Fishing for Chips: Assessing the EU Chips Act
China, the United States, and the European Union (EU) are currently developing strategies for semiconductors aimed at financing R&D and the installation of new factories on their territories, in particular through subsidies. The EU Chips Act, announced in February 2022, represents a real break in Europe's industrial policy.
Key Takeaways:
- Drawing lessons from the ongoing shortages in chip supply, the United States, China, and the European Union are adopting industrial policies in the semiconductor sector in search for supply chain security and economic and technological competitiveness.
- The EU Chips Act in particular represents a notable shift from a long-held opposition to industrial subsidies seen as detrimental to international competition.
- The proposal will support R&D in Europe, provide a legal basis for EU member states to use subsidize domestic semiconductor manufacturing, and facilitate trade measures to intervene in the supply chain in times of crisis.
- This new global subsidy race to build foundries carries the risks of channeling billions in public funds into unprofitable investments, due to the complexity of semiconductor production and risks of overcapacity in certain segments.
- To avoid that, cooperation with like-minded partners of the EU, especially the US, appears necessary but still needs to be worked out.
This briefing is available in two languages:
- in English : Fishing for Chips : Assessing the EU Chips Act
- In French : Marché aux puces : analyse de la loi européenne sur les semi-conducteurs
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Fishing for Chips: Assessing the EU Chips Act
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Artificial intelligence (AI), 5G, cybersecurity, robotics, semiconductors, space... Technology, especially in the digital domain, is now deeply affecting all human activities and, by extension, international relations. The resulting political, strategic, economic and social issues manifest themselves at multiple political scales involving states, international organizations and private companies. The dynamics of international competition and cooperation are transformed.
It is to respond to these challenges that Ifri is launching the Geopolitics of Technology program in the fall of 2020, which builds on the work it already carried out on these subjects for several years.
The program takes a resolutely European approach to international issues related to so-called critical technologies. Its work is organized around four cross-cutting themes:
- Power: redistributions of power caused by new technologies, in particular digital; military and dual innovations; transformations of international competition;
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- Governance: ethical and legal issues; interactions between companies, states, international organizations and users; public-private partnerships and GovTech;
- Society: political and social impacts of technological innovations; risks and opportunities for the future of work, health, the fight against climate change; connectivity and economic development.
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