In order to keep up with the rising demand for microchips in smartphones, servers, data centers, and storage applications, international organizations are expanding their semiconductor production capacity. 

The CHIPS and Science Act in the US and the Chips Act in the EU both seek to increase local production, lessen reliance on outside sources, and foster a bright future for science and technology.

(Photo: VIRGINIA MAYO/POOL/AFP via Getty Images) European Commissioner for Internal Market Thierry Breton speaks during a signature ceremony regarding the Chips Act at EU headquarters in Brussels on February 8, 2022.

The European Chips Act

By 2030, the European Union's Chips Act seeks to increase Europe's capacity for chip manufacture, spending €43 billion ($47.5 billion) to reach a 20% share of world microchip output. 

The Act, which was introduced in February 2022, intends to encourage innovation, draw in investment, and get ready for any supply issues. Increasing domestic production and preparing for any supply disruptions are the EU's main objectives.

With the Chips Act, the EU hopes to become a world leader and less dependent on Chinese chip producers. The program has already resulted in new manufacturing facilities, greater R&D, and a rekindled sense of pride in European industry. 

Héctor Gómez Hernández, the Spanish Minister for Industry, Trade, and Tourism, believes this initiative will bring a renaissance to the EU's tech industry, reducing foreign dependencies and enhancing domestic prowess.

Read Also: EU Supports US on Blocking Exports of Chip-Making Supplies to China 

Its Use for The Industry

The CHIPS and Science Act passed in 2022, allocates $52 billion in funds and tax incentives to support America's semiconductor sector. The legislation was adopted by President Biden with an emphasis on measures for semiconductor manufacturing. 

The additional funding seeks to improve the country's capacity to lead in chip manufacturing and promote innovation.

The Spring 2023 announcement of the CHIPS and Science Act aroused interest and rivalry among businesses and academic organizations. The legislation intends to boost domestic semiconductor production, advance R&D, and establish a dynamic ecosystem of chip-related businesses.

It ensures the safety of the country's supply chain and upholds the US's leadership in semiconductor technology, giving it a competitive edge in the international market.

Global Chip Race

To improve the state of the global semiconductor industry, the EU and the US are concentrating on domestic chip production. Foreign organizations may encounter difficulties when big economies bolster their positions, such as a decreased reliance on manufacturing capacity. 

A decentralized supply chain, on the other hand, may increase global resilience and lessen vulnerabilities. The requirement for major investment to promote research and development and expand manufacturing capacity is one of the challenges. 

The competition for supremacy in the semiconductor industry may increase geopolitical tensions, which might result in trade conflicts or supply chain limitations.

The CHIPS and Science Act in the US and the EU both seek to support regional chip production and position economies in the semiconductor sector. These programs lessen reliance on foreign aid, encourage research, and foster economic expansion. 

However, smaller economies have difficulties due to global rivalry, investment, geopolitical conflicts, and competition, which creates an unfair playing field.

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