EU outlines plan to boost European chip manufacturing

Why it matters: The EU wants to double its share of the global semiconductor market by 2030, an ambitious goal that will reduce the region’s reliance on Asia for advanced chip manufacturing. To that end, regulators are unlocking billions in funding and subsidies to attract companies like Intel and TSMC.

The European Union this week announced the European Chips Act which is going to help fund the region’s semiconductor production capabilities. This comes just as the global race for advanced chip production is intensifying amid soaring consumer demand and a desire to create a more resilient tech supply chain.

The initiative will unlock €15 billion ($17.15 billion) that will go towards public and private investments in chipmaking capabilities until 2030. This will come on top of an existing commitment of €30 billion ($34.3 billion) from Horizon Europe, NextGenerationEU, as well as governmental projects.

European 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.”

She also believes the move will encourage further long-term investments into research and development, testing, and production facilities.

Companies like Intel have already expressed their interest in building chip manufacturing plants in Europe, with up to $94.7 billion in capital expenditures planned over the next decade. For them, the EU is going to relax its state aid rules, which are currently used to prevent illegal subsidies being offered to companies. This is a must for chip factories, which are very expensive to build, operate, maintain, and upgrade to more advanced nodes.

EU Executive Vice President Margrethe Vestager said the goal is to make Europe’s tech sector more competitive and double its market share to 20 percent by 2030. While this won’t make the region self sufficient, it could reduce its reliance on Asia for semiconductors.

Interestingly, the Taiwanese government welcomes the EU’s plans. TSMC is currently evaluating Germany as a possible location for a European arm, a move that could improve the cooperation between Taiwan and Europe.

Other companies like GlobalFoundries — which is majority owned by the government of the United Arab Emirates — are also looking to build factories in Europe, but they’re currently waiting until they can secure enough long-term commitments to warrant an investment in added manufacturing capacity.