EU Chip Act: Brussels has its bait for the chip industry ready

In the European Union there is now finally an agreement on a subsidy package with which one wants to support the settlement of important future technologies. This relates primarily to the semiconductor industry.

The so-called EU Chip Act was proposed by the European Commission last year. However, the voting and agreement processes here took a little longer than is the case in a single country like the USA. A comparable program has been able to take effect there for several months – and according to the latest data it is doing so. Investments in production facilities there are at a level that has not been seen for a long time.

However, the delay in Europe does not necessarily mean that it is too late and that investors have already struck elsewhere. The firm announcement of the deal alone has meant that the EU has attracted more than 100 billion euros in public and private investment since last year, an EU official told the news agency Reuters.

money is not everything

The package that Brussels is now providing amounts to 43 billion euros. However, these are only a part of the concrete settlement projects, since the member states themselves and also regional administrations are still involved with their own funds. In this respect, the money from the EU should be understood more as an addition that can be used to increase the attraction even further.

In general, the subsidies alone are only part of the arguments that contribute to location decisions for chip manufacturers. “The critical part of the equation that the EU, like the US, needs to get right is how much of the supply chains that support the industry can be moved to the EU and at what cost,” the analyst said Paul Triolo, a China and technology expert at the Center for Strategic & International Studies in Washington.

Because both the USA and the EU are concerned with bringing a good part of the production chains back from the Far East. Based on the experiences during the corona pandemic, this is intended to ensure that the supply chains for critical components can no longer break down so easily. When the trade routes from East Asia were interrupted, various key industries in this country could not continue production. In the car industry, for example, chips and other semiconductor components for on-board electronics were missing.

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