European chip industry urges pragmatic rewrite of Chips Act 2.0 amid competitiveness fears

The European semiconductor industry is urging for the revision of the Chips Act 2.0 into a pragmatic version, raising concerns over the bloc’s competitiveness. SEMI Europe, the trade association that represents semiconductor equipment, materials, and design firms, submitted a formal recommendation ahead of the EU’s planned review of the Chips Act in 2026. 

According to SEMI’s recommendation, the EU should simplify and accelerate the state aid approval process, especially for newly designed projects.

The current regulations restrict funding to projects considered novel, which the SEMI group argued limits investment in areas that could strengthen production capacity across the EU region. Easing the rules would allow for a wide range of strategic projects to access financial support, according to the submission. 

SEMI recommends €20 billion in funding to support R&D

SEMI has recommended establishing a single point of contact within the European Commission for all semiconductor projects. According to the association report, clear binding deadlines for regulatory approvals would help reduce bureaucratic delays and provide predictability to investors planning long-term, capital-intensive projects. 

The submitted recommendations primarily focus on funding, with SEMI proposing that the EU allocate €20 billion specifically for chip investments. The funding will cover advanced manufacturing, research and development, and pilot production lines. The association noted that the funding will increase the existing provisions and boost Europe’s competitiveness against the United States, China, Taiwan, South Korea, and Japan. 

Based on the 2023 Chips Act, established as the Chips for Europe Initiative, five main pillars were outlined to receive support and strengthen the European Semiconductor ecosystem. The five pillars included a cloud-based design platform, advanced pilot lines, quantum chip development, competence centers, and the Chips Fund to support SMEs.

The latest submission by the SME also aims to enhance supply chain resilience, reduce dependency on external chip suppliers, and encourage innovation in design and production. A Reuters report outlined that industry experts argued against the existing framework, noting that it provides a foundation but is insufficient to advance geopolitical and technological competition. SEMI said that without proper reforms, the EU region risks being left behind by major competitors in terms of production capacity and technological advancement. 

SEMI’s recommendations have also included support for R&D collaborations and innovation, which is expected to keep European firms competitive in areas such as quantum computing, AI accelerators, and advanced logic and memory chips.

EU plans to release proposed updates by March 2026

SEMI has listed the importance of collaboration among EU member states by monitoring demand, anticipating potential shortages, and activating crisis measures.

The association noted that these collaborations will strengthen the EU’s semiconductor supply chain and reduce vulnerability to external disruptions. The group also emphasized that timely funding and clear regulations will help in the achievement of the proposed objectives. 

The EU is already reviewing the Chips Act and is expected to release proposed updates by March 2026. Based on a recent call to evidence report published by the European Commission, one of the areas under consideration is easing state aid restrictions, which may allow member states to provide more flexible financial support to semiconductor projects.

The EU Commission noted that such reforms may advance investment in both existing and new fabrication facilities, pilot lines, and R&D hubs. 

EU’s push for a pragmatic Chips Act 2.0 follows a growing trend globally, such as in the U.S, where the Chips and Science Act was implemented in 2022 to provide subsidies and incentives to domestic firms. 

According to a Cryptopolitan report, the Chips and Science Act was introduced during the Biden administration to enhance local semiconductor manufacturing in response to competition from China. 

The report also revealed that the Chips and Science Act allocated approximately $52.7 billion in subsidies to multiple semiconductor companies, including Samsung, Intel, and Micron. The act allocated $39 billion towards manufacturing incentives and $75 billion in government loan authority, which awarded roughly $33 billion during the Biden administration. 

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