EU Chips Act likely to get green light on April 18

Sources say that the EU member countries will most likely agree a deal when they meet in Strasbourg later this month.

This week Reuters reported that The EU’s plan to turbocharge its semiconductor industry in order to compete with the United States and Asia is likely to get the green light from EU countries and lawmakers on April 18, when the bloc holds its monthly meeting in Strasbourg, France.

The EU Chips Act was launched in a hurry last year to try to reduce the EU’s reliance on US and Asian semiconductors. The European Commission announced the 43 billion euro initiative in the wake of the problems in the global chip supply chain that severely impacted a wide range of European businesses, from carmakers to manufacturers.

A direct response to a US challenge

The legislation is also seen as a direct response to the US’s own CHIPS for America Act, which aims to provide $52 billion (€48 billion) in funding to help North American semiconductor manufacturing compete with Asian chip makers.

Discussions have to date focused on a 400-million-euro funding shortfall, but sources told Reuters that the Commission has “managed to come up with the bulk of the funds”. This, the sources implied, indicates that the bloc will most likely “clinch a deal”when they meet in Strasbourg.

The EC had originally proposed funding only cutting-edge chip plants, but EU member governments and lawmakers insisted on expanding the scope of the Act to cover the entire value chain, including older chips and research and design facilities.

Supporting the entire supply chain

Providing funding to the entire value chain also addresses complaints from the smaller EU countries about being left out after Intel, enticed by the EU Chips Act, picked Germany for its giant new semiconductor manufacturing complex.

Franco-Italian company STMicroelectronics, Europe’s largest semiconductor contract manufacturing and design company, is building a €730 million chip plant in Italy thanks to promised Chips Act funding. The company has also partnered with Malta-based GlobalFoundries to build a 6.7 billion euro chip factory in France, relying on funds from the government.