European Chip Law: Boosting Competitiveness and Innovation

The European Chip Law aims to enhance Europe’s competitiveness and resilience in the semiconductor technology sector, contributing to digital and environmental transformations. This initiative seeks to strengthen Europe’s technological leadership in chip manufacturing and address the urgent need for action within the European Union.

The Significance of Chips in Business Life

Chips serve as essential components within critical production chains and emerging industries such as automated automotive, cloud computing, the Internet of Things, and defense. The recent global semiconductor shortage crisis has underscored the vulnerability of supply chains and dependence on a limited number of suppliers. As the realms of artificial intelligence, 5G, and the Internet of Things progress, the demand and opportunities within the chip industry are notably expanding.

The Chip Survey, initiated by the European Commission, predicts a doubling of chip demand by 2030. Ursula von der Leyen, the Commission’s President, has outlined a strategy to propel an advanced European chip ecosystem encompassing production, research, and design.

Objectives of the European Chip Law

The Chip Law will mobilize public and private investments exceeding €43 billion to bolster research in more efficient chips, amplify production capacity, and encourage innovation in design and fabrication. Additionally, a stable supply chain will be ensured, skills shortages addressed, and international partnerships promoted.

In summary, the European Chip Law aims to strengthen Europe’s technological standing and ensure a reliable supply of semiconductors, driving innovation and competitiveness across key industries.

Key Milestones in European Chip Law Approval

The Council of the European Union’s approval of the Chip Law, following endorsement by the European Parliament, marks a significant step in the legislative process.

Furthermore, the Council has greenlit an amendment to the Regulation governing joint enterprises within the Horizon Europe framework. This modification will enable the establishment of a chip joint enterprise, building upon the existing joint enterprise structure for key digital technologies and undergoing a renaming process.

Current Landscape of the Chip Industry

In 2021, global microchip production reached approximately 1.1 trillion units, equivalent to nearly 140 microchips per individual on Earth. The European Union contributed 10% to global microchip production in 2020.

When examining Europe’s market shares in chip production across various sectors, the distribution is as follows:

• Automotive: 27%
• Aerospace, Defense, and Security: 22%
• General Industry: 20%
• Health and Medical Care: 19%
• Appliances: 17%
• Audio and Video: 11%
• Computing and Data Processing Equipment: 5%
• Telecommunications: 4%

Promising projections lie ahead for the market’s future. The chip demand is anticipated to double between 2022 and 2030. Furthermore, the semiconductor industry is predicted to achieve a value of approximately $1 trillion by 2030.

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