The world is moving at an unprecedented pace towards technological advancement, and at the forefront of technological development is the semiconductor industry. Semiconductors or microchips are critical components of modern electronics, from smartphones to self-driving cars. As the world becomes increasingly reliant on technology, the demand for semiconductors has skyrocketed. They expected the industry to grow by USD 464.26 billion, at a CAGR of over 4% during the period from 2020 to 2025.
With the recent semiconductor chip shortage, experts have highlighted the fragility of the global supply chain currently relies on a few manufacturers, primarily based in the US and Asia. As governments around the world scramble to address the ongoing semiconductor shortage and its implications. The European Union is working on a new act that could reduce dependence on US and Asian semiconductor manufacturers.
We expect the Chips Act to be approved on April 18, 2023. To promote the development and production of semiconductor microchips in the EU supply chain and reduce the region’s dependency on foreign technology. The proposed Chips Act is a significant step towards strengthening Europe’s position. A global leader in technological innovation and ensuring its technological independence in the years to come.
We expect the act to focus on three key areas: research and development, manufacturing, and strategic infrastructure. The first area of focus for the Chips Act is research and development. The EU aims to establish a sustainable research and development ecosystem, which will foster the development of new technologies and innovative solutions in the semiconductor industry. They will achieve this through a series of grants, incentives, and partnerships with academic institutions and organizations within the EU.
By promoting research and development, the EU aims to bolster its position as a hub for technology innovation and intellectual property creation, which will stimulate investment and job creation in the sector. It will ensure that Europe stays at the forefront of technological advancement. It will be critical to address various global challenges, from climate change to national security. The second area of focus for the Chips Act is manufacturing.
Europe aims to create a robust and resilient semiconductor manufacturing industry within its borders, capable of producing high-quality microchips in large quantities. They will achieve through the establishment of state-of-the-art semiconductor manufacturing facilities, subsidies, and tax incentives to attract private sector investments. It assists funding for small and mid-sized enterprises (SMEs) to help them expand their manufacturing capabilities.
The EU recognizes the importance of having strong domestic manufacturing capabilities. To ensure the competitiveness of its industry and secure the supply of critical technologies. It will create new job opportunities and generate economic growth across the EU. A third area of focus for the Chips Act is strategic infrastructure. EU aims to establish a robust semiconductor supply chain. The region’s companies can access components such as raw materials, equipment, and design tools.