Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

In the global chips race, EU’s cash engine sputters

In the global chips race, EU’s cash engine sputters

Brussels is struggling to clear cash for Europe to rival the US on microchips.

The European Union is scrambling to cough up the public investment needed to try and go head-to-head with the world's leading chip producers in the United States, Taiwan and South Korea.

Europe is aiming to grab 20 percent of the global market share in microchips by 2030 with the European Chips Act, one of the EU's most ambitious industrial policies to date.

But a cornerstone of its budget is in question this week with both European Parliament lawmakers and European government officials quarreling over how to pay for the new chips push. And that risks torpedoing the whole plan.

Europe is trying to enter a global race to expand local microchips manufacturing, design and innovation. It's also trying to learn the lessons of a chips shortage over the past two years that shuttered European car plants and held back sales of consumer electronics. At the same time, chips are a new battleground for a geopolitical Cold War between the U.S. and China.

The European Commission talked big earlier this year by saying there would be €43 billion of public investment to back the EU's chip dreams. But even from the start, the EU executive struggled to explain just how that funding would come together.

That funding is now facing a whirlwind of questions and concerns in Brussels, as the Parliament and Council scrutinize the chips budget amid a push to get the legislation passed as soon as possible. That seems to be slowing down; crucial deliberations by government representatives have been scrapped from this week's agenda, underlining the difficulty in getting a deal.

Eva Maydell, a center-right member of Parliament, told lawmakers on Monday of the importance of making progress on chips money even as she seeks clarity from the Commission on the budget "in order for our promises to become reality and not castles made of sand."

"We cannot ignore the significant level of investment that our global competitors and partners are putting in similar initiatives," she said.


Cooking the books


Most of Europe's overall investment in the semiconductor industry will be subsidies from national governments that aim to lure private investment.

The EU's planned €43 billion framework included an €11 billion pledge to help bring research applications to the market. It was going to pay for it by taking €3.3 billion out of the EU budget. Half of that €3.3 billion would be taken from the EU's flagship R&D program Horizon Europe and half from its digital technology program Digital Europe.

European lawmakers are up in arms, warning that the EU's chips plans are eating away at funding for other potential projects. Parliament's lead member on the issue Karlo Ressler said it's "unfortunate" that the chips budget is based on taking money from elsewhere.

MEP Eva Maydell told lawmakers of the importance of making progress on chips money


Last week a group of lawmakers led by Maydell wrote to the Commission asking for "a detailed projection of funding available," writing that "there's increasing concern that the purported sums of funding available to support the ambition of the Chips Act may not materialize."


Countries at odds


The Chip Act's budget is a headache for EU countries too. Deputy ambassadors this month struggled with it as one of the three remaining open issues in the draft bill they are negotiating. Some capitals are worried that other research projects will fall victim to the chips rush, one EU diplomat said.

The destination of the chips cash is also raising hackles. Chipmakers are placing their projects in larger EU nations such as Germany and France, which can guarantee the public support needed to make the new investments happen.

"People are waking up to the reality that allowing member states to finance industry projects through national subsidies massively tips the scale towards big member states," said Niclas Poitiers, a research fellow at Brussels-based think tank Bruegel.

The Czech Republic, which currently lead talks between EU governments, had aimed to nail the Chips Act at a December 1 meeting of industry ministers. That seems unlikely now; at best they could do a deal on the legislation by excluding the budget issue, effectively kicking the can down the road.


The global race that wasn't


The EU's €3.3 billion from the research budget is dwarfed by funding from EU governments which could be as much as €30 billion.

Europe's struggles to secure proper funding for chips give the lie to its geopolitical posturing and efforts to restore chip production. The U.S. CHIPS Act became law in August and the U.S. federal government has far more power over how it can spend its $52 billion budget.

The real race now is how well regions can pull in new investments for "mega fabs" from three key manufacturers of chips: Taiwan's TSMC, South Korea's Samsung and the U.S.'s Intel.

Europe has secured €17 billion from Intel for a German plant and a reported €5.7 billion from smaller manufacturers STMicroelectronics and GlobalFoundries in France. The U.S. has been much more successful. Just last week, Bloomberg reported that Taiwan's TSMC — the industry leader — was laying the groundwork for a second U.S. factory in Arizona, next to its first.

China is on course to invest $150 billion in chips between 2015 and 2025


China is on course to invest $150 billion in chips between 2015 and 2025, the Commission estimated last year. South Korea is working with industry players to unlock $450 billion of private funding by 2030.

The Chips for Europe Initiative's €11 billion focused on commercializing research "would still punch below its weight" even if it all materializes, said Zach Meyers, a senior research fellow at London-based think tank Centre for European Reform. Meyers estimates that the U.S.'s chips strategy promises $13.2 billion in research.

Even that small bet has the potential to hit a jackpot.

"If we look at how the U.S. uses chips as a geopolitical tool, it's all about the [intellectual property], the IP rights for technology," Poitiers said.

"The objective should be to develop some technologies that no one else has. For developing these technological advantages, we need to invest in research," he said.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
×