The EU might ease restrictions on state aid for the semiconductor industry, following French calls for a more interventionist approach to overcoming the global supply crisis.
At a meeting today, the European Commission might agree to a new approach to state-aid policy that would allow governments to subsidize cutting-edge chip fabrication plants in Europe, a policy paper said.
Given the importance and difficulty of securing chip supplies, the commission “might envisage approving public support to fill possible funding gaps in the semiconductor ecosystem for the establishment in particular of European first-of-a-kind facilities,” the paper said.
Photo: EPA-EFE
The shortage of computer chips hampering European manufacturers this year has highlighted the limits of the bloc’s technological muscle.
The supply-chain crisis has also opened up a bitter debate between larger member states, led by France calling for more state intervention to help companies compete with the US and China, and those who want to stick with the EU’s free-market approach.
European Commissioner for Internal Market Thierry Breton last week labeled those opposed to more state involvement as “naive.”
European Commissioner for Competition Margrethe Vestager, one of the most high-profile proponents of constraining government interventions, has cautioned against large subsidies, saying that “self-sufficiency is an illusion.”
The mention of “first-of-a-kind facilities” is a victory for the French, who have called for the bloc to build cutting-edge chips in the region.
Commissioners opposed to this development have been insisting that funds needed to be focused on less-advanced chips where shortages have affected manufacturing in Europe.
European Commission President Ursula von der Leyen on Monday said that Europe needs to improve chip design and research, build up production capacity and create closer cooperation with the industry.
“Increased European production of chips is good for Europe, as this means less dependence on a few East Asian countries,” she said during her visit to the Eindhoven, Netherlands-based ASML Holding NV advanced semiconductor factory.
The eurozone is to unveil its “European chips act” in the first half of next year, as part of its strategy to boost semiconductor production. One of the goals is to reach 20 percent of global market share by 2030.
France and Germany have been at the forefront of pushing for exemptions to support European companies against US and Chinese rivals, but those opposed to the initiative say that it would give an unfair advantage to larger member states that have more money to boost national companies.
Critics have said that easing state-aid rules could undercut Europe’s position at the WTO, where it is pushing to reign in the massive subsidies that China supplies to its companies.
Last week, six member states, including the Netherlands, Denmark and Ireland, sent a letter to the commission, opposing government funding being used for mass production or commercial activities.
“Excessive and non-targeted use” of strategic funds for key industries would lead to “subsidy races and unfair competition within the EU,” the letter said.
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