EU eases state aid rules in multi-billion euro chip boost as UK risks falling behind
The European Commission is set to ease funding rules in order to pump billions into its innovative semiconductor programme, as it looks to boost the continental chip industry and cut dependence on the US and Asia.
The Commission’s action comes as a global chip shortage and supply chain bottlenecks have created havoc across almost all industries over the past year.
The European Chips Act will “enable €15bn (£13bn) in additional public and private investment by 2030,” Commission President Ursula von der Leyen said in a statement.
“This will come on top of 30 billion euros of public investments already planned from NextGenerationEU, Horizon Europe and national budgets. And these funds are set to be matched by further long-term private investments,” she said, referring to ongoing EU projects.
Crucially, the move mirrors the $52bn (£38bn) U.S. Chips Act aimed at increasing competitiveness with China.
By adapting state aid rules, the EU is allowing for public support for ‘first-of-a-kind’ production facilities across Europe, which hopes to help the bloc double its global market share to 20 per cent in 2030.
However, EU governments were also warned against unfair tactics to attract investments after some smaller nations aired concerns about subsidies favouring the likes of France and Germany.
“Because we cannot just authorise any subsidy where one is higher than the other. We have always been sort of very attentive to the fact that it should not be for one government to try to lure investments in one territory by jacking up the state aid promises,” she said.
The announcement also comes after Nvidia’s $40bn takeover of UK chip designer Arm collapsed this morning.
The British company now plans to IPO after SoftBank abandoned its sale of Arm to the US chipmaker due to regulatory hurdles.
Scott White, chief exec of PragmatIC Semiconductor, told Morning Wire: “The European Chips Act clearly demonstrates that the EU is not afraid to make significant investments in semiconductor manufacturing within its region, whereas in the UK there seems to be a reluctance to ‘back winners’ from our home shores.”
“There is a real opportunity for UK Plc and unique businesses with global differentiation to really scale. Now is the time to make brave choices and show the world the creativity of category-leading UK companies with innovative semiconductor technologies addressing some of the world’s biggest challenges.”