A further step towards the adoption of the European chip law – known internationally as the EU Chips Act – has been taken: All political groups of the Committee for Industry, Research and Energy (ITRE) have agreed on a joint draft and thus decided the position of the EU Parliament.
From February 2023, the trilogue between Parliament, the European Council and the EU Commission will begin, which must find a common denominator. Companies have long been scratching their heads because the promised funding will only flow once the project has been finalized. Intel is at the forefront with the Magdeburg Megafab for at least 17 billion euros and an Italian packaging plant for 5 billion euros. But Infineon also wants to build for 5 billion euros in Dresden and Wolfspeed together with ZF for 3 billion euros in Saarland.
In a press conference, MEP Bart Groothuis emphasized that the European Union was making progress on the chip law “at the speed of light”. It is important to find a balance between fair funding and implementation as quickly as possible.
Innovations in the draft law
The EU Parliament’s Chip Act draft is largely based on the EU Commission’s proposal, but contains some important changes. In the future, all companies in the value chain for semiconductor components should be eligible for funding. This also includes small companies, provided they develop innovative technologies. Originally, only the big industrial fish like Intel were supposed to receive subsidies.
A second amendment prohibits the transfer to China of intellectual property (IP) created through the EU Chips Act. New process technologies, for example, should therefore not be shared with Chinese chip manufacturers such as SMIC.
Definition semiconductor crisis
The planning of the EU Chips Act began during the acute semiconductor crisis of the past few years with the elementary goal of preventing or mitigating future semiconductor crises. For the first time, the EU Parliament has included a definition of what such a semiconductor crisis actually is in its own draft. The draft is available heise online. Here is our translation (you can find the English original below):
16a) “Semiconductor crisis” means the existence of a serious and imminent threat to the citizens and to the functionality, security and defense of the critical infrastructure, the economy and the institutions of the Union due to concrete and reliable indications of a serious and exceptional disruption in the semiconductor supply chain.
The semiconductor crisis prevents the delivery, repair or maintenance of essential products within the semiconductor supply chain, potentially leading to a significant shortage of semiconductors, intermediates or raw materials or processed materials, with the potential to have severe, extraordinary and lasting effects on the functioning of the (…) critical sectors would have.
17) “Crisis-Related Product” means semiconductors, intermediates, and raw and processed materials needed to manufacture semiconductors or intermediates affected by the semiconductor crisis and critical to the resolution of the semiconductor crisis.
Critical sectors are:
- financial market infrastructure
- drinking water supply
- Digital Infrastructure
- Public administration
- space travel
- Production, processing and distribution of food
(16a) ‘semiconductor crisis’ means the existence, based on concrete and reliable evidence of a serious and immediate threat to citizens, and to the functioning and security and defence of the Union’s critical infrastructure, economy, and institutions, of a serious and extraordinary disruption in the semiconductor supply chain, thus preventing the supply, repair or maintenance of essential products within the semiconductor supply chain, which has the potential to cause significant shortages of semiconductors, intermediate products or raw or processed materials to the extent that it would have a serious, extraordinary, and detrimental effect on the functioning of the critical sectors (…).
(17) ‘crisis-relevant product’ means semiconductors, intermediate products, and raw and processed materials required to produce semiconductors or intermediate products, that are affected by the semiconductor crisis and are of crucial importance to remedy the semiconductor crisis.
The semiconductor committee to be founded with the EU Chips Act is to develop a methodology for early warning indicators and to declare a semiconductor crisis in an emergency. A handful of instruments would then be available to combat this, including the possibility of distributing compulsory orders for the production of certain semiconductor components to chip manufacturers within the EU.
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