The European Union or EU is now looking for ways to fix the ongoing supply chain problem that has caused shortages in chip production. The EU will be investing in chip production to be less dependent on foreign firms.

EU to Invest in Chip Shortage

The European Commission, the executive branch of the EU, announced a new European Chips Act on Feb. 8 that will enable $17.11 billion in additional investments. The European Chip Act will continue to add public and private investments until 2030, according to The Wall Street Journal.

The investment will be added on top of the $35 billion public investments that had been earmarked. Ursula von der Leyen, the European Commission president, said that the pandemic has affected the supply chains of chips and exposed its vulnerability. The shortage of ships has slowed down the recovery of the tech industry.

In the wake of the coronavirus pandemic, the tech industry has struggled, especially automakers. The chip supply chains were heavily impacted, and it resulted in limited access to technology, according to The Verge.

Also Read: Global Chip Shortage Forces Canon to Sell Printer Cartridges Without DRM Chip 

Chips are used for different purposes, like car manufacturing, smartphone manufacturing, laptops, computers, and even household goods.

Leyen said that they have laid out their 2030 goal. They aim to increase the global market share of chips production by up to 20% in Europe. Right now, the global market share is at 9%.

Increasing chip production in the EU was one of the main promises that Leyen made last year when he addressed lawmakers.

On Feb. 8, the commission announced its intention to adjust state aid rules in order to support public investments in chip production, according to TechCrunch.

However, for the project to get public funding while adhering to state aid rules, it needs to show that an equivalent facility does not exist already.

The proposals have yet to be approved by European lawmakers. Luckily, the proposals were presented just when the EU was looking to help the tech industry.

The EU wants to focus on digital sovereignty, meaning they will create the technology to create semiconductors and no longer rely on foreign technology and foreign companies.

The concept of digital sovereignty has gained more support in Europe in the past few years amid tensions between the United States and China.

For now, a massive bulk of the world's chip production is from Taiwan and China.

Analysts at ING said in a note that if Europe wants to control its own tech industry, it has to be involved in the design and innovation of artificial intelligence systems.

US on the Global Chip Shortage

The EU is not the only one that wants to solve chip shortages. On Feb. 6, the US Congress passed the Chip Production and Supply Chain Infrastructure under the COMPETES Act of 2022.

The COMPETES Act of 2022 aims to increase the production of semiconductors and solve its shortage in the United States.

Also, it aims to compete with China in its dominance in global chip production. The US will manufacture and distribute chips themselves with this bill instead of relying on foreign companies.

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Written by Sophie Webster