The European Commission has proposed a comprehensive package of measures to ensure supply security, resilience, and technological leadership in semiconductor technology and applications for the European Union. The European Chips Act will boost Europe’s competitiveness and stability whilst supporting digital and green transitions.
Semiconductor chips are the essential building blocks of digital products we use constantly ranging from smartphones and computers to appliances in our homes, lifesaving medical equipment, communication, energy, and industrial automation.
Chips are everywhere.
IN 2020, MORE THAN 1 TRILLION MICROCHIPS WERE MANUFACTURED AROUND THE WORLD.
ABOUT 140 CHIPS FOR EVERY INDIVIDUAL WORLDWIDE.
The global chip shortage, which began in 2020 and continues today, is a crisis in which demand for integrated circuits (commonly known as semiconductor chips) exceeds supply, affecting more than 169 industries. The COVID-19 pandemic is considered to be a reason for the shortage.
Such shortage has led to:
- Higher Prices;
- Lengthy Delivery for consumer electronic and life-saving equipment;
- Decrease in car production by 1/3 in some EU countries.
The European Chips Act has two key goals:
- To strengthen European resilience to supply chain disruptions and
- To increase European capacity in semiconductor RD&I and production, particularly for advanced nodes
In a nutshell, the proposed Act will encourage the development of advanced manufacturing, design and system integration, and cutting-edge industrial production capabilities. These aims are backed by increased public and private investment totalling more than 43 billion euros by 2030. This includes the possibility of very high levels of public investment for “one-of-a-kind” facilities that can benefit all of Europe.
The proposed Act also addresses the critical need for skills and introduces tools for predicting and avoiding supply shortages. International partnerships is one of these endeavours, demonstrating the EU’s commitment to remaining open to the rest of the world while also striving to improve balance interdependence.
Five strategic objectives of the EU Chips Act
The Act focuses on five strategic objectives:
- Strengthening Europe’s research and technology leadership
- Building and reinforcing the EU’s own capacity to innovate in the design, manufacturing and packaging of advanced, energy-efficient and secure chips, and turn them into manufactured products
- Putting in place an adequate framework to increase substantially EU production capacity by 2030
- Addressing the acute skills shortage, attracting new talent and supporting the emergence of a skilled workforce
- Developing an in-depth understanding of global semiconductor supply chains
Implementation based on three pillars
Implementation of the European Chips Act and achieving its objectives fall under three pillars: the Chips for Europe Initiative, Security of Supply, and Monitoring and Crisis Response.
Addressing Skills Shortages
Education, training, skilling, and reskilling programs will also be supported by the Chips for Europe Initiative. This comprises postgraduate microelectronics programs, short-term training courses, employment placements/traineeships/apprenticeships, and advanced laboratory training.
1st pillar: the Chips for Europe Initiative
This program will foster large-scale capacity development in Europe by investing in cross-border and publicly available research, development, and innovation infrastructure.
One of the key characteristics of this effort is the establishment of a network of competence facilities across Europe that will provide expertise and assist stakeholders, including end-user SME’s and start-ups, in developing their competencies.
2nd pillar: Security of Supply
This second pillar will provide a framework for ensuring supply security within the EU by encouraging investments and new innovative manufacturing facilities. Additionally, it will cover advanced packaging, testing, and assembly facilities
3rd pillar: Preparedness and Monitoring
The third pillar is the establishment of a system for coordination between EU Member States and the Commission to monitor supply chains and avert shortages. This coordination will entail monitoring semiconductor supply, estimating demand, anticipating shortages, and, if required, initiating a crisis stage.