In recent years, Europe has faced an unprecedented chip shortage due to factors such as the new crown epidemic and challenges arising from political and geographical relations. This scarcity has significantly impacted European sectors including automobiles, energy, communication, health, and security. Recognizing the strategic importance of chips, the European Union has implemented support policies to bolster the chip industry and enhance supply chain autonomy.
In April of this year, the European Parliament, Council of the European Union, and the Executive Committee reached a consensus and approved an updated support policy for the chip industry. Aiming to increase the proportion of globally produced chips made in Europe to 20% by 2030, the EU has committed to investing €43 billion in the semiconductor sector.
On July 11, the European Parliament enacted another plan to secure the EU's chip supply through the promotion of production and innovation, as well as the development of emergency measures to address chip shortages. The legislation is set to support projects that secure the EU's supply chain by attracting investment and increasing production capacities. Simultaneously, the EU will inject €3.3 billion into chip-related research and innovation, establishing a network of competence centers to resolve the chip shortage while attracting new talent in research, design, and production.
The essential nature of chips in key global industrial chains has become increasingly apparent in recent years. According to the European Commission's "European Chips Survey Report" published in August 2022, the global demand for chips is predicted to double between 2022 and 2030. However, Europe comprises less than 10% of the global semiconductor production market, heavily reliant on Asian chip producers.
The European Commission has cautioned that should the global chip supply chain face disruption, Europe's chip reserves in crucial industries, such as automobiles and healthcare equipment, could be depleted within weeks, potentially paralyzing multiple European sectors. Consequently, the EU aims to ensure the safety of the European semiconductor chip supply and decrease reliance on external sources by implementing local support measures for the chip industry.
Nevertheless, the current heightened risk of global semiconductor supply chain decoupling might negatively impact traditional EU industries like automobiles and machinery, possibly prompting another semiconductor supply chain crisis.
As per the latest "European Chip Initiative," its primary objective is to aid large-scale EU semiconductor technology capacity building and innovation for next-generation high-end semiconductor and quantum technology development and deployment, ultimately bolstering EU capabilities in innovative design, system integration, and chip production. This move seeks to facilitate the digitization and green transformation of the European economy.
Regarding the latest chip industry policy, the EU plans to address skills shortages by creating a network of competence centers to attract new talent in research, design, and production. Furthermore, authorities will establish a crisis response mechanism, with the European Commission evaluating member states' semiconductor supply risks and early warning indicators. The EU also aims to strengthen collaboration with strategic partners such as the United States, Japan, South Korea, and Taiwan to maintain supply chain security.
It has been reported that the EU will implement a crisis response mechanism to evaluate the risks faced by the bloc's semiconductor supply. Early warning indicators from member states will be utilized to trigger EU-wide shortage alerts, enabling the European Commission to carry out emergency measures. These could prioritize the supply of products heavily impacted by shortages or facilitate common procurement for member states.
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