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Executive Summary
POSITION | EUROPEAN LEGISLATION | SEMICONDUCTOR
BDI Position European Chips Act
German industry’s position on the European Commission’s proposal for strengthening Europe's semiconductor ecosystem (Chips Act) 2022/0032 (COD).
March 22th 2022
Executive Summary
German industry welcomes the Chips Act as an important step to strengthen Europe as a global player in chip production. Semiconductors are essential for the future of European industry and the successful ecological and digital transformation of Europe as a business location. Becoming more independent in chip design and production is an integral part of a resilience-oriented European industrial policy. Technological competition is intensifying with increasing geopolitical tensions and high state and often opaque subsidies in semiconductor production from countries such as China, South Korea, Taiwan and the US. The semiconductor strategy must take these developments and the European needs of industry in Europe into account and, at the same time, must not lose sight of the global value chains to establish a level playing field. To ensure that, German industry espouses the following further amendments to the chips act proposal.
We welcome the speed with which the Chips Act has been prepared and proposed, which is urgently needed given the current situation. Nevertheless, a distribution of the funds by 2030 is slow compared to the US chip law, which should be implemented by 2026. 11 bn. Euro of EU and national budgets for Pillar 1 “Chips for Europe Initiative” might not be enough to compete with other countries in the attempt to attract the full R&D semiconductor ecosystem. Regarding the total volume of investments, we are also critical of the redistribution of funds from the budgets of the EU states that have long been reserved. The EU should ensure that other – equally relevant – areas, such as cybersecurity, do not suffer any disadvantages as a result. Overall, the entire semiconductor value chain must be strengthened, so in addition to chips, material, process, and equipment expertise plays a fundamental role in enabling new semiconductor technologies. The potential 30 bn. Euro from national budgets for building up additional production capacity must also be secured as soon as possible. All in all, the EU should reveal their timeline and plan for establishing a European funding landscape and instruments (EU and national) in the coming weeks and months.
Legend:
positive positive tendency neutral negative tendency negative
Chapter II Pillar One: Chips for Europe Initiative
Basically, this approach goes in the right direction. We welcome the approach of design capacities and the developing of pilot lines. The approach of integrating quantum chips is also exciting. Moreover, we support the promotion of the competence centers. We endorse the chips fund, but we recommend a clarification of the investment. We welcome that the ECIC is concepted as a private-public consortium, but the principles of EU competition policy in the implementation of ECIC should be strictly observed. If set up, the role of the ECIC compared to other existing public-private associations like INSIDE, Aeneas should be clarified.
However, the focus on small structure sizes (< 2 nm and 10nm FDSOI) for pilot lines should be aligned with the anticipated future needs of the customer industry. The strengths of the European semiconductor industry, especially in the area of significantly larger power semiconductors and sensors should not be left aside. It must be ensured that the Chips for Europe Initiative, more precisely the Chips JU, is still targeting Europe’s industry needs in an adequate manner. IP design in key verticals like Automotive, Automation, Machinery, Industrial, Telecommunication Infrastructure (6G), Health but also Smart Home – and the rapid industrialisation of it - must be focused upon as well. Moreover, specific chemicals and smart functional materials are the basis for chip technologies and manufacturing processes and should be included in R&D as well as mass production roadmaps, work programs and calls.
Chapter III Pillar Two: Security of Supply
The first-of-a-kind facilities instrument creates the necessary framework conditions for new semiconductor settlements, which can have catalytic effects. The framework covers EU Open Foundries and Integrated Production Facilities, which potentially allows for investments in a broad manner, not restricted to technologies and node sizes. This is key to attract manufacturing projects which benefit the EU market, but the financing needs to be clarified in more detail.
Chapter IV Pillar Three: Monitoring and crisis response
Basically, we view this pillar and the crisis monitoring mechanism rather critically and find it questionable in terms of regulatory policy and competition, as this mechanism is disproportionate and at the same time hardly effective, although in principle we support gaining more transparency along the chip supply chain. It is uncertain what a critical state is and to what extent market intervention will take place. There are many unanswered questions regarding the mandatory release of information, mandatory prioritisation, joint procurement and export controls. We take a very critical view of the state allocation or monopolisation of the purchase of chips, including the state's authority to define them.
Chapter V: Governance
The need for a specially created EU Semiconductor Board is not apparent in view of the broad committee landscape. In addition, questions of staffing and powers are unclear, which increases the risk of long-term market intervention. If implemented, close exchange with industry must be institutionalised, in particular, for funding instruments, funding programs, funding rules, and content of funding programs and calls.
Table of Contents
Executive Summary............................................................................................................................1
Proposal for a Regulation establishing a framework of measures for strengthening Europe's semiconductor ecosystem (Chips Act).............................................................................................4 Chapter II Pillar One: Chips for Europe Initiative .................................................................................. 4 Chapter III Pillar Two: Security of Supply.............................................................................................. 6 Chapter IV Pillar Three: Monitoring and crisis response....................................................................... 7 Chapter V: Governance....................................................................................................................... 11
