The European Union is preparing to seal a broad agreement this week on sweeping changes to its chip industry policy. Leaders hope to accelerate chip production, aiming to strengthen Europe’s role in the global semiconductor market and reduce its dependence on foreign suppliers.
Chips are a cornerstone of modern technology. Yet the EU currently lacks sufficient capacity to design and manufacture all categories of chips, from mature to cutting edge. Czech Industry Minister Josef Sikela highlighted the urgency of diversifying away from heavy reliance on Asia and the United States, stressing that Europe must build domestic capabilities that are resilient to global disruptions.
The agreement reached by the Community Industry Ministers will provide the foundation for negotiations with the European Parliament on the final text of the law. The measure targets both research and the construction of factories capable of producing semiconductors across the spectrum, including highly advanced devices and sectors with substantial, proven industrial use such as automotive electronics.
The proposed law rests on three pillars. First, a joint initiative known as Chips Initiative for Europe will drive research, technology development, and the consolidation of capabilities in semiconductor design and manufacture. Second, a robust investment framework aims to attract capital and secure a stable supply chain. Third, a crisis mechanism will enable coordinated procurement and priority access to essential supplies when shortages occur.
Member states, aligned with the European Commission’s vision, propose a joint venture with a budget of 3.3 billion euros drawn from Horizon Europe for research (1.65 billion euros) and the Digital Europe program to fund capacity development. This funding plan is designed to accelerate the growth of industrial capabilities across the continent.
Some capitals have pushed back on adding another 400 million euros from Horizon Europe, arguing the program is primarily research oriented. They will therefore need to bridge the funding gap through negotiations with the European Parliament to ensure sufficient resources for both R&D and industrial deployment within the global budget framework. The international outlook remains clear in statements accompanying the agreement, underscoring the balance between ambition and fiscal prudence.
The overarching objective is to mobilize a total of 43 billion euros in public and private investment to build a robust European semiconductor ecosystem that can sustain critical supply lines for years to come. This is not just about technology; it is about strategic autonomy and the ability to compete in a high-stakes global market.
Spain, as an initiator of the case, underscored the importance of clearly distinguishing funding streams for different targets. Industry Minister Reyes Maroto explained that resources must be allocated so research remains adequately funded while ensuring industrial capacity is not neglected. The emphasis was on creating a favorable business environment that attracts more European and international companies to establish or expand manufacturing in Europe, supplying the region with the devices needed today and tomorrow.
During the meeting, ministers stressed the role of industrial autonomy as a key driver for economic sovereignty. They highlighted that the law should bolster a climate where European industries can thrive without overreliance on external actors, a priority in a context of global competition and geopolitical tension calls.
The ministerial agreement also clarifies the framework for a future European Chips Infrastructure Consortium. It confirms openness to a range of operators and cooperation models, including one-of-a-kind semiconductor factories, and it adapts the scope of emergency measures to evolving circumstances. This clarifies which sector will receive priority in a crisis and how penalties for noncompliance will be handled, while allowing greater participant input in decision-making processes.
German Industry Minister Sven Giegold warned that crisis instruments must be used with care. He noted that emergency measures should never be disproportionate, as heavy-handed actions could undermine Europe’s attractiveness to investors and erode confidence in long-term plans for a thriving semiconductor sector. The delicate balance between rapid response and steady, predictable policy remains a central theme as negotiations continue. (Source attribution: European Commission)