) seen by EUROPE on Monday 7 February. The goal is to achieve at least 20% of global production by value of advanced and sustainable semiconductors by 2030.
The communication, entitled ‘A Chips Act for Europe’ (about 20 pages long), has several objectives. Firstly, it aims to strengthen the EU’s leadership in research and innovation, in particular to position the EU in breakthrough technologies. Secondly, the strategy aims to increase investment in ‘pilot lines’ to move from the prototype stage to production (in particular to achieve an etch size of less than 10nm or even 2nm).
Thirdly, the Commission wants to strengthen the EU’s overall chip production capacity, both in mature and advanced technologies, while limiting its environmental footprint. Fourthly, the institution wants to tackle the skills shortage by attracting “talent” and encouraging a skilled workforce to “emerge”.
Fifth, the Commission wants the EU to monitor global semiconductor supply chains thoroughly, anticipating future trends and potential disruptions. In particular, it wants to establish “more balanced” international partnerships and give the EU the possibility of taking “appropriate” measures. The Commission will assess whether the introduction of export controls will be necessary.
Legislative and non-legislative initiatives
The European Commission therefore intends to launch a proposal for a regulation to build a resilient European ecosystem and strengthen Europe’s technological leadership, to provide an appropriate framework for investment in chip production. Finally, this Regulation aims to ensure effective coordination between Member States and the Commission in dealing with crises in the semiconductor market. It is precisely this last point that is being addressed in a Commission recommendation to respond to the urgency of the situation.
Finally, a proposal for a Council Regulation amending Regulation (EU) 2021/2085 establishing Joint Undertakings under Horizon Europe is also being prepared.
A European Semiconductor Buying Group
The recommendation, as seen by EUROPE, provides for the creation of a ‘European Semiconductor Expert Group’ to disaggregate information more efficiently on the situation of semiconductor needs and production.
The Commission suggests that Member States put in place a “toolbox” in case of shortages to prioritise products so that critical sectors can continue to function.
The institution also proposes, where appropriate, that Member States grant it a negotiating mandate to act as a central purchasing body on behalf of two or more Member States for the public procurement of relevant products in the event of a crisis in certain critical sectors.
It also wishes to assess whether the Union should exercise surveillance over exports of certain products in the event of a crisis and whether the conditions for protective measures with regard to exports in accordance with Regulation 2015/479 are met.
Governance is also in its remit. In this context, Member States would inform the Commission of all national measures taken in relation to the semiconductor supply chain. As part of this, the institution recommends a whole series of indicators to take the pulse of the sector.
A budget similar to the US budget?
In the provisional documents obtained, the final budget was not yet established (except for €10 billion of public investment in design and manufacturing capacities). The only certainty is that industry should “at least” match the effort made by the public sector.
Commissioner for the Internal Market Thierry Breton said last September that the effort should be similar to that in the US (see EUROPE 12796/10).
As a reminder, the proposed US Chips Act comes with $52 billion. China is accelerating its efforts to close the technology gap by 2025 with an estimated budget of around $150 billion.
Increasingly important IPCEI
The role of Important Projects of Common European Interest (IPCEI) is naturally highlighted. A second IPCEI on microelectronics is currently under preparation and is expected to involve more than 100 participants from some 20 Member States, we hear. The Semiconductor Alliance will play an advisory role.
The Communication was announced to the European Parliament last September by European Commission President Ursula von der Leyen in her State of the EU address (see EUROPE 12791/4) and is part of a wider strategy to empower the EU in the wake of the pandemic (see EUROPE 12881/2).
Indeed, despite its strengths in semiconductor research, Europe has been steadily losing market share since the 1990s and now holds only 10% of the world market. It is largely dependent on third countries from South East Asia (Taiwan and South Korea in particular). (Original version in French by Pascal Hansens)