FIW Policy Briefs | 2023-02

FIW-Policy Brief No. 58 “The European Chips Act”

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Decorative symbol photo shows electronic circuits of a motherboard.

The EU Chips Act is a new policy instrument that aims to increase Europe‘s autonomy in the area of microchips. The Chips Act includes funding for research and development, investments in new chip production capacities, and monitoring of the chip market to anticipate supply shortages. The total funding for the act is 43 billion EUR, with 11 billion EUR allocated for R&D and innovation. Most of the funds will come from member states and companies.
The EU Chips Act has been criticized for its structure, its funding, and its strategic orientation. Observers argue that the funding may be insufficient for the act’s ambitious goals, that it may focus on the wrong technologies, and that the goal of technological sovereignty in chips is unrealistic. Additionally, similar programs in other countries could lead to an oversupply of chips. However, given the current global tensions and the potential for disruptions to chip supply from Asia, there may be no alternative to public support for ramping up chips production in Europe.