Leading MEP pushes for geographical balance in the Chips Act

*This article was updated to clarify the relationship between the Chips Act and the EU’s state aid rules.

The European Parliament’s rapporteur Dan Nica seeks to obtain “a clear added value for all the member states” in his draft report, shared on Monday (26 September) and obtained by EURACTIV.

The leading lawmaker’s text addresses widespread concerns that the Chips Act would only benefit large countries with deeper pockets to subsidise expensive chipmaking facilities, the so-called mega fabs.

“The [Chips for Europe] Initiative is also intended to strengthen the economic, social and territorial cohesion of the Union and at reducing disparities between the levels of development of member states and of the various regions within the Union, creating a clear positive impact on several member states,” reads the draft report.

The involvement of the industry has also been strengthened via the Alliance on Processors and Semiconductor Technologies, which was given a stronger advisory role on matters such as the certification schemes and the triggering of the emergency status.

The draft report of the industry committee also covers the definition of mega fabs, the monitoring of supply chain vulnerabilities, the formation of consortia, quantum computing, skills, international cooperation and intellectual property rights.

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Mega fabs

The Chips Act provides a special regime for first-of-a-kind facilities, mega fabs able to advance Europe’s technological status and to receive public subsidies in accordance with the EU’s state aid rules.

The definition of first-of-a-kind was extended to include product innovation and contribution to the EU and global supply security. In addition, the scope was broadened to processing raw materials, manufacturing materials or equipment needed in semiconductors manufacturing.

The Commission would have to issue a decision within six months after receiving an application for a first-of-a-kind facility. The application of state aid support schemes to support such mega fabs should also be assessed “in a timely manner.”

Crisis stage

In case of a supply crisis, these mega fabs might be ordered to prioritise provisions of chips to certain critical sectors. The automotive sector has been added to the list of critical sectors alongside defence and any sector related to public health, safety and security.

At the same time, the rapporteur stressed in the accompanying note that this part of the proposal was met with criticism and that his amendments were a mere first step as the text could be further improved.

In particular, the responsibility for monitoring the semiconductor value chain was moved from the hands of the member states to the Commission. A standing subgroup of the European Semiconductor Board, a body that will gather the national governments, might be established to assess the effectiveness of such monitoring twice per year.

A new article has been added prescribing how the Commission should map the global semiconductor value chain focusing on potential risks and market dynamics. The mapping result would be available to the member states in an information platform.

European Chips Infrastructure Consortium

For the European Chips Infrastructure Consortia, the rapporteur suggested that an EU country can only host one statutory seat, even if it is part of several consortia, to prevent large countries from capturing the lead of all the projects.

Nica also proposed that the establishment of a consortium is not limited to member states but any public or private entities from at least three countries. In addition, the annual report of the consortia would have to be reviewed by independent experts against pre-set indicators.

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Skills

The leading MEP also included several references to addressing the skills shortage to develop, attract and retain talent in all member states. The European Competence Centres’ mandate was extended to promoting STEM education from primary school to post-doctorates.

The draft report empowers the EU executive to establish an exchange programme for researchers specialised in semiconductor engineering. Moreover, the first-of-a-kind facilities would have to commit to supporting EU talent pipelines with plans for developing educational and skills training.

Budget

The rapporteur stressed that, since chip manufacturing is a highly capital-intensive endeavour, the Chips Act should receive fresh budgetary resources and not draw them from existing programmes, as has so far been the case for the EU’s flagship research programme Horizon Europe.

However, this part is meant to send a political message as Nica did not present any budgetary amendment but pitched putting the Chips initiative on the table for the mid-term review of the Multiannual Financial Framework.

Quantum technology

The rapporteur introduced references to the development and manufacturing of quantum chips to facilitate the miniaturisation of quantum devices and their integration into larger systems. The text adds pilot lines dedicated to quantum chip design, manufacturing and testing as part of a broader European Quantum strategy.

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International cooperation

The draft report includes a new international cooperation article requiring the Commission to engage with relevant third countries to prevent the next chip shortage. Collaboration in the field of semiconductors would also become a key dimension of trade agreements.

Intellectual Property

A new article has been introduced to protect Intellectual Property rights and trade secrets related to chips to increase “legal certainty for private investors and encourage investments in state-of-the-art chip design.”

[Edited by Alice Taylor]

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