Skip to content

The EU Chips Act

Chips are essential for a wide range of technological and digital products, such as cars, household appliances and electronics. Due to geostrategic issues and supply chain disruptions, European industry is currently facing challenges in the supply of semiconductors.

The Chips Act aims to reduce the EU’s vulnerabilities and dependencies on foreign actors. This will improve the EU’s security of supply, resilience and technological sovereignty in the field of chips.

On 25 July 2023, the EU adopted the Chips Act. The new rules aim at doubling the EU’s global market share in semiconductors from 10% to at least 20% by 2030.

Infographic explaining the importance of (micro-)chips and the evolution of the chips market globally.

The EU chips act: strengthening the EU's competitiveness in semiconductor technologies

(Micro-)chips or semiconductors are the DNA of modern technology.

What is a microchip?

  • a microchip is a set of electronic circuits on a small flat piece of semiconductor material, usually silicon
  • a microchip the size of a fingernail can contain billions of transistors, which are electronically controlled switches

Chips can capture, store, process and act on data. They can be divided into three categories: 

  • logic chips
  • memory chips  
  • DAO (discrete, analogue and other) chips

Chips are used

  • in everyday life: work, education, entertainment, households (fridge, washing machine, LED lights) 
  • for critical applications: cars, planes, healthcare (medical equipment) 
  • for key infrastructures: energy, mobility, data and communication (computers, smartphones) 

and are essential for tomorrow’s economy (green energy, Internet of Things, artificial intelligence, high-performance computing platforms) 

  • 1 smartphone contains around 160 chips
  • 1 hybrid electric car contains up to 3 500 chips

The chips market

1.1 trillion microchips - global production of microchips in 2021 (around 140 chips per person on earth) 

The EU’s share of global microchip production is 10% (2020) 

Europe's market shares in chip production for different sectors:

  • automotive: 27%
  • aerospace/defence/security: 22%
  • industry: 20%
  • health and care: 19%
  • home appliances: 17%
  • audio and video: 11%
  • PC and data processing: 5%
  • telecommunications: 4%

How will the market evolve?

Chip demand is expected to double between 2022 and 2030.

The semiconductor industry is estimated to be worth around $1 trillion in 2030.

Chart: Semiconductor market size forecast by application (in $ billion)

Why do we need the EU chips act?

Chip production comprises over 1 000 steps:

  • materials
  • design
  • equipment
  • manufacturing
  • commercialisation

Many actors around the world are involved in manufacturing chips. They collaborate and trade products, often within complex and vulnerable supply chains. Specific technologies and activities are concentrated within a limited number of companies and regions. 

Disruptions to chip production can cause shortages and may have major consequences.

The EU chips act aims to:

  • ensure large-scale capacity building and innovation within the EU
  • ensure that the EU is self-supplying to a much greater extent
  • ensure that the EU can react quickly in the event of supply crises

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Topics