Chip law: EU states call for change of strategy for semiconductor leadership

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The European Chips Act to strengthen the European semiconductor sector has only been in force since 21 September 2023. Nevertheless, after just over two years, the EU member states are united in calling for a comprehensive amendment to the regulation. They published a statement on this on Monday. In it, they call for more to be done to strengthen and revitalise Europe's position in the global semiconductor industry.

The reason for the paper, which the member states submitted to the EU Commission on Monday, is the targeted revision of the chip law planned for 2026.

Second phase: strategic industry

The signatories see the Chips Act as a first step towards strengthening the semiconductor sector. However, global competitors are investing heavily, and a large part of the industry's value creation continues to take place outside the EU. It is therefore time for a future-oriented second phase of the Chips Act.

A reform should address Europe's current weaknesses, respond to geopolitical, technological, and environmental challenges, and capitalize on existing strengths and new market opportunities. The EU countries are calling for the semiconductor sector to be prioritized as a strategic industry – on a par with aerospace and defense, for example. It must be treated as a key target for investment, research and development, innovation, and, if necessary, protective measures.

The most ambitious target of the existing chip law is to increase Europe's global market share in semiconductor production from around 10 to 20 percent by 2030, mobilizing a total of over 43 billion euros in public and private investment. However, the EU Court of Auditors criticized this target in April as unrealistic and too broad.

Innovation leadership and resilience

The countries are now pushing to establish a competitive European semiconductor ecosystem with a revised Chips Act. Europe should continue to develop its technological innovation leadership in key areas such as materials, chip design, equipment, and production.

The governments also have resilience in mind: they are keen to ensure a stable and reliable supply of trustworthy semiconductors for Europe's most critical sectors, especially in times of global disruption or geopolitical uncertainty.

To this end, the signatories have defined five key political priorities. They want to establish a complementary ecosystem with European collaborations and alliances from industry, research, SMEs and start-ups. The framework conditions that are important for growth within the EU, such as authorization procedures, network access, and energy supply, should be adapted.

The member states are in favor of accelerating important projects of common European interest (IPCEIs) for strategic semiconductor projects. In addition, a European skills development program should be established with existing semiconductor competence centers to promote education in the fields of mathematics, computer science, natural sciences and technology (STEM) as well as retraining and further education initiatives. Highly skilled labor would need to be attracted and retained.

Green Deal and international partners

The countries also want to focus on the development of semiconductors that contribute to the "green transition". They are referring, for example, to energy-efficient chips, clean energy applications, and the circular economy. Semiconductor production itself is to become greener by replacing hazardous substances and increasing the use of renewable energies.

The final point is global cooperation with like-minded international partners to create mutually beneficial dependencies and build a resilient global supply chain. From the German government, the Ministry of Economic Affairs and the Ministry of Research co-wrote the paper. Economics Minister Katherina Reiche (CDU) surprised the local semiconductor industry in June by announcing her intention to cut back on financial support for chip factories.

(vbr)