EU Agrees with $44 Billion Plan to Fund Semiconductor Production, Reduces Reliance with US and Asian Manufacturers

A $44 billion plan (€43 billion) was agreed to push by the European Union nations to fund the bloc's own semiconductor production. Through this, 27 countries will be reducing their reliance on manufacturers from the United States and Asian countries. A meeting in December will be conducted for this plan to be debated with the European Parliament before it becomes law.

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BRUSSELS, BELGIUM - OCTOBER 21: The Berlaymont building, the headquarters for the European Commission, is unveiled October 21, 2004 in Brussels, Belgium. Berlaymont, originally built in 1967 but abandoned in 1991 after asbestos was discovered throughout the structure, was finally unveiled after a long delayed 13 year redevelopment. The building is expected to re-welcome the EU commission on November 1.

EU Chips Act

An agreement from the nations of the European Union was settled to continue, as the bloc allocates funding worth $44 billion (€43 billion) for its plan to jump-start its own semiconductor production.

According to a report from Reuters, the European Commission's proposal was unanimously supported by the separate ambassadors.

Through this, the bloc will be reducing its reliance on countries such as the United States and China, when it comes to chip manufacturing. Adding to this is the expansion of its scope regarding chip plants and its quality for state aid that secures the bloc when an emergency was triggered and occurs in supply chains.

For this plan to push through, ministers of the European Union are set to meet on December 1 to talk about this matter and to stamp the chip plan. This will still be needed to debate by the European Parliament next year before it formally became a law.

This proposal was rooted when the chip shortage was experienced around the world that affected automakers, health care providers, and telecom operators.

As the EU hopes aims to achieve a 20% share of global chip capacity for the next eight years, they introduced EU Chips Acts earlier this year which will fund the semiconductor industry with a certain budget ($44 billion, to be exact), that will be allocated for both research and production.

However, some EU members were questioning the use of EU funds regarding its plans for allocations. On Wednesday, Bloomberg reported that the members agreed to reallocate $400 million of research funds for semiconductors that were raised by countries with small chip industries.

According to the report, this money will only benefit countries like Germany which is considered huge in the industry, as they tend to have larger operations.

New Manufacturing Sites

Although this plan is still not finalized and will not be ready to launch until next year, new semiconductor manufacturing sites have already been announced by several companies to start production. These include Intel Corp., GlobalFoundries Inc., STMicroelectronics NV, and Infineon Technologies AG.

With a $61.5 billion reported revenue last year, Taiwan Semiconductor Manufacturing Company (TSMC) is the largest contract chip manufacturer in the world. South China Morning Post reported that 60% of semiconductors around the world are produced in Taiwan, which resulted in developing tech conflict between China and Western countries.

This might be the reason why the European Union has agreed unanimously as Taiwanese semiconductor producers will be finding themselves in the middle of this conflict.

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Written by Inno Flores