EU to offer €8.1 billion in aid to make chips, communication tech

EU to offer €8.1 billion in aid to make chips, communication tech

The funding, which was planned by 14 member nations, is expected to attract another €13.7 billion in private investments.

Credit: European Union, 2018

Just weeks after European Union (EU) Commissioner Thierry Breton put emphasis on Europe making its own chips, the EU has announced up to €8.1 billion in public funding for building microelectronics and communication technologies.

The funding, which was planned by 14 member nations under the Union, is dubbed Important Project of Common European Interest (IPCEI) under the EU State aid rules, allowing member states to pool resources and cooperate across borders.

“These member states will provide up to €8.1 billion in public funding. This is expected to unlock another €13.7 billion of private investments. This will bring the total investments in the project to over €21 billion,” EU Executive Vice President Margrethe Vestager said in a statement.

This IPCEI, which is the EU’s largest to date, will see 56 companies across the EU, including startups, large enterprises, and small and medium-sized enterprises, undertake a total of 68 projects, Vestager added.

Some of the companies involved in the IPCEI include Bosch, STMicroelectronics, GlobalFoundries, Orange, and Continental Automotive.

As part of the IPCEI, the European Chips Act is expected to support research, development, and innovation further, Vestager said, adding that the Act will help fill the gap from research to production by developing design capacities and pilot lines.

The direct result of the IPCEI, according to the Union, will see the creation of 8,700 highly skilled jobs. The first direct products of the projects are expected to hit the market by 2025, it added.

However, Vestager warned that the IPCEI will ensure that taxpayers' money is wisely spent and the subsidy or aid will be “limited to the amount necessary for the project actually to go ahead.”

“In addition, large beneficiaries will return part of the aid received if their projects turn out to be more profitable than foreseen. We call this a claw-back mechanism,” Vestager said.

Further, the innovations arising out of the IPCEI will be shared by member states.

EU’s decision to aid chip-making and communication technologies such as 5G and 6G comes at a time when the US and China are locked in a battle for supremacy over chip manufacturing.

Both nations have tried several strategies including partnering with other nations and banning the use of chips manufactured by companies that are headquartered in the other nation.

Last month, the UK, which is no longer a part of the EU, faced criticism over the amount of funding after it announced a £1 billion chip manufacturing strategy.

Tags semiconductorcommunication technology

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