Introduction

The European Parliament approved on Tuesday a plan to develop the semiconductor industry locally and reduce dependence on Asia in this strategic sector.

The text was approved by 587 members and rejected by 10 members, while 38 members abstained from voting.

The text is known as the “Chip Law” and aims to double the EU’s global market share to 20% by 2030, according to AFP.

Increasing Production and Reducing Dependence

To do this, the conglomerate will have to increase production four times.

Europe has seen a decline in semiconductor manufacturing capacity in recent decades and has become increasingly dependent on Asian manufacturers that dominate the global market: Taiwan (where 90% of the world’s most advanced chips are made), South Korea and China.

The Covid pandemic has paralyzed supply chains in Asia in 2020, leading to significant semiconductor shortages that have particularly affected the European automotive industry.

In addition to cars, semiconductors are essential in many everyday gadgets (smartphones, home appliances, etc.) as well as data centers needed to run a thriving digital economy, as well as green technologies.

The law also aims to reduce Europe’s vulnerability to geopolitical crises.

The war in Ukraine has highlighted the dependence of 27 Member States on Russian gas.

Among the most visible risks at present is the possibility of a military conflict between China and Taiwan, which could lead to a halt in semiconductor exports and thereby paralyze European industry.

The law provides for the allocation of 43 billion euros of public and private investments for the development of production centers on the European continent.

In this regard, the European Commissioner for the Internal Market, Thierry Breton, told MPs: “Without factories, there will be no industrial policy … The time for European investment in research alone has passed.”

About 6.2 billion euros of public investment, 3.3 billion of which comes from the EU budget, will be mobilized for research and development to facilitate the transfer of knowledge from laboratories to factories.

A shortage monitoring system will also be put in place so that the European Commission can anticipate potential supply and work bottlenecks during a crisis, including through pooled procurement.

The “Chip Law” was the subject of an agreement between the European Parliament and Member States on 18 April.