Brussels opens the door to public aid for the manufacture of chips due to the global shortage of semiconductors


Public aid to manufacture chips given the global shortage of semiconductors that runs through the production chains of multiple industrial sectors. It is one of the main novelties of the Communication from the European Commission on how the Community Executive wants the EU’s competition policy to be in the near future. Not in vain, chip crisis could cost auto industry 180 billion, twice as expected, for example; a sector paralyzed by the semiconductor crisis. “Achieving a robust and secure supply of semiconductors for European industry is a prerequisite for achieving the goals of the Digital Decade and its targets for 2030,” says Brussels.


The lack of materials behind the chip crisis: "The ecological and digital transition is at risk"

The lack of materials behind the chip crisis: “The ecological and digital transition is at risk”

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The European Vice President for Competition, Margrethe Vestager, has presented this review of EU competition policy, which, yes, preserves its ability to veto agreements, punish bad business behavior and block large state aid. Some capacities sometimes discussed by France and Germany, who ask for a wider sleeve for their large national champions – like Siemens or Alstom – against its Chinese rivals, to whom Brussels tries to reduce the room for maneuver when foreign companies are state-owned.

And, in relation to aid for chips, the European Commission understands that state funds can be used for innovation and research, without being a blank check. Thus, the Commission is ready to remove obstacles for EU countries wishing to invest in chip production facilities, albeit with conditions.

The aid will have to be “necessary, appropriate and proportionate”, minimize “undue distortions of competition” and the benefits must be “shared widely and without discrimination throughout the European economy”, says the Community Executive in its communication.

Vestager has in the past allowed subsidies to semiconductors through so-called Major Projects of Common European Interest (IPCEI), limited to research funding for cutting-edge chips. It is now open to the EU allowing state aid to ensure that there is sufficient microchip production capacity in Europe.

“In view of the exceptional situation with regard to semiconductors, their relevance and the dependence on supply of a limited number of companies in a challenging geopolitical context, the Commission may consider the approval of aid to fill possible financing gaps for the establishment, in particular, of first-rate European companies – unique facilities in the semiconductor ecosystem, “says Brussels.

“The European chip law has been announced in the context of the global shortage of semiconductors, which has highlighted the extraordinary relevance of this industry in a wide range of the European industrial footprint, from automotive to healthcare,” continues the Community executive, “something that will increase exponentially in the future in view of the demands for connectivity, cybersecurity and energy efficiency. Achieving a robust and secure supply of semiconductors for European industry is a prerequisite for achieving the goals of the Digital Decade and its targets for 2030, endorsed by the European Council “.

The European Commission notes that the crisis “has revealed Europe’s dependence on supply from a limited number of companies and geographies, and its vulnerability to export restrictions from third countries and other disturbances in the current geopolitical context. Furthermore, this dependence it is compounded by the industry’s extremely high entry barriers and capital intensity, as well as its particular relevance to existing and future security and defense applications. ”

“Taking all factors into account,” the European Commission “can envisage the approval of public aid to fill possible funding gaps in the semiconductor ecosystem for the establishment, in particular, of pioneering European facilities in the Union. Such aid should be subject to strong safeguards to ensure that aid is necessary, appropriate and proportionate, that undue distortions of competition are minimized and that benefits are shared widely and without discrimination throughout the European economy. All cases involving the supply of a Such critical product must be rigorously scrutinized on their own respective merits. ”

The European Commission states that “the opening of the single market to trade and investment is a strength and a source of growth and resilience for the Union, as a major importer and exporter. However, it is possible that the scale and level playing field that offers the single market do not guarantee the competitiveness of European companies if fair competition is not also guaranteed on the world stage “.

Thus, the Commission is reviewing the framework for state aid on major projects of common European interest (IPCEI). This framework enables Member States and industry to “jointly overcome market failures or societal challenges, by launching ambitious pan-European projects in a transparent and inclusive manner, while ensuring positive spill-over effects for the EU economy. usually”.

For example, the Commission is willing to allow the co-financing of a potential health IPCEI with EU funds that can contribute to the achievement of EU health and resilience goals by designing new generations of medical countermeasures or innovative manufacturing technologies. .

Regulations

To contribute to Europe’s response to the coronavirus crisis and support European recovery, the European Commission has adopted a sixth extension of temporary state aid with a limited extension of existing measures until the end of June 2022.

Brussels thus sets the path for a progressive phase away from crisis measures, while avoiding the effects of the precipice, and accompanying the recovery with new tools to boost and attract private investment in the recovery phase.

In relation to the green transition, the forthcoming guidelines on climate, environmental protection and energy aid will aim to “support industry efforts towards decarbonisation, circularity and biodiversity, as well as clean or zero emission mobility and efficiency. energy of buildings “.

Furthermore, the Commission intends to “provide guidance and legal certainty to enable cooperation to pursue more sustainable products and production processes”. To contribute to the digital transition, the forthcoming broadband state aid guidelines “aim to foster the development of digital infrastructure by facilitating the deployment and adoption of broadband networks that respond to rapidly evolving user needs” .

“To contribute to resilience through open and competitive markets”, continues the EU Executive, “European merger control will continue to allow companies to achieve greater scale, while ensuring that markets remain competitive and companies diversified supply chains. Furthermore, antitrust policy enables EU companies to join forces to advance their research and development efforts, design, produce and market products, or jointly purchase products or services that they may need for their operations. ”

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