The European Semiconductor Industry Association (ESIA) has urged the European Union to expedite financial support, develop a revised “Chips Act 2.0” package, and appoint a dedicated envoy to advocate for the semiconductor sector.
In a statement, the organization emphasized the need for policies that prioritize competitiveness, enabling the sector to expand and invest further in Europe.
“The adoption of the [current] EU Chips Act has been a fundamental building block,” ESIA said in the statement. “Its implementation and further development will be decisive for the EU’s success in championing the global race for technology leadership. To not lose momentum, ESIA advocates for an immediate ‘Chips Act 2.0’ process.”
ESIA represents major chipmakers like Infineon, STMicroelectronics, and NXP, as well as top equipment producer ASML and research institutions such as imec, Fraunhofer, and CEA-Leti.
Challenges in the current Chips Act
Europe’s existing Chips Act, which came into effect in 2023, aims to secure 20% of the global semiconductor market by 2030.
However, achieving this will require speeding up the approval process for “first-of-a-kind” manufacturing facilities, according to the ESIA.
Manish Rawat, a semiconductor analyst at TechInsights, emphasized that any new Chips Act should prioritize streamlining aid processes to speed up approval and disbursement. Simplifying bureaucratic procedures and setting clear timelines for funding decisions could help minimize project delays.
“Secondly, the act should focus investment on niche areas where Europe has a competitive edge, such as advanced semiconductor equipment and power semiconductors,” Rawat said. “By concentrating resources in these areas, the EU can optimize investments and enhance its market position.”
Strengthening public-private partnerships and incentivizing local supply chain development are also essential steps to reduce reliance on external sources.
“Finally, the ‘Chips Act 2.0’ should include mechanisms for flexibility and adaptability to rapidly respond to industry shifts and geopolitical changes, ensuring that the EU’s strategy remains relevant and effective in the evolving semiconductor landscape,” Rawat added.
Overcoming export restrictions
A significant challenge has been the trade restrictions placed on companies like ASML regarding exports to China. The ESIA has urged a more constructive approach, advocating for incentives over protectionism.
“By curbing sales of advanced semiconductor manufacturing equipment, European companies risk losing substantial revenue streams, which could weaken Europe’s position as a leader in this high-tech industry,” Rawat said. “Moreover, the reduced market size might lead to a slowdown in research and development investments, ultimately hampering innovation within Europe’s semiconductor ecosystem.”
Moreover, these restrictions could trigger retaliatory actions from affected nations, potentially disrupting global supply chains and driving up operational costs for European companies.
“To mitigate these risks, the EU could consider implementing targeted restrictions that allow the sale of certain technologies while safeguarding the most sensitive advancements,” Rawat said. “Another approach could involve shifting from purely restrictive measures to incentivizing the development of secure, exportable technologies.”