European Commission invests 43 billion in chip production after global shortages

The European Commission proposed a new Chip Act on 8 February. With this they want to combat the enormous production shortages of chips, conduct research into new ecological prototypes and strengthen the technological leadership of the European Union in the field of chips.

Global potato chips shortages

Worldwide there are major shortages of chips in various sectors such as the medical, the automotive industry and certainly also the telephone production. These shortages have forced many factories to close. In a number of Member States, the production of chips in the automotive sector has decreased by 1/3 by 2021. This has made Europe realize that we are globally dependent on chips in terms of industry, politics and society.

“Chips are necessary for the green and digital transition and for the competitiveness of European industry. We must not depend on one country or one company to ensure security of supply. We need to do more together in research, innovation, design, production to make Europe stronger as a key player in the global value chain. This will also benefit our international partners. We will work with them to prevent future supply problems.”

The European chip law will build on the strong points and try to remedy the weak ones. The European Union has earmarked 43 billion euros in private and public institutions for this purpose. The chip law also consists of a number of measures to be able to respond more quickly in the future if there are still shortages. With this law, the EU also wants to increase their market share by 20% by 2030.

Main elements of the chip law

The first important part of the law is the Chips for Europe initiative. With this they want to join the forces of all member states to research new ecological prototypes and to strengthen their innovation and development. The second important part of the law is a new framework to increase production capacity. Part of this is a new chip fund that will financially support new companies during the start-up period. The last important part is anticipating new shortages. To make this possible, they will collect important information from companies. This allows them to identify the primary bottlenecks and tackle them in time.

It is good that the European Union is taking measures because the chip sector is an important asset for the industrial world. The digital transformation is opening up new markets for the industry such as smartphones, the cloud, the internet, 5G and many more.

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