The EU is investing 43 billion euros to increase local sawdust production and reduce dependence on Asia

The European Parliament and EU member states reached an agreement on Tuesday on a plan to increase the supply of semiconductors in Europe as the bloc seeks to reduce its dependence on Asian suppliers.

The European Union has prioritized local chip production after the coronavirus pandemic triggered supply chain shocks that led to significant shortages.

Asian industry, especially Chinese and Taiwanese companies, currently dominates semiconductor manufacturing and export.

EU chief Ursula von der Leyen said the agreement “enables a competitive chip industry and builds a foundation for global market share. It empowers a clean technology industry made in Europe and strengthens our digital resilience and sovereignty.”

Under the interim political agreement, the EU aims to double its current global market share to 20 percent by 2030 and mobilize more than 43 billion euros ($47.2 billion) in public and private investment to fuel Europe’s growing potato chipping.

Europe needs to quadruple its production to achieve this goal.

The funding comes from existing EU budget funds and the deal also loosens state aid rules so that the funds are used to develop centers that produce the key component.

The EU is also mobilizing 3.3 billion euros for research and development, and the agreement includes a system for monitoring the supply gap in order to act in crisis situations.

The legislative text is also part of the bloc’s push to produce more in Europe to reduce its vulnerability to geopolitical shocks such as the war in Ukraine.

When Russia invaded Ukraine last year, the EU looked for alternative energy sources for years, relying on Russian fossil fuels.

“This allows us to balance and secure our supply chain, reducing our collective dependence on Asia,” EU Industry Commissioner Thierry Breton said in a statement after parliament and the European Council reached an agreement.

– Hungry for chips –

Europe was under pressure to act quickly.

In August, the United States passed its own Chips and Science Act, which included about $52 billion to promote the production of microchips and tens of billions more for scientific research and development.

Japan and South Korea have also promised to spend billions to develop their countries’ semiconductor production.

Washington has backed allies such as Japan and the Netherlands this year to curb exports of semiconductor technology to China, much to the chagrin of Beijing.

Franco-Italian chipmaker STMicroelectronics, US-based GlobalFoundries and US-based technology giant Intel announced last year that they would invest billions in new production facilities in France and Germany. They can now apply for state support for their projects.

Brussels is racing to protect the bloc’s competitive edge against threats from China and the United States, which have plowed billions into green technology.

Last month, the EU’s executive body published two proposals to get Europe to produce cleaner technology, including critical raw materials needed to make batteries for electric vehicles.

“Europe’s goal is to become an industrial powerhouse in the markets of the future – with digital and clean technologies that allow us to remain a competitive export power, create quality jobs and ensure our security of supply,” Breton said.

“Because there is no green or digital transition without a strong manufacturing base,” he added.

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