The European Union opens the door for assistance in the production of semiconductors

The European Union opens the door for assistance in the production of semiconductors

Brussels – The European Commission said on Thursday it could agree to help fund semiconductor production in the 27-nation bloc amid a global shortage of chips and intense global competition to fill the need.

The EU’s executive arm predicts that the scarcity of semiconductors – a key component in everything from smartphones to cars – will continue, affecting the region’s economy.

Automakers have been among those hardest hit by the shortage, which has slowed or halted production.

Most of the chip makers are located in Asia, and the association wants to reduce its dependence by increasing production on its soil.

“The Commission will consider approving support to fill potential funding gaps in the semiconductor ecosystem, in particular for European first-of-its-kind facilities,” said Margrethe Vestager, European Competition Commissioner.

She said safeguards would be put in place to ensure that assistance was “necessary, appropriate, proportionate and of course to ensure that unjustified distortion of competition is limited”.

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Vestager’s announcement came on the heels of the September presentation of the European Chip Act, which aims to make the bloc competitive in the race for more advanced chips by expanding research and production in the European Union. Earlier this year, the union also launched an industry alliance with the goal of increasing the EU’s share of global semiconductor production to 20% by 2030.

In the global race, the United States is stepping up efforts to boost the industry. US lawmakers approved a bill earlier this year aimed at boosting domestic semiconductor production, as part of a broader competition with China over trade and technology.

When offering a review of EU competition policy, Vestager said “self-sufficiency is an illusion” but insisted the EU could not rely on a single country or company alone to get the chips.

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“The goal should be to diversify among like-minded partners to build a resilient supply chain and avoid single points of failure,” she said.

Meanwhile, the commission extended the temporary framework for government assistance to support businesses affected by the coronavirus pandemic until the end of June, Vestager said. Under this programme, more than 3.1 trillion euros ($3.5 trillion) in aid has been approved across the bloc.

She said: “On the one hand, the limited prolongation offers the opportunity for a phased and coordinated phase-out of crisis measures, without creating effects on the edge. This reflects the expected strong recovery of the European economy in general. On the other hand, we will continue to closely monitor the alarming rise in COVID-19 infections. and other risks to the economic recovery.”

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