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EU to propose microchips law in early February

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The European Commission will propose a draft legislation for the regulation of microchips in Early February, European Commission President Ursula von der Leyen said on Thursday, as the EU’s need for chips is set to double in the next decade, according to Reuters. 

„Most of supplies come from a handful of producers outside Europe. This is a dependency and uncertainty we simply cannot afford,” von der Leyen said during the opening of the World Economic Forum.

The proposal, known as the European Chips Act, will aim to adapt state aid rules, improve tools to anticipate shortages and crisis and strengthen research capacity in the bloc.

The EU wants to become more involved in chip production, with a target of producing 20% of the world’s value of semiconductors by 2030, up from 10%, according to Bloomberg.

Currently, the EU is a world leader on chip research and production equipment but lags behind in producing chips, particularly state-of-the-art versions. A global supply shortage of semiconductors highlighted the continent’s dependence on Asia and the U.S.

Major semiconductor producers are eying European expansion plans, with Taiwan Semiconductor Manufacturing Co. exploring a location in Germany and U.S. company Intel Corp. due to announce a number of investments in Germany, France and Italy.

State aid rules currently allow for public money to go to chip companies largely for research. The EU made changes to its state aid rules last year to open the door to more funding for cutting-edge chips production.