Response from EU to America: Historical $47 billion chip law approved

The recently passed European Chip Act aims to help the block secure the semiconductor supply, ensure self-sufficiency and compete with the US and Asia on technology. Semiconductors had become a thorny issue for governments around the world after a global shortage caused supply problems for major automakers and electronics manufacturers. Under the new decisions, Europe will try to control its supply chain more to reduce its dependence on foreign companies.

Reply from Europe to USA

Called the European Chip Act, the initiative aims to help the bloc compete with the US and Asia on technology, maintaining control over a critical piece of technology behind electronic products and devices around the world. The EU Parliament and 27 member states agreed on the legislation on Tuesday. In the statement, it was stated that the new rules aim to increase the EU’s global market share in semiconductors from 10% to 20% by 2030.

“This agreement is crucial for the green and digital transition while securing the EU’s resilience in turbulent times. The new rules represent a real revolution for Europe in the key sector semiconductors,” Swedish Energy Minister Ebba Busch said on Tuesday. said. Europe predicts that semiconductor chip demand will double to $1 trillion by 2030. In 2021, 1.1 trillion microchips were produced and the EU’s share in this production is 10 percent.

What’s in the European Chip Law?

The European Chip Law can be summarized as a massive 43 billion euro ($47 billion) public and private investment package aimed at securing supply chains, preventing future semiconductor shortages and encouraging investment in the sector.

The Chip Act has three main purposes:

• Building large-scale capacity and innovation.
• To make the EU self-sufficient.
• To prepare the EU for possible future supply chain crises.

The EU’s executive body, the European Commission, said in a statement that the EU Chip Law will invest 6.2 billion euros to promote the industrialization of innovative technologies. Within the scope of the law, serious incentives will be provided for the construction of new facilities. The EU announced the drafting of this law last year, and since then nearly 100 billion euros of public and private investment commitments have been drawn to the continent.

Why is it important?

Semiconductors and chips are essential parts of any electronic device. They are used in every field, every device, from smartphones to cars. The crisis experienced during the pandemic period in semiconductors and the East Asia-based supply chain behind them had serious effects around the world. This problem was behind the graphics cards, PS5 consoles and cars that could not be found.

Taiwanese semiconductor giant TSMC is by far the largest microchip maker, but tensions between China and Taiwan could set the stage for a possible supply crisis. Therefore, the USA’s CHIPS Act and the EU’s Chip Act focus on differentiating production so that such problems do not occur again. The EU currently does not have companies with the ability to compete with TSMC and others. Therefore, the prepared law is expected to attract investments to the EU. US giant chip maker Intel is among the companies increasing its investments in Europe and has committed to invest over 33 billion euros to increase chip production across the EU. In the UK, chip companies are threatening to leave the UK as they do not receive similar support from the government. Authorities want more semiconductors to be developed within Europe so they don’t face a huge risk of shortages or threats to national security.