The European Union on Tuesday agreed to a chip subsidies plan worth 43 billion euros ($47 billion) aimed at attracting top chipmakers to build factories in the bloc and doubling its share of global output to 20 percent by 2030.
However, industry experts warn that the relatively modest budget, lack of a domestic market for cutting-edge chips, and regulatory red tape could hinder efforts to catch up with the United States and Asia.
The legislation aims to ensure critical component supplies in the wake of COVID-19 lockdowns that caused significant shortages and reduce the EU’s reliance on Asia, where Taiwan accounts for over 60 percent of global chip production.
Despite the interest from Intel and other companies, Richard Windsor of Radio Free Mobile warns that Europe’s subsidies are likely to be below those available in Asia, highlighting that semiconductors are currently more about geopolitics than economics.
While the EU Chips Act is a good start, the EU must play to its chipmaking strengths and address regulatory issues to compete with Asia, says Christopher Cytera of the Centre for European Policy Analysis.