The European Commission presented, on Tuesday 8 February, a strategy for empowering the EU in the field of electronic chips, or semi-conductors, which is divided into two parts: in the short term to respond to the urgency of current shortages, then in the medium and long term to consolidate the European industrial fabric and help it gain a share of the world market. Although the sums involved are colossal, little “fresh” money is injected at European level: it is mainly a question of redirecting funds.
European Commission President Ursula von der Leyen, who announced the initiative last September (see EUROPE 12791/4), outlined the two main objectives at a press briefing on Tuesday morning.
“This legislation on semiconductors comes absolutely at the right time and has two main objectives: the first objective is, in the short term, to increase our resilience to future crises, by enabling us to anticipate and avoid supply chain disruptions, and the second is of course to look to the medium term and make Europe an industrial leader in this very strategic market”, she said.
In fact, as we had reported, the Communication includes two regulations and one recommendation (see EUROPE 12885/1). The Commission is proposing a recommendation to “immediately” initiate coordination between the Member States and the Commission to address the current shortage.
It is therefore a question of putting forward a “ voluntary” participation, explained a source, in view of the implementation of the Chips Act, notably its chapter V dedicated to governance. Furthermore, the Commission proposes the revision of the EU Council Regulation amending Regulation 2021/2085 establishing Joint Undertakings under Horizon Europe.
Procurement and interdependence
Thus, the Commission’s roadmap aims, in the medium term, to strengthen the EU’s industrial activity while tackling the issue of securing the supply of the semiconductor ecosystem, leading to a rebalancing of partnerships with third countries, primarily with the United States, Japan and Singapore. Taiwan was not openly mentioned by the various commissioners who came to present the package, but could be seen as a potential partner, they said.
This raises the thorny issue of export controls. It is an instrument of “last resort”, the European Commission Vice-President Margrethe Vestager stressed during a press conference. An instrument that must be used with extreme caution and in consultation with the Member States. Answering EUROPE, she said that the best thing was to avoid any shortages and to ensure interdependence between partners.
The Commissioner for the Internal Market, Thierry Breton, said that the threat of export controls had been effective on the issue of vaccine manufacturing, faced with the blocking of certain active ingredients needed for the production of messenger RNA vaccines.
Budgetary redirection rather than “new money”
The European Commission acts with a fixed budget. As a result, as Ms Vestager told EUROPE, there have been “reprioritisations” or redirections of EU funds withdrawn from certain projects.
Mariya Gabriel, the Commissioner for Innovation and Research, cited the €3.3 billion earmarked for semiconductors: €1.65 billion from the Horizon Europe framework programme and €1.65 billion from the Digital Europe programme. €2.875 billion of this will be implemented through theChips Joint Undertaking.
According to the proposed Semiconductor Regulation, this sum will be supplemented by €125 million fromInvestEU and €300 million through the European Innovation Council. This is in addition to the budget already earmarked for microelectronics activities in the context of the multiannual financial framework, reaching almost €5 billion, it says.
At a press conference, responding to EUROPE, Ms Gabriel said that the money taken from Horizon Europe will be made up via unused funds in various programmes during the Multiannual Financial Framework.
Nothing changes on State Aid
Regarding State Aid, Vice-President Vestager indicated that the rules have not been changed so far and that the idea is to always respond to market failures without distorting competition, in line with Article 107 TFEU (§3). As a reminder, the latter provision makes it possible for State Aid to facilitate the development of certain economic activities or regions.
Here, the Commission indicates that it will take into account the fact that the new production facilities are “pioneers” in the Union, as they target breakthrough technologies that do not currently exist in the EU. As such, the Commission provides for a definition of the term “pioneer” in the proposed Semiconductor Regulation.
€43 billion
In general, the European Commission’s communication estimates that €43 billion of public investment will be needed between now and 2030 to achieve the objectives set out in the communication, in particular for the EU to capture 20% of the global semiconductor market. The institution hopes that the private sector will match this amount.
In comparison, the United States is putting a similar amount of money into developing its autonomy in this sector. China, for its part, will deploy around €150 billion over ten years. South Korea, already a leader in this field, wants to support private investment, which is estimated at €450 billion by 2030.
Responding to a journalist, Ms Vestager said that the Commission’s intention was not to seek total autonomy. To do this, it would be necessary to come up with, not 43 billion euros, but with a sum ranging between €240 and €320 billion.
To consult the European Commission’s initiatives: https://aeur.eu/f/91 (Original version in French by Pascal Hansens)