Legislation aimed at boosting the manufacturing and development of semiconductor technology across the EU has come into effect.

The European Commission says that semiconductors are central to the modern digital economy, but European industry has been hit by supply shortages.

Used in products ranging from smartphones and cars, semiconductors are also part of critical applications and infrastructure for healthcare, energy, defence, communications and industrial automation.

The European Chips Act is part of a plan to double to the EU’s global market share of the semiconductor market to 20% by 2030.

State aid

The act is designed to strengthen manufacturing activities, stimulate design, and support scale-up and innovation in the sector.

It includes an initiative – backed by €3.3 billion of EU funds – designed to bridge the gap between research and industrial activities.

A second pillar of the act is aimed at attracting investment and boosting production capacity. The commission has indicated that state aid may be granted to new facilities.

Monitoring supply

A third element of the legislation sets up a co-ordination mechanism between member states and the commission for strengthening collaboration, monitoring the supply of semiconductors, estimating demand, anticipating shortages and, if necessary, triggering the activation of a crisis stage.

Věra Jourová (commission vice-president, pictured) said that Europe must secure its part in a global race for leadership in chips.

“In the EU we have great talent and research, but we are missing out in linking those advantages with production and roll-out of the technology,” she stated, adding that the new act would support investment and research facilities so that Europe could become “an innovation powerhouse”.