EU announces €43 billion plan to reduce semiconductor dependency from Asia

The European Union has announced a €43 billion plan for semiconductor manufacturing to combat the ongoing global chip shortage and also to reduce its dependency on the manufacturers in Asia.

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Titled the "European Chips Act", the plan aims to set measures to prevent, prepare, anticipate and swiftly respond to any future supply chain disruption with the help of the Member States and international partners.

Commission President Ursula von der Leyen said:

“The European Chips Act will be a game-changer for the global competitiveness of Europe's single market. In the short term, it will increase our resilience to future crises, by enabling us to anticipate and avoid supply chain disruptions. And in the mid-term, it will help make Europe an industrial leader in this strategic branch. With the European Chips Act, we are putting out the investments and the strategy. But the key to our success lies in Europe's innovators, our world-class researchers, in the people who have made our continent prosper through the decades.”

The Chips for Europe initiative intends to pull resources from the Union, Member States, and third countries that are already associated with Union programs as well as the private sector. Around €11 billion will be used to strengthen existing research, development, and innovation in the semiconductor industry. The plan will also ensure the deployment of advanced semi-conductor tools, pilot lines for prototyping, testing, and experimentation of new devices.

The €43 billion budget includes €30 billion from previous investments. The majority of the money is expected to be delivered by the Member States instead, while direct funding from the bloc constitutes less than 15% of the total.

Currently, the Taiwanese Semiconductor Manufacturing Company (TSMC) dominates the semiconductor industry and generates more than 50% of global revenue. However, there have been reports that TSMC could be setting up its fabs in Europe.

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