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EU takes on United States, Asia with chip subsidy plan


FILE PHOTO: A view of a chip on an electronic device at a shop in Brussels, Belgium, February 8, 2022. REUTERS/Yves Herman

 

By Foo Yun Chee

BRUSSELS (Reuters) -The European Union on Tuesday agreed a 43 billion euro ($47 billion) plan for its semiconductor industry in an attempt to catch up with the United States and Asia and start a green industrial revolution.

The EU Chips Act, proposed by the European Commission last year and confirmed by Internal Market Commissioner Thierry Breton, aims to double the bloc’s share of global chip output to 20% by 2030 and follows the U.S. CHIPS for America Act.

Reuters reported on April 5 that a deal was imminent and the confirmation of the EU Chips Act was welcomed by industry players which said it would bring manufacturing capabilities, skills and research and development improvements.

“We need chips to power digital and green transitions or healthcare systems,” Commission Vice-President Margrethe Vestager said in a tweet.

Since the announcement of its chips subsidies plan last year, the EU has already attracted more than 100 billion euros in public and private investments, an EU official said.

But the EU may struggle to close the gap with rivals, said analysts such as Paul Triolo, a China and tech expert at the Washington-based Center for Strategic & International Studies.

“The critical piece of the equation which the EU will need to get right, as for the U.S., is how much of the supply chains supporting the industry can be moved to the EU and at what cost,” said Triolo.

While the Commission had originally proposed funding only cutting-edge chip plants, EU governments and lawmakers have widened the scope to cover the whole value chain, including older chips and research and design facilities.

Hendrik Bourgeois, VP European Government Affairs at U.S. chipmaker Intel (NASDAQ:INTC), which will get subsidies for a plant it operates in Germany, welcomed the deal saying ti showed that the EU was “serious about securing its future prosperity”.

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