Brussels quarrels over semiconductors rules
EU commissioners in disagreement over regime to boost Europe’s chip sector
Chipped Chips Act
A fierce battle has broken in Brussels over plans to equip the European Commission with sweeping powers to address supply crunches in Europe’s semiconductor industry, write Andy Bounds, Mehreen Khan and Javier Espinoza in Brussels.
EU officials have told Europe Express that proposals in the forthcoming European Chips Act that would give regulators powers to ensure components are prioritised for the domestic production during a crisis are being heavily contested within the commission.
The EU’s industry commissioner, Thierry Breton, has been championing the new powers as part of proposals aimed at bolstering the EU’s semiconductor industry. Last week, he told reporters the forthcoming act, which was due for publication on Tuesday, would involve tools to help “shore up our security of supply” — referencing emergency US powers to prioritise domestic needs.
Chip supply shortages have hit the manufacturing of cars, aircraft and other products as industry rebounds from the pandemic. The EU wants a bigger share of the global chips market as part of its quest for “strategic autonomy”. It has 10 per cent of global production and wants to reach 20 per cent by 2030, with demand forecast to double in that time. It also wants to be able to make the most advanced chips.
European Commission president Ursula von der Leyen, who has strongly backed the Chips Act, yesterday called it a “game changer” and said it would leverage up to €12bn from the private sector and public money. In addition, member states had already committed €30bn, she said.
Among the companies that the EU is seeking to woo with subsidies is Intel, which is planning to announce a new chipmaking factory in Europe. One of the ideas that is still contested in the draft plans is to loosen state EU aid rules to allow the bloc to compete with rivals which offer public subsidies of up to 50 per cent of the cost of a new plant.
Von der Leyen said the EU would be “adapting” its state-aid rules, under a set of strict conditions, to permit public support for European “first of a kind” production facilities.
Margrethe Vestager, the EU’s liberal competition commissioner, has pushed back against the idea that semiconductor investment will require a loosening of the EU’s state-aid rules, arguing that the current regime is equipped to help promote investment.
Asked whether state rules should be changed, Vestager told the Financial Times: “No. We cannot tweak them, we already have provisions in the treaty that enable that support.” She also told the Digital Europe forum yesterday that “self-sufficiency is not our goal” and would cost €240bn-€320bn to achieve.
Officials said there was a clash between senior commissioners about the level of EU subsidies needed for the sector with some fearing that it would lead to a glut in international supply. The US, China and Taiwan all heavily support their microchip industries.
“Can we hope to compete on subsidies with China? And where are the billions coming from?” one official asked. Senior officials will meet today to settle their differences ahead of the publication of the rules next week.