The Chips Act is here to make the EU an ‘innovation powerhouse’

21 Sep 2023

Image: © arsenypopel/

The act aims to increase the EU’s global share of chip production, improve its technology and protect from any future supply shortages.

The long-awaited European Chips Act has come into effect today (21 September), to help the EU rise up in the global semiconductor sector and protect its supply chain.

First proposed by the European Commission last year, the act aims to increase the EU’s share of global chip production from 10pc to at least 20pc by the end of the decade. It was also proposed during the global chip shortage, as a way to prevent future supply constraints.

The EU approved the Act in July, just two weeks  after the EU parliament adopted the €43bn act in a 587 to 10 vote with 38 abstentions.

Semiconductors are used for various products in the modern era, from smartphones and cars to critical applications in healthcare, energy, defence, communications and more. The global chip demand is expected to double between 2022 and 2030.

Overall, the European Chips Act aims to strengthen manufacturing activities in the EU, stimulate the bloc’s design ecosystem and support scale-ups and innovation in this sector.

The three pillars

The Act involves three core objectives – or pillars. The first aims to have Europe be a technological leader in the chip sector by “facilitating the transfer of knowledge from the lab to the fab”, in order to reduce the gap between research and industrial activities.

A total of €3.3bn will be used to support this initiative and develop pilot production lines, a cloud-based design platform, competence centres to create more apprenticeships and more.

The second pillar is focused on incentivising public and private investment in manufacturing facilities, to boost Europe’s overall chip production.

The third pillar is focused on protecting the supply chain and aims to establish a coordination mechanism between the European Commission and EU member states. The goal is to increase cooperation in order to monitor supply, estimate demand and anticipate any future chip shortages.

Věra Jourová, European Commision VP for values and transparency, said the EU has “great talent and research”, but claimed it is not “linking those advantages with production and roll-out” of chip technology.

“The global race for leadership in chips is a fact and Europe must secure [its] active part in it,” Jourová said. “The Chips Act will support investment and research facilities so Europe can become an innovation powerhouse with a strong stake in the global market.”

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Leigh Mc Gowran is a journalist with Silicon Republic