European Chips Act enters into force - guide

21 September 2023
by eub2 -- last modified 21 September 2023

The European Chips Act entered into force on 21 September. It puts in place a comprehensive set of measures to ensure the EU's security of supply, resilience and technological leadership in semiconductor technologies and applications.

• A strengthening of the semiconductor value chain, to ensure security of supply for European businesses using chips in their products. The acceptance to satisfy EU priority-rated orders, as also set out in the proposed Chips Act, will play a role in this respect.
• A positive contribution in terms of attracting qualified workforce to Europe.
• A positive impact on innovation in Europe, bringing benefits to SMEs and end users. The commitment to invest in innovation, set out in the proposed Chips Act for the recognition of the status of OEF and IPF, will play a role in this respect.

How to address the skills shortage?

Demand for talent in electronics has been increasing in the last 20 years, with the microelectronics industry in Europe being directly responsible for 455,000 high-skilled jobs in 2018. One of the main challenges for the sector is to attract and retain highly skilled talent.

The Chips for Europe Initiative will support education, training, skilling and reskilling initiatives. Action will support access to postgraduate programmes in microelectronics, short-term training courses, job placements/traineeships and apprenticeships and training in advanced laboratories. Additionally, the Initiative will support a network of competence centres, located across the European Union. The aim is to increase the availability of internships and apprenticeships, raise students' awareness of the opportunities in the field and support dedicated scholarships for masters and PhDs, also aiming at increasing female participation.

What investments are needed?

There are various ways into achieve the objectives of the strategy. Huge investments are required to achieve this ambition. This will require the pooling of investment from the Union, Member States and significant contributions from private investors.

The strategy underlying the European Chips Act will mobilise more than €43 billion euros of policy-driven investments. This includes € 11.15 billion of public investment to be directly provided under the Chips for Europe Initiative to finance technology leadership in research, design and manufacturing capacities up to 2030.

These investments will complement existing actions in research & innovation in semiconductors such as those from Horizon Europe and the Digital Europe programmes as well as additional support already envisaged by Member States (e.g., specific measures in recovery and resilience plans, national or regional funds etc.).

The new Joint Undertaking "Key Digital Technologies" just started in December 2021. Why a new one now?

The new generation of Horizon Europe partnerships are flexible to adapt to changing technology, market and policy environment. By changing the mandate of the Key Digital Technologies Joint Undertaking set up under the so-called Single Basic Act (the regulation that sets up joint undertakings under Horizon Europe), the Commission is responding to urgent needs.

The Chips Act is a promising opportunity for a wide range of stakeholders, not only for chip manufacturers but also for user industries, in transport, healthcare, communication, manufacturing, etc. The Chips Joint Undertaking should be open to the participation of new stakeholders in this respect.

What is being done at international level?

By improving its supply chain security and through its capacity to design and produce powerful and resource-efficient semiconductors, the EU is contributing to the rebalancing of the semiconductors global supply chain. Additionally, the EU has as an overall objective to serve the global demand, which will increase substantially, and to win its share of the growing market.

Europe will aim at building balanced semiconductor partnerships with like-minded countries. The aim of these partnerships would be to cooperate on initiatives of mutual interest and ensure continuity of supply in times of crisis.

At the same time, the EU should be prepared for possible sudden changes in the political situation or unforeseen crises, which could threaten the EU's security of supply. The crisis response toolbox within the EU Chips Act would give the EU the necessary means to address such situations and, in the last resort, to ensure Europe's overall resilience.

What are the next steps for the Chips Act?

The regulation on the Chips JU also entered into force at the same time as the Chips Act transforming the Key Digital Technologies Joint Undertaking (JU) into the Chips JU. This allows to start with the implementation of the main part of the Chips for Europe Initiative described above. Furthermore, the Chips Fund is able to start its activities.

Moreover, companies will already be able to apply for the label that determines that their project is a "first-of-a-kind" facility in the Union: the label as "Integrated Production Facility (IPF)" or "Open EU Foundry (OEF)" in order to start benefitting from a number of advantages that come with the label (e.g., in the frame of state aid assessments this status will be taken into consideration as one positive element in the balancing exercise; fast-tracking of permit granting procedures to facilitate their planning and establishment; priority access to Initiative's pilot lines).

With the entry into force, the work of the newly established European Semiconductor Board, an overarching advisory body that will be the key platform for coordination between the Commission, Member States and stakeholders, will also formally start.

Source: European Commission