Mechanisms in motion: the European Chips Act enters into force

One step closer to achieving the targeted 20% global market share in semiconductors by 2030. 

Brussels, September 21, 2023 - Today, the European Chips Act enters into force, after only two months from its signature on July 25, 2023. This marks a milestone in the European Union's bid to bolster its semiconductor industry's security, resilience, and global leadership. Acknowledging the essential role of semiconductors, this comprehensive legislation aims at raising its market share in the field to 20% by 2030. To achieve such an ambitious goal it will: strengthen manufacturing activities, stimulate the European design ecosystem, and boost innovation and growth of the value chain. 

Structuring the change: the three pillars of the ECA 

The European Chips Act is composed of three pillars that categorise the core targets of the initiative and address from different directions a final unanimous goal. 

At the core of the Act is the Chips for Europe Initiative, which constitutes the first pillar. This part of the ECA will be implemented through the Chips Joint Undertaking. EU funds will support this initiative with €3.3 billion which will be complemented by funds coming from the Member States. The main goal is to build a bridge between research and industry, supporting the transfer of knowledge and innovation from the lab to the fab. The initiative should establish advanced pilot production lines, create a cloud-based design platform, develop quantum chips, and set up a Chips Fund to facilitate financing for businesses.

The Act's second pillar is centred around investments. It will incentivize the pre-existing ones and attract the new ones, both within and without the European Union and of both a public and private nature. The investments will target semiconductor manufacturing and enhance production by promoting a specific framework, for the so-called ‘first of a kind’ facilities. These facilities - which can either be Integrated production Facilities or Open EU Foundries - are considered of extreme importance in the creation of a resilient ecosystem. They guarantee great safety in supply contributing to the general security of the Union. 

The third pillar establishes a coordination mechanism between Member States and the Commission. Its role is fundamental for the cooperation among Member States, which is at the core of the Act itself. Moreover, it establishes a monitoring system for supply forecasting demand and foreseeing shortages. In case of a crisis, it will activate a semiconductor alert system initiated in April 2023.  

But hadn't they already signed it?

Correct. As mentioned at the beginning of the article, on July 25, 2023, the ECA had already been signed by the Council of the EU, however, there is a deep difference between signature and entry into force. After being signed, the legislation is still not legally binding. Only after entering into force does the act become enforceable. At this point, the act's provisions become applicable and must be followed by individuals, organisations, and authorities within the country. This means that from today all the different mechanisms in the pillars will start moving: The Regulation on the Chips Joint Undertaking comes into force, the Chips for Europe will be implemented; The Chips Fund will start its activities; the European Semiconductor Board will begin its work and ‘first of a kind’ facilities will be able to receive incentives.