Brussels approves 8 billion euros in new subsidies for "Made In Europe" microchips

2023-06-09 08:45:00, Kosova & Bota CNA

Brussels approves 8 billion euros in new subsidies for "Made In

The European Union hopes to increase domestic semiconductor production and capture 20% of the global market by 2030.

A new set of European microchip subsidies is on the way.

The European Commission approved on Thursday a tranche of 8.1 billion euros in state aid for the production of Made in Europe semiconductors.

56 companies of different sizes will come together to implement 68 projects in 14 member states: Austria, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Malta, Netherlands, Poland, Romania, Slovakia and Spain.

The Commission hopes that public money will bring 13.7 billion euros in private investment and thus mobilize a total of almost 22 billion euros between now and 2032, when all projects are expected to reach the final stage.

The first products may be available on the market as early as 2025.

"This is a big thing. There are a lot of funds going into these projects," said Margrethe Vestager, the European Commission's executive vice-president in charge of competition.

The projects will focus on research and development of "resource efficient technologies" such as chips, processors and sensors, Vestager explained.

The approval was made in the framework of the so-called "Important Projects of Common European Interest" (IPCEI), a type of enterprise that is supposed to benefit not only the countries that inject the aid, but the entire European economy.

Because of this expected spillover effect, IPCEIs enjoy easier access to taxpayers' money.

As the main enforcer of competition rules, the European Commission has the mandate to examine and approve any subsidy that threatens to upset the economic balance between member states and cause unfair competition.

State aid regulation has traditionally been strict, angering larger countries. But increasingly fierce competition for microchips, the tiny electronic circuits that power smartphones, computers, vehicles and everyday devices, has prompted Brussels to adopt a softer approach, creating exemptions to allow public funds to be injected with a faster pace and on a larger scale.

The ultimate goal is to increase the production of Made In Europe microchips and achieve a 20% share of the global market by 2030, which, in theory, would ensure the bloc's long-term competitiveness and sovereignty.

"We need to increase Europe's chip research, development (and) manufacturing capabilities," Vestager said. "We have to be pioneers. We have to have really innovative solutions and, of course, their first industrial deployment in Europe."

However, the ambition faces an uphill battle against the technological prowess of China, Japan, South Korea and, most importantly, Taiwan, which dominates the advanced semiconductor market in an almost monopolistic manner.

The United States, which, like the EU, has found itself lagging behind in Southeast Asia, has also become more assertive in its policies. Last year the country passed the CHIPS and Science Act, which includes $39 billion in manufacturing incentives and $13.2 billion in research and development.

Brussels is meanwhile finalizing the legislation behind the European Chip Act, a three-pillar proposal that aims to mobilize over €43 billion in public and private investment, with €3.3 billion coming directly from the EU budget.

The IPCEI is a separate instrument and the money collected under the state aid scheme will not count towards the European Act./ CNA.al