The European Union has taken significant steps to secure its chip supply and bolster production and innovation. The Parliament has adopted new legislation aimed at creating a favorable environment for chip investments in Europe, streamlining permitting procedures, and recognizing the critical importance of chips through a highest national significance statute. This legislation also aims to support small and medium-sized businesses, particularly in chip design, to boost innovation in the sector.

To enhance the EU's security of chip supply, the legislation will support projects that attract investment and build production capacity. During negotiations with the Council, Members of the European Parliament (MEPs) secured €3.3 billion for chip-related research and innovation. Additionally, a network of competence centers will be established to address skills shortages and attract talent for research, design, and production in the EU.

To address potential supply problems, a crisis response mechanism will be established. The European Commission will assess risks to the EU's chip supply using early warning indicators in member states, triggering an EU-wide shortage alert. This mechanism will enable the Commission to implement emergency measures, such as prioritizing the supply of affected products or coordinating common purchasing for member states. MEPs have also introduced a mapping tool to identify supply bottlenecks, ensuring the effectiveness of these measures as a last resort during semiconductor crises.

The legislation also includes provisions to strengthen international cooperation with strategic partners and safeguard intellectual property rights. This is to ensure competitive advantages and protection for the EU's semiconductor sector.

Rapporteur Dan Nica emphasized the objectives of the European Chips Act, aiming to strengthen the EU's position in the global semiconductor landscape and address supply chain vulnerabilities exposed by the pandemic. The Act secured €3.3 billion for research and innovation, with a focus on boosting technological capacity and implementing measures to combat potential shortages. Europe is committed to prioritizing strategic autonomy, security, and a favorable business environment in the semiconductor industry.

The legislation was adopted by a large majority in the Parliament and now awaits endorsement by the Council of ministers to become law.

Highlighting Europe's low share (below 10%) of global semiconductor production capacity, a Parliament study emphasizes the aim of increasing it to 20%. The pandemic has also revealed vulnerabilities in global supply chains, with semiconductor shortages causing rising costs for industries, higher consumer prices, and impeding Europe's recovery pace.

The European Chips Act responds to citizen proposals from the Conference on the Future of Europe. It addresses the need for expanding European technology as a strong alternative to foreign counterparts, ensuring supply security, and enhancing manufacturing in Europe. It aligns with proposals advocating for strengthened EU supply chains, strategic investments, and inter-member state cooperation to manage supply chain risks. With over €43 billion of public and private investments mobilized, the Act proactively manages and provides swift responses to future supply chain disruptions.