The EU proposes a new plan to build its own chips industry

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The European Union has a plan to bolster its microchips industry to catch up with rivals like China and the US, using a new ‘Chips Act’ announced by Ursula von der Leyen.

The initiative aims to link up research and design across members states, coordinate funding, and create a joint state-of-the-art ecosystem of microchip companies.

The European Commission president said this during her State of the European Union speech in Strasbourg. She said the bloc has to ‘be bold again’ to build a competitive semiconductor industry, a task she said would be ‘daunting.’

Von der Leyen’s gambit on chips

The announcement comes after Europe suffered a chip shortage linked to the disruption of global supply chains.

Europe’s car manufacturers who rely on chips have been forced to stop production lines several times this past year, as the production of other goods reliant on chips has experienced disruptions.

Global powers, embarrassed by how unaware they were when the shortage hit, have been funnelling public funds into projects to bolster chip production and ease the existing bottlenecks. The US had the Chips for America Act, where they committed tens of billions of dollars into the sector.

The EU has some way to go

The EU is yet to pledge any specific amount of money toward chip design or production. However, it has said it wants to boost its share of the global chips market to 20% by 2030.

However, critics have argued the bloc lacks a credible industry policy and public subsidies that can match the Chinese and American programs.

While EU leaders have said they want to do what their peers have done, they still need to collect tens of billions of euros in public and private funds to compete. It remains to be seen how well ongoing efforts will do.

Tip: EU should pay Intel 8 billion euros for two chip factories