Chip Production: EU Looks to Ease Dependency on Asia, Announces $48-Billion Plan
The European Union announced a $48 billion (roughly Rs. 3,58,520 crore) plan Tuesday to become a major semiconductor producer, seeking to curb its dependency on Asian markets for the component that powers everything from cars to hospital ventilators and game consoles.
At a time when natural gas shortages and Europe's reliance on Russia for energy shows the political risks of economic dependency, the 27-nation bloc is moving to boost its economic independence in the critical semiconductor sector with its Chips Act.
“Chips are at the center of the global technological race. They are, of course, also the bedrock of our modern economies,” European Commission President Ursula von der Leyen said. The plan still needs the backing of the EU parliament and the member states.
The EU move mirrors US President Joe Biden's $52 billion (roughly Rs. 3,88,398 crore) push to invest in a national chip-producing sector to make sure more production occurs in the US.
As the economy has bounced back from the COVID-19 pandemic over the past year, there has been a supply chain bottleneck for semiconductors. In Europe, some consumers have had to wait up to almost a year to get a car because of a lack of spare parts.
“The pandemic has also painfully exposed the vulnerability of its supply chains,” von der Leyen said. “We have seen that whole production lines came to a standstill.”
“While the demand was increasing, we could not deliver as needed because of the lack of chips,” she added. As a result, factory belt lines ground to a halt, some factories had to temporarily close and workers were left unemployed because of lack of electronic parts.
Semiconductors are the tiny microchips that act as the brains for everything from smartphones to cars,
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