CHIPS ACT will ‘increase EU semiconductor supply chain security’ – and market share
Speaking at the WorldECR Virtual Forum, Steven Brotherton and Lincoln Clark of KPMG gave a thought-provoking and hugely informative presentation on supply chain issues in the semiconductor industry, setting out the myriad constraints that can affect supply, including complexity of global manufacturing processes, weather events, increased demand and sluggish production during the Covid-19 pandemic, political tensions, and increasing export control related restrictions.
New items containing semiconductors, the presenters pointed out, are being added to control lists, leading to increased volume of export licences, as are significant number of parties being added to sanctions lists, and sectoral sanctions further complicating business practices.
Brotherton and Clark also pointed out that both the United States and the European Union are taking steps to address supply and security issues, as the demand for semiconductors across a huge sweep of industrial sectors continues to rise.
CHIPS with everything?
Amongst items discussed was the EU Chips Act – a proposal for which was published by the European Commission earlier in February and one which the EU describes as ‘a comprehensive set of measures to ensure the EU’s security of supply, resilience and technological leadership in semiconductor technologies and applications’ and which will ‘bolster Europe’s competitiveness, resilience and help achieve both the digital and green transition.’
Inter alia, the Act provides that in the event of a supply ‘crisis’, ‘the European Semiconductor Board may advise on the necessity of introducing an export control regime pursuant to Regulation (EU) 2015/479 of the European Parliament and of the Council [and] may also assess and advise on further appropriate and effective measures,’ adding, ‘The use of all these emergency measures should be proportionate and restricted to what is necessary to address the significant disturbances at stake insofar as this is in the best interest of the Union.’
Announcing the Act, the Commission said, ‘Recent global semiconductors shortages forced factory closures in a wide range of sectors from cars to healthcare devices. In the car sector, for example, production in some Member States decreased by one third in 2021. This made more evident the extreme global dependency of the semiconductor value chain on a very limited number of actors in a complex geopolitical context…
‘The EU Chips Act will build on Europe’s strengths – world-leading research and technology organisations and networks as well as a host of pioneering equipment manufacturers – and address outstanding weaknesses. It will bring about a thriving semiconductor sector from research to production and a resilient supply chain. It will mobilise more than €43 billion euros of public and private investments and set measures to prevent, prepare, anticipate and swiftly respond to any future supply chains disruption, together with Member States and our international partners. It will enable the EU to reach its ambition to double its current market share to 20% in 2030.’
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