Microchip supply shortages during the COVID-19 pandemic meant that car production fell by a third in some EU member states. The medical technology industry suffered from extended lead times for the same reason. These shortages, along with recent geopolitical tensions, have prompted leading industrial nations to reconsider their position in the semiconductor supply chain. There is also rising awareness that microchips are key enablers for the EU’s digital and green transition and for future strategic value chains.
Microchips (also known as semiconductors) are the building blocks of our modern technological infrastructures. They are found in all aspects of our daily lives, from smartphones and cars to critical applications for healthcare, energy supply, mobility, and communication, including satellites and advanced military devices. They are also vital for artificial intelligence and data processing.
Over the last 20 years, the EU’s share in global manufacturing capacity across all types of microchips has fallen significantly, from 24 % in 2000 to only 9 % in 2020. The EU is lagging behind Taiwan, South Korea, China, Japan, and the United States, a situation that might put EU strategic independence at risk. Most leading world economies have adopted national policies related to the semiconductor industry, with considerable packages of investments or other incentives. These include a programme worth some €420 billion in South Korea by 2030, €260 billion in the US from the CHIPS and Science Act over the next 10 years, or €185 billion in China from the “Made in China 2025” strategy for 2015-2025.
This is the context for the EU Chips Act presented by the European Commission in February 2022. The Act retains the target set by the EU’s Digital Compass of doubling the EU’s global share of cutting-edge and sustainable chip production to at least 20 % by 2030. It also highlights the need to address strategic dependencies in the semiconductor sector. The Chips Act entered into force on 18 September 2023 and aims to mobilise €43 billion of policy-driven public and private investments by 2030.
Is the EU’s industrial policy effective in strengthening the EU’s strategic autonomy of the semiconductor industry? That is the main question to be tackled by our audit and we expect to publish our report at the beginning of 2025.
NEWS2024_01_NEWSLETTER_01 | European Court of Auditors (europa.eu)