Adoption of EU Chips Act by early 2023 uncertain, as Parliament and Council start their work
The European Parliament and Member States have started the political review of the proposed EU Chips Act regulation, which provides a framework for investments by Member States in chip manufacturing, design and research and development. The act also proposes far-reaching supply chain intervention powers in case of a supply shortage that could set precedents for sectors beyond the semiconductor industry. Consensus on the importance to strengthen the European semiconductor ecosystem and a common sense of urgency could see a swifter process than usual, but the involved budgets and supply chain interventions could make the aspired adoption in the first quarter of 2023 challenging. CLEPA supports the proposal, however, implementation and investments by Member States will be key, whereas supply chain intervention powers will need further revision.
On the side of the European Parliament, Social Democrat Dan Nica will — as rapporteur for the Industry Committee — be in charge of formulating the Parliament’s priorities in the subsequent inter-institutional negotiations. Questions regarding budgets and synergies with other funds, geographical distribution and role of SMEs and start-ups are likely to play a significant role in the discussions. The Council has started the process of review and may be more inclined to look critically at proposed supply chain intervention powers and export controls.
The act could foster public and private investment in R&D, chip design and manufacturing capabilities. Member States will need to commit concrete investments, reflecting industry needs, reducing supply chain risks and strengthening innovative capabilities. Concerns remain around the supply chain intervention powers. In the proposal, clear definitions are missing which risk creating legal uncertainty and conflicting legal requirements for companies. The proposal for joint purchasing by public bodies in case of a shortage could result in inefficient allocation or market disruptions, given the complex product specifications of chips. More importantly, elements of the supply chain intervention mechanism could create legal uncertainty and therefore undermine critical private investment. CLEPA adopted its contribution to the consultation on the final EU Chips Act proposal and presented in February a policy guide with recommendations.
In: CLEPA News, Growth & Competitiveness