EU Nations Approve a 45 billion Euro Chip Production Plan

European chip production subsidies. Agreement from EU countries to a 45-billion-euro (USD 46.6 billion) fund to encourage local chip production.

FREMONT, CA: The European Union has made progress toward its goal of increasing its chip production capacity. The EU member states approved a USD 46.6 billion (USD 45 billion) plan to finance the manufacturing of chips. The move, which is a part of the EU's strategy to rely less on chips from Asia and the United States, was taken following the Covid-19 outbreak when several nations realised the serious consequences of chip shortages.

European Chips Act

Due to the small quantity of chip inventory that automobile manufacturers normally kept, the automotive industry was particularly hard hit. The European Commission presented a multibillion-euro Chips Act in February to address the chip problem and increase the continent's competitiveness in the industry.

The European Union declared that as part of its 2030 Digital Compass strategy, it aimed to create at least 20 per cent of the world's most advanced semiconductors by the end of the decade.

Currently, Europe produces eight per cent of the world's chips, a decrease from 24 per cent in 2000. The European Chips Act, a proposal, is promoted as a strategy to increase Europe's self-sufficiency in the semiconductor industry by simplifying state aid regulations, enhancing tools to foresee shortages and crises, and enhancing research capacity within the Union.

A 45 billion euro fund was included in the European Chips Act to prevent, plan for, foresee, and promptly respond to any potential disruption of supply chains, working with Member States and our foreign partners. By doing so, the EU will be able to realise its goal of increasing its market share to 20 per cent by 2030.

The Czech Republic, which now holds the rotating EU presidency, has revealed that EU envoys unanimously endorsed an updated version of the European Commission's plan. European Union ministers will gather on December 1st to approve the chip plan, which must still be discussed with the European Parliament before it can become law. The Commission's plan was modified to allow state subsidies for a wider variety of chips, not simply the most sophisticated ones. The incentives will include chips that offer advancements in artificial intelligence, energy efficiency, environmental benefits, and processing power. However, the memo stated that EU lawmakers still need to work out the project's finances.