EU preps Chips Act 2.0 to stregthen semiconductor industry after original program reportedly flopped

A group of European countries led by the Netherlands is setting the groundwork for the European Chips Act 2.0 after the original one failed to achieve its goal of strengthening the European semiconductor industry, reports Reuters. The group aims to deliver concrete proposals by summer to work closely with the European Commission. The politicians indicated their work after producers of chips and chipmaking tools asked the EC to launch a follow-up for the 2023 Chips Act.

The group includes nine European Union members led by the Netherlands, including France, Germany, Italy, and Spain, which already have semiconductor industries (except Spain, which is more focused on R&D activities). Dutch Economy Minister Dirk Beljaarts explained that this group is preparing for a potential second funding package for the semiconductor industry, including both small and medium-sized companies.

"We need to allocate funds," Beljaarts told Reuters. "Both private and public funds to push the sector, also to make sure that the trickle-down effect takes place and that (small and medium-size) companies also benefit."

The 2023 Chips Act program, which is currently under review, failed to achieve any significant targets as it required the EC to approve projects funded by member countries and the EC (yet most of the projects were funded solely by member countries). The approval processes required by the EC, member countries, and local authorities were too slow for the rapidly developing semiconductor industry. As a result, Intel and Wolfspeed postponed building major production facilities in Europe since economic situations changed while awaiting their approvals. According to Beljaarts, the intention this time is to be more selective and strategic in funding decisions.

Europe is strong in areas like research and development as well as chipmaking tools (ASML, ASM International, Carl Zeiss SMT, SUSS MicroTec, etc.). However, only Intel makes chips using advanced process technology in Ireland. Other European chipmakers use trailing nodes.

Because of interest in selling their most advanced tools and government funding, makers of semiconductor production equipment have called the EC to launch the second round of funding.

After a gathering in Brussels with European lawmakers, ESIA and SEMI Europe (organizations uniting producers of chips and chipmaking equipment) said they would formally address their proposal to Henna Virkkunen, the EC's digital official. SEMI stated the need for direct backing in several areas beyond fabs, including 'semiconductor design and manufacturing, R&D, materials and equipment.'

More than a dozen companies joined the meeting. Among them were chip manufacturers Bosch, Infineon, NXP, and STMicroelectronics, as well as equipment suppliers ASML, ASM, Zeiss, and Air Liquide.