EU Council gives its final approval to the Chips Act

On 25 July 2023, the EU Council approved the regulation to strengthen Europe’s semiconductor ecosystem, better known as the “Chips Act”. This was the last step in the decision-making process.

Chips or semiconductors serve as the DNA of modern technology, being integral components in everyday life and vital for the development of future technologies. Often unnoticed, chips are ubiquitous, with approximately 160 chips present in a single smartphone and up to 3500 chips in a hybrid electric car.

Currently, Europe is too dependent on chips produced abroad, which became even more evident during the COVID-19 crisis. The chip demand is projected to double from 2022 to 2030, transforming the chips market into a trillion-dollar industry by the end of the decade. This significant growth involves numerous actors worldwide engaged in chip manufacturing, working together and trading products within complex and vulnerable supply chains. With chip production involving over 1000 steps, any disruption to the process can lead to shortages and potentially result in severe consequences.

The Chips Act has the objective of enhancing the EU’s security of supply, resilience, and technological sovereignty in the field of chips by reducing its vulnerabilities and dependencies on foreign actors. The Chips Act’s primary goal is to foster large-scale capacity building and innovation within the EU, leading to greater self-sufficiency and improved responsiveness to supply crises. The program aims to attract €43 billion in combined public and private investments (including €3.3 billion from the EU budget) with the objective of increasing the EU’s current global market share in semiconductors from 10% to a minimum of 20% by the year 2030.

Following the Council’s approval of the European Parliament’s position, the legislative act has been adopted. Once signed by the President of the European Parliament and the President of the Council, the regulation will be published in the Official Journal of the European Union and will come into effect on the third day after its publication.