Paul van Gerven
8 February

The European Chips Act aims to support local R&D efforts and relax state-aid rules for funding semiconductor manufacturing facilities.

The European Chips Act will enable 15 billion euros in additional funding to boost the EU’s semiconductor industry and reduce its dependence on Asia and the US, European Commission president Ursula von der Leyen said at the presentation of the proposal on Tuesday. This amount comes on top of an expected 30 billion euros in public investments drawn from the corona recovery fund NextgenerationEU, research program Horizon Europe and the coffers of individual member states.

The Act, which will now be discussed by European Parliament and member states, has two main components. The first deals with R&D, education and support for SMEs. The Chips for Europe Initiative will make 11 billion euros available to strengthen relevant R&D infrastructures, including deployment of pilot lines to take research from lab to fab, and fund educational programs to train semiconductor industry experts. The EU Chips Fund will support equity for startups and scale-ups in the chip sector, for a projected overall value of 2 billion euros.

The second component is the relaxation of Europe’s state-aid rules, aiming to attract enhanced production capabilities. It will be a novelty that any kind of manufacturing facility is subsidized within the EU. Until now, state support for anything else than pre-competitive activities has been strictly forbidden.

Loosening state-aid rules is therefore a major source of contention that likely hasn’t been resolved yet. “Relaxation of our rules, as some suggest, is not the right way to tackle new challenges. It could easily lead to negative effects on competition, markets and growth on the single market as well as a harmful subsidy race that benefits few and hurts many. It will not strengthen the global competitiveness of European companies and will harm our level playing field at home,” six member states, including the Netherlands, wrote in an open letter last year.

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ASML

Von der Leyen said that the adaption of the rules would be “under strict conditions.” Antitrust Commissioner Margrethe Vestager, who previously cautioned against getting overly ambitious in the semiconductor arena, said fab funding would be a rarely used provision in the EU treaty. She added that aid has to be proportionate, have a pan-European impact and not be more than necessary.

Both foundry and IDM operators can qualify for public support, provided that they contribute to Europe’s security of chip supply, be first-of-a-kind in Europe and commit to continued investment in the EU, according to a statement released by the Commission. Up to 100 percent of a “proven funding gap” can be covered by governments.

Intel has welcomed the chip push. “We’re currently considering a significant increase in our European footprint, and we expect that the EU Chips Act will facilitate these plans,” the company told Reuters.

ASML, too, “strongly supports the European Commission’s ambitious proposal for a European Chips Act. In ASML’s view, the Act needs to secure Europe’s relevance in the global semiconductor ecosystem by focusing not only on increasing microchip production capacities but also on the capabilities and performance of European products and technologies that other parts of the world rely on,” reads a statement.

The Veldhoven-based equipment maker released a position paper, written together with customers, suppliers, partners and other stakeholders, on how to achieve these goals. The paper’s main recommendations are to develop a long-term strategy for the mature-semiconductor ecosystem, attract industry frontrunners to build advanced fabs in Europe, upgrade European semiconductor process technology research facilities at Imec, CEA-Leti and Fraunhofer and invest in chip design infrastructure.

Main picture credit: EC – Audiovisual service