EU chip subsidy supporters seek to privilege European firms

The main countries of the European Union They support Brussels’ initiative to turn the region into a semiconductor superpower, but are reluctant to provide too much state aid to chipmakers.

The representatives of Belgium, France, Germany, Italy and the Netherlands fear that excessive public investment in the production of chips It could spark a subsidy race among EU countries or even overproduction of chips, according to people familiar with the discussions between the countries.

These countries support the effort to create state-of-the-art chips, but emphasize that state aid should go to innovation rather than production, according to the sources cited. Countries do not want to veto the use of state aid, but to make sure the money is spent wisely. Some of these countries also stressed that state aid should be used to strengthen European companies.

The five capitals recognized that, although the EU must be more competitive and autonomous, they warned of the danger of the so-called “reshoring”, that is, return to the country of origin the production processes that are transferred abroad. Instead, they agreed that the EU should work with other continents to keep their markets open and ensure access to semiconductor components elsewhere.

The five countries have held meetings before the publication of the next proposed law on chips of the EU, which will lay out the European Commission’s ideas for becoming the world’s leading producer of semiconductors, which could make the continent less dependent on Asia and the United States for vital components for cars, smartphones and washing machines.

The EU wants to make 20% of the chips of the world by 2030, a goal that requires the continent to quadruple its output of semiconductors.

Capitals are likely to review the Commission’s plans on 8 February, as Thierry Bretonresponsible for the internal market of the EUtold the media last week that the law would include plans to use state aid for state-of-the-art production plants.

The plan could be backed by tens of billions of euros of funding from both the EU budget and EU countries, but even countries that stand to benefit from foreign investment insist on caution.

Representatives from the five countries did not immediately respond to a request for comment late Monday.

According to press reports, both Intel Corp. and Taiwan Semiconductor Manufacturing Co. are eyeing Germany as part of their European expansion plans. Intel has made it clear that it wants possibly billions in state aid to settle in the EU.