Brussels Approves €8 Billion in New Subsidies for Made in Europe Semiconductors

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solo9 June 2023Last Update : 4 months ago
Brussels Approves €8 Billion in New Subsidies for Made in Europe Semiconductors

The European Union is hoping to boost domestic production of semiconductors and capture 20% of the global market by 2030.

A new raft of European subsidies for microchips are on the way.

The European Commission on Thursday approved a tranche of €8.1 billion in state aid for the production of Made in Europe semiconductors.

56 companies of various sizes will tap into financial vessel 68 projects to be completed in 14 member states: Austria, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Malta, Netherlands, Poland, Romania, Slovakia and Spain.

Projects will focus on research and development across the value

The Commission expects the public money to bring €13.7 billion in private investment and thus raise a total of around €22 billion between now and 2032, the date by which all projects are expected to reach the final stage.

However, the first product may be available in the market as early as 2025.

“It’s a big deal. These projects cost a lot of money,” said Margrethe Vestager, the European Commission’s executive vice-president in charge of competition.

Vestager explained that the projects will focus on research and development of “resource-efficient technologies” such as chips, processors and sensors.

The approval was made under the framework of the so-called “Important Projects of Common European Interest” (IPCEI), a type of undertaking that benefits not only the countries that inject the aid but also the European economy as a whole.

Because of this expected spill-over effect, IPCEIs enjoy easy access to taxpayer funds.

As the main enforcer of competition rules, the European Commission has the authority to investigate and approve any subsidy that threatens to disturb the economic balance between member states and trigger an unfair race.

The state-aid rulebook has traditionally been strict, resenting big countries with big pockets. But Increasingly fierce race for microchipsThe tiny electronic circuits that power smartphones, computers, vehicles and daily appliances have prompted Brussels to take a more lenient approach, carving discount To enable injection of public funds at a faster pace and on a larger scale.

The ultimate goal is to boost the production of Made in Europe microchips and achieve a 20% share of the global market by 2030, which would, in theory, ensure the bloc’s long-term competitiveness and sovereignty.

“We must increase Europe’s own chips research, development (and) production capabilities,” Vestager said. “We need to be pioneers. We need to develop truly innovative solutions and, of course, their first industrial deployment in Europe.”

However, the ambition faces an uphill battle against the technological prowess of China, Japan, South Korea and most importantly Taiwan, which dominate the market for advanced semiconductors in an almost monopoly manner.

The United States, which like the European Union has found itself falling behind behind southeast asia, has also become more vigorous in its policies. Last year the country adopted the CHIPS and SCIENCE Act, which includes $39 billion in incentives for manufacturing and $13.2 billion in research and development.

Brussels is meanwhile wrapping up the legislation behind the European Chips Act, a three-pillar proposal aimed at mobilizing more than €43 billion in public and private investment, with €3.3 billion coming directly from the EU budget.

IPCEI is a separate instrument and funds raised under the state-aid scheme will not count towards the European CHIPS Act.

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