SEMICONDUCTOR INDUSTRY European MEPs adopt legislation to boost EU chip industry

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MEPs have backed legislative plans to safeguard the supply of EU chips through boosting production and innovation and adopting emergency measures that will prevent future shortages.

The European Parliament on Tuesday, January 24, backed a legislative initiative designed to address future shortages of critical microchips. The Industry and Energy Committee adopted two draft bills: one on the so-called “Chips Act” that aims to increase technological capacity and innovation in the EU microchip ecosystem and a second one on the Chips Joint Undertaking which is designed to increase investments for developing this type of European ecosystem.

In their amendments, MEPs focused on next-generation semiconductors and quantum chips. A network of competence centers will also be created to address current skills shortages and attract the very best talent to research, design, and production. The Chips Act will also support projects that aim to secure the EU’s supply security by enticing investment and shoring up production capacity.

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Responding to future shortages

Under the legislation, a new crisis response mechanism will also be set up, with the European Commission assessing the EU supply of semiconductors and early warning indicators in member states that could trigger an EU-wide alert. This alert would then enable the Commission to implement emergency measures, such as prioritizing the supply of chips to particular products or procuring chips on behalf of member states.

MEPs have also highlighted the critical importance of international cooperation with the likes of the United States, Japan, South Korea, and Taiwan. MEPs have said that the Commission should establish a “chips diplomacy initiative” to address any future supply chain disruption.
The legislative report on the Chips Act was adopted 67 – 1, with four MEPs abstaining.

The ‘Chips for Europe’ initiative

In a second, separate vote, MEPs adopted 68 – 0 the Chips Joint Undertaking proposal, implementing the measures previously outlined in the “Chips for Europe” initiative. This scheme aims to support large-scale capacity building through investment into EU-wide, accessible research, development, and innovation infrastructure. The initiative will also enable the development of cutting-edge and next-generation semiconductor technologies. MEPs have highlighted that in order to boost innovation, more money will be needed, as well as a reallocation of funds from Horizon Europe, the EU’s key funding program for research and innovation.

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“We want the EU Chips Act to establish Europe as an important player in the global semiconductors arena. Not only does the budget need to be commensurate with the challenges and funded through fresh money, but we want to ensure that the EU is leading in research and innovation, that it has a business-friendly environment, a fast permitting process, and invests in a skilled workforce for the semiconductor sector. Our goal is to ensure growth in Europe, prepare for future challenges and have in place the right mechanisms for future crises,” said Dan Nica, Romanian MEP and Rapporteur on the Chips Act.

What happens next?

The mandate for negotiations will be announced at the opening of the 13-16 February plenary session in Strasbourg. If there is no request to put the decision to enter into negotiations to the plenary vote, the European Parliament will be able to begin talks with the Council. Parliament will hold a vote on the Chips Joint Undertaking proposal during the same session.

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