EU unveils a $49 billion plan to address chip shortages

Along with a US effort to bolster semiconductor production, the Chips Act aims to prevent future scarcity.

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Some jurisdictions are looking into ways of boosting semiconductor production amid the global chip shortage that's impacting all kinds of sectors. The European Union, for one, wants to become a bigger player in the field and it announced a $49 billion plan to help it get there. The EU's executive branch has revealed the European Chips Act, which, in part, aims to reduce the bloc's reliance on components from Asia.

The EU believes the plan will allow Europe to harness its strengths in areas like research and manufacturing, while addressing what it says are some of the region's weaknesses. The legislation aims to bolster research and development, boost production and monitor the supply of semiconductors.

The plan, which requires approval from member states and the European Parliament, involves public and private investments and looks to mitigate any future disruption to chip supply chains. The bloc also wants to double its share of the global semiconductor market to 20 percent by 2030.

“The European Chips Act will be a game changer for the global competitiveness of Europe's single market," European Commission president Ursula von der Leyen said in a statement. "In the short term, it will increase our resilience to future crises, by enabling us to anticipate and avoid supply chain disruptions. And in the mid-term, it will help make Europe an industrial leader in this strategic branch."

The introduction of the Chips Act follows an effort to bolster chip production in the US. This month, the House of Representatives passed the America COMPETES Act, which earmarks $52 billion in subsidies for semiconductor manufacturing as well as almost $300 billion for research and development. President Joe Biden plans to sign the bill into law should it pass through the Senate.

Legislation on both sides of the Atlantic could lead to a battle between Europe, the US and Asia to attract chip manufacturers. If legislators approve them, the plans should ultimately boost global semiconductor production, which will benefit manufacturing process for things like medical equipment, electric vehicles and game consoles.