As expected, the EU has finalized its plans for the chip law. Only official ratification remains. The law must more than double European chip production, but it still seems seriously lacking in financial clout.

As expected, the EU has finalized the chip law. Negotiations between the European Parliament and the Member States have ended, leaving only the ratification of the text. This means that the last major hurdle for the chip law has been taken.

The EU has big ambitions with the plan. The chip law aims to more than double Europe’s share of global chip production to twenty percent by 2030. The EU has stated during the Covid pandemic that microchips are a strategically very important asset, but Europe is heavily dependent on the US and, beyond all, Asia for its production.

The chip law itself speaks of investments of 43 billion both in the production of microchips and in the important research into them. The latter is important for our country, which, with Imec in Leuven, is home to one of the world’s most important research institutes for chips.

Great ambition, scarce resources

The question is what the chips law is really worth. The amount of 43 billion euros means little or nothing in reality. Almost 3.3 billion euros from the European budget are earmarked for the final version of the law. That’s a no-brainer, while the original $43 billion is actually already on the tight side. The US is providing $53 billion through a similar plan.

To put the planned 3.3 billion in perspective, look at the planned construction of a modern Intel chip factory in Magdeburg, Germany. The cost of this site is currently estimated at around $20 billion, half of which Intel wants to receive as a grant. If you know that such sums flow into chip production, you may wonder how the EU wants to work with 3.3 billion euros.

This has not gone unnoticed by MEPs. In an earlier conversation, Tom Vandenkdelaere (CD&V) spoke of a “Ketnet competition policy”. Europe hopes the 3.3 billion will create a momentum effect that will boost investment from the European Central Bank and the private sector.

Good start

The conclusion of the negotiations is good news for the chips law. The pending approval is actually a formality. The ambition of the EU is also commendable and it is good that there is a legal framework to boost chip production on European soil. Nevertheless, it is important to look at what has been decided, and that is not a funding program of 43 billion euros, but one of almost 3.3 billion euros.