EU Forms New Chip-making Ecosystem To Reduce Dependency From Asia And US

JAKARTA - The European Commission announced their plans on Wednesday, September 15 to create a new chip-making "ecosystem" to keep the European Union competitive and self-sufficient in the wake of a global semiconductor shortage. They consider it dangerous to only rely on suppliers from Asia and the US.

The United States last year announced the CHIPS for America Act aimed at increasing its ability to compete with Chinese technology.

“Digital is a make-or-break issue”, said EU Commission President, Ursula von der Leyen, in a policy speech at the European Parliament in Strasbourg, Wednesday, September 15.

"We will present the new European Chips Act. The goal is to jointly create a sophisticated European chip ecosystem, including for production. It ensures the security of our supply and will develop new markets for innovative European technologies", she said.

Industry Commissioner Thierry Breton said chips are more than just a key component for automakers, smartphone makers, and video game players.

"The race for the most advanced chips is a race for technology and industry leadership", he wrote in a blog post.

Breton said the European Chip Act would cover research, production capacity, and international cooperation, and that the bloc should consider setting up a European Semiconductor Fund specifically.

Semiconductor shortages have posed one of the biggest risks to an EU revival from the effects of the COVID-19 pandemic. The EU Commission last year announced plans to invest a fifth of its 750 billion euros COVID-19 recovery fund in digital projects.

Von der Leyen laments the EU's dependence on Asian-made chips and its reduced share in the supply chain, from design to production capacity.

However, hurdles to building European chip capabilities include gaining access to rare earth minerals outside the block and a reluctance by companies to make massive investments unless they can run factories at full capacity to increase returns.