European Chips Act (semi-conductors)

In “A Europe Fit for the Digital Age”

PDF version

The European Commission put forward on 8 February 2022 a ‘European chips act package’ focused on the strategic objective of increasing the resilience of the EU’s semiconductor ecosystem and increasing its global market share.

The package includes a proposal for a Regulation of the European Parliament and of the Council establishing a framework of measures for strengthening Europe's semiconductor ecosystem (Chips Act) (to be adopted by the co-legislators under the ordinary legislative procedure). The proposed framework for reinforcing the EU chip sector is based on three pillars: 

  • Pillar 1: the 'Chips for Europe Initiative', supporting large-scale technological capacity building and innovation across the EU. The actions under this Initiative will be primarily implemented through the Chips Joint Undertaking, i.e. the amended and renamed Key Digital Technologies Joint Undertaking (hence the proposal for a Council Regulation, see below).
  • Pillar 2: a framework to facilitate the implementation of projects aimed at ensuring the EU's security of supply, by attracting investments and enhancing production capacities, via so-called 'first-of-a-kind' Integrated Production Facilities (vertically integrated production facilities) and Open EU Foundries (offering their production capacity to other industrial players). 
  • Pillar 3: a coordination mechanism between the Member States and the Commission for monitoring the supply of semiconductors and crisis response to semiconductor shortages, estimate demand, anticipate shortages, trigger the activation of a 'crisis stage' and act through a dedicated toolbox of emergency measures (the Commission may oblige undertakings to provide information concerning production capabilities, production capacities, etc., and Integrated Production Facilities and Open EU Foundries to accept an order of crisis-relevant products (‘priority rated order’), or act as a central purchasing body to buy crisis-relevant products).

A European Semiconductor Board, composed of representatives of the Member States and chaired by a representative of the Commission, would advise the Commission.

At the Competitiveness Council (internal market and industry), the Chips Act was presented by the Commission on 24 February 2022, and then debated on 9 June. The Council adopted its position ('general approach') on 1 December 2022.

In the European Parliament, the lead Committee is the Committee on Industry, Research and Energy (ITRE). ITRE's draft report was released on 21 September 2022. The draft report was presented and discussed during the ITRE meeting of 13 October 2022. Following the debate, ITRE MEPs tabled 688 additional amendments. In total, in ITRE, 804 amendments were tabled to the Commission proposal. The final vote in ITRE took place on 24 January 2023. On 15 February 2023, Parliament approved the decision of the ITRE Committee to enter into interinstitutional negotiations with the Council. Parliament's position is the Committee's report. 

Provisional political agreement was reached between the co-legislators on 18 April 2023, after four trilogues (28 February, 9 March, 30 March and 18 April 2023). For a detailed description of the final agreement, please refer to the EPRS legislative briefing of 23 June 2023 mentioned in the 'further reading' section.

The provisional political agreement was endorsed in Council by the COREPER on 10 May 2023, and in Parliament by the ITRE Committee on 23 May 2023. The Parliament adopted its position at first reading on 11 July 2023. The Council gave its final approval of the new Regulation on 25 July 2023.

The Chips Act (Regulation (EU) 2023/1781 of the European Parliament and of the Council of 13 September 2023 establishing a framework of measures for strengthening Europe’s semiconductor ecosystem and amending Regulation (EU) 2021/694)) was published in the Official Journal of the EU on 18 September 2023. 

References:

Further reading

Author: Guillaume Ragonnaud, Members' Research Service, legislative-train@europarl.europa.eu

As of 20/03/2024.