The EU's Groundbreaking Move to Revive the Semiconductor Industry Leaves Everyone Awestruck

The EU council has finally adopted the Chips Act. Meanwhile, Germany plans a €20bn investment in semiconductors as it woos foreign chipmakers.

After more than a year of deliberations, the EU has finally adopted the Chips Act after the European Council approved the regulation today (25 July) to make the bloc a world leader in chip production and research.

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First proposed by the European Commission last year, the act aims to increase the EU’s share of global chip production from 10% to at least 20% by the end of the decade. Lawmakers hope this will strengthen the EU semiconductor sector to be resilient to any global supply chain issues.

Héctor Gómez Hernández, Spain’s minister for industry, trade and tourism, said that the Chips Act will help make Europe "a frontrunner" in the world semiconductors race.

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"We can already see it in action: new production plants, new investments, new research projects. And in the long run, this will also contribute to the renaissance of our industry and the reduction of our foreign dependencies," Hernández said after today’s council approval.

This comes just two weeks after the EU parliament adopted the €43bn act in a 587 to 10 vote with 38 abstentions.

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"The EU Chips Act will be an instrument of technological and industrial leadership for Europe," industrial markets chief Thierry Breton tweeted at the time. "There is no industrial policy without factories and without semiconductors. The EU is back!"

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One of the primary motivations behind the Chips Act is the reliance of EU businesses on chips manufactured in foreign countries, most notably East Asia. Chip demand is expected to double between 2022 and 2030, with the global semiconductor industry estimated to be worth $1trn by the end of the decade.

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To further boost self-supply, Germany’s economy ministry announced today that the country will invest around €20bn in the semiconductor industry in the coming years.

Taiwanese chip giant TSMC has also expressed interest in investing in a semiconductor production facility in Germany, Reuters reports, and the ministry is in "close contact" with the company over an investment decision – with possible subsidies on the table.

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Meanwhile, China hit back against recent US sanctions earlier this month, with planned export restrictions on two metals considered vital to the semiconductor sector. The move is a response to ongoing restrictions the US and other countries have imposed on China since late last year.

The country’s planned restrictions will impact exports of gallium and germanium metals, along with various items related to these materials. These materials are used for chips that go into various electronic products, from smartphones to advanced military equipment.

In May, the UK revealed its strategy to build up and protect its semiconductor sector, with plans to invest £1bn over the next decade. This strategy received mixed responses due to the much smaller spending plan compared to the EU and the US.

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