EU nations agree to back £38.6bn chip manufacturing project

EU envoys have unanimously agreed to a €45bn (£38.6bn) plan to finance silicon semiconductor manufacturing, with the aim of reducing the bloc’s dependence on US and Asian manufacturers.

European Union nations have backed the European Commission’s proposal to boost domestic semiconductor production amid a global shortage.

The deal was backed by EU ambassadors, people familiar with the matter told Reuters.

This is the last move of the saga of European french fries lawpresented earlier this year, which aims to strengthen European competitiveness and resilience in semiconductors, with the aim of doubling the current EU market share to around 20% of global semiconductor production by 2030 .

Currently, Europe produces 8% of the world’s share of semiconductors.

The deal would expand the reach of chip plants considered “first of their kind” and eligible for state aid, but stops short of allowing all automotive chips to qualify for the funds, which some countries had applied to the beginning of this year.

The latest version of the legislation also adds more safeguards for when the EU’s executive arm can trigger an emergency and intervene in companies’ supply chains. It would be too enable government subsidies for a wider range of chips that bring innovation in computing power, energy efficiency, environmental benefits and artificial intelligence.

However, some points of the legislation could still be criticized, especially as regards the allocation of EU funds.

In the latest consensus, the nations of the bloc agreed not to reallocate €400 million of research funds from the Horizon Europe research program for semiconductors, following concerns that this money will only benefit countries with large manufacturing infrastructures.

The proposal still needs to be debated and approved by the European Parliament before it can enter into force. However, a number of companies have already expressed interest in building new semiconductor sites in Europe, including Intel Corp., GlobalFoundries Inc., STMicroelectronics NV and Infineon Technologies AG.

These companies are eager to increase their manufacturing capabilities to meet the growing demand for semiconductors, which has it has wreaked havoc in many industries that rely on this technology, including automakers, healthcare providers, and telecom operators. Big companies like Apple and Ford have been forced to do it stop production processesfacing billions of dollars in losses on projected sales.

Earlier this year, Raimondo warned that the global chip crisis it should last until 2023 and possibly longer as production still struggles to keep up with demand.

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