EU launches Chips Act

The Act aims to rival the $52 billion US Chips Act with the goals of quadrupling EU IC output in the next eight years and securing  20% world market share for Europe..

$48 billion in one year, on its own, looks small compared to the capex budgets of the Big Three which are running at $40 billion a year.

The source of the funding for the Act’s proposals is under discussion because the EU budget has already been allocated till 2027.

It seems that only €5 billion – or  15% of the budget – is coming from direct EU funding and the rest has to be clawed back from already allocated spending.

There is a digital fund worth about €1.8 billion and more  from Horizon Europe, the seven-year €95.5-billion from Horizon Europe which could be re-purposed.

Von der Leyen says she’ll find €12 billion from public/private sources on top of €30 billion already allocated under EU and Member States’ budgets.

But some Member States have objected to having money which has already been allocated being clawed back to be spent on chip fabs owned by foreign compsnies. The EU is contemplating spending 100% of the cost of fab sites.

“It may be justified to cover up to 100% of a proven funding gap with public resources, if such facilities would otherwise not exist in Europe,” says the bill.

Companies that receive state aid will face “public service obligations” like undertaking that in times of crisis, the EU can require companies to report stock levels and prioritise certain products. 

The EU could also implement export controls and launch joint purchasing schemes.

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