• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile

  • CORONAVIRUS
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • REGIONS
    • Asia Pacific
    • Canada
    • China
    • Europe
    • Latin America
    • Middle East/Africa
    • North America
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » EU Offers Ambitious Chips Law That May Struggle to Deliver Funds

EU Offers Ambitious Chips Law That May Struggle to Deliver Funds

chipmaking
An employee inspect wafers using an optical microscope. Photo: Bloomberg.
February 9, 2022
Bloomberg

The European Union unveiled its plan Tuesday to use its economic leverage to attract large semiconductor producers like Intel Corp. and Taiwan Semiconductor Manufacturing Co., but reaching the full 45 billion euro ($51.4 billion) price tag depends on a controversial and untested method of subsidizing production.

Under the EU’s Chips Act, the bloc would allow its massive state aid funding program to be used for “first-of-a-kind” production sites in Europe, as part of a larger goal of producing 20% of the world’s semiconductors by 2030.

Despite broad agreement over the need to address the global chip shortage, the EU plan could face significant hurdles — both over its direct funding, which relies on already allocated money and stretched EU government budgets, and its use of state aid, which some countries and EU officials worry could lead to a subsidy race.

“Europe needs advanced production facilities, which come, of course, with a huge upfront cost,” European Commission President Ursula von der Leyen said Tuesday in Brussels. “We are therefore adapting our state aid rules, of course, under strict conditions, and this will allow for the first time public support for European first of a kind production facilities.”

The EU’s Chips Act aims to put the bloc on the same playing field as the U.S., which has proposed a competing $52 billion plan. Overall, the EU executive arm’s plan would be backed by roughly 45 billion euros in public and private money. About 15 billion euros will be part of a public-private partnership for research and innovation, with another 30 billion euros in state aid aimed at chip production and smaller projects. 

Previously, the EU only allowed state aid for research and the first production run, but the commission tweaked its rules to allow subsidies for semiconductor manufacturing — a change that may prove controversial inside the bloc.

Companies’ requests for subsidies are likely to face tough scrutiny from the commission’s competition department, as they have to prove their plans are truly first of a kind in Europe and there is a genuine funding gap. The commission’s competition chief, Margrethe Vestager, said in a news conference that state aid will be “targeted and proportionate.” She added, “Only what is needed and nothing more.”

Vestager also pushed back against the idea that the first-of-a-kind criteria constituted a change to state aid rules. “We’re not bending, we’re not adapting the state aid rules,” she said. “We’re using the provision of a treaty that allows to enable economic activity. That is in the treaty.”

The rest of the money backing the proposal isn’t guaranteed either, as the EU is reallocating more than 5 billion euros that's already been distributed in the EU budget and could face opposition from EU countries and the European Parliament. The Chips Act runs until 2030, and with the current EU budget ending in 2027, the commission earmarked more than 1 billion in the next EU budget, a plan that could be nixed when the next commission takes office.

The vast majority of the money will come from EU countries, which is expected to have more than 100 smaller projects under the Important Projects of Common European Interest program, and could make billions available in state subsidies.

The EU plans more oversight for semiconductor companies to ensure the security of supply. If there is a crisis, countries would be able to require companies to report stock levels, prioritize certain orders and jointly purchase items.

The measures unveiled Tuesday left some industry groups saying the details were still insufficient.

“It is still unclear how much indirect funding (money coming from member states) will be secured, and how it will be spent,” DigitalEurope, an industry group, said in a statement. “More clarity on the size and source of funding especially for research and development is needed.”

Even so, companies largely welcomed the EU’s overall proposal, with Infineon Technologies AG CEO Reinhard Ploss writing in a statement that it is “an important step towards establishing a semiconductor ecosystem in Europe at the top global level and reducing unilateral dependencies.”

Intel also pushed the EU to work with the U.S. “for the sake of our collective economic stability and supply chain security,” especially by aligning regulation in the joint Trade and Technology Council.

RELATED CONTENT

RELATED VIDEOS

Global Trade & Economics High-Tech/Electronics Europe
  • Related Articles

    EU Gives May Another Two Weeks to Avoid a No-Deal Brexit

    U.S., EU Agree to Trade Deal That Stands Up to China

Bloomberg

Baby Formula Shortage Shows Risk of U.S. Industry Concentration

More from this author

Wake up to live
“Supply Chains in Crisis”
updates and the latest Supply Chain News!

Subscribe to our Daily Newsletter

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • Medical drone

    Amazon May Be Proof That Delivery Drones Aren’t Practical

    Last Mile Delivery
  • digital work

    Supply Chain Managers Are Quitting in Unprecedented Numbers

    Coronavirus
  • North Jakarta, Indonesia

    Physical, Financial Visibility: A Dual Approach to Supply Chain Resilience

    Supply Chain Planning & Optimization
  • Heat Wave Triggers Blackouts

    Vast Swath of U.S. at Risk of Summer Blackouts, Regulator Warns

    Supply Chain Security & Risk Mgmt
  • Worker using tablet

    Podcast | Stitching Together the Physical and Digital Supply Chain

    Technology

Digital Edition

Scb may 2022 sm

2022 Supply Chain ESG Guide

VIEW THE LATEST ISSUE

Case Studies

  • 3PL Doubles Productivity With Robots to Fulfill Medical Supply Orders

  • E-Commerce Company Cuts Order Fulfillment Time by 40%

  • Fashion Retailer Halves Fulfillment Time With Omichannel Automation

  • Distributor Scales Business by Integrating Warehouse Automaton Software

  • Fast-Growing Fashion Brand Scales E-Commerce Fulfillment With Whiplash

Visit Our Sponsors

Yang Ming Alithya Barcoding
Blue Yonder BNSF Logistics Generix
GEP GIB USA GreyOrange
Here Honeywell Intelligrated Inmar
Keelvar Kinaxis Korber
Liberty SBF Locus Robotics Lucas Systems
Nvidia Old Dominion Parsyl
Redwood Logistics Saddle Creek Logistics Schneider Dedicated
Setlog Holding AG Ship4WD Shipwell
Tecsys TGW Systems Thomson Reuters
Tive Trailer Bridge Vecna Robotics
Whiplash    
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2022 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing