While the shortage of chips continues to hit hard around the world, in Europe pressure is mounting to define a position with respect to government subsidies for the installation of new semiconductor factories. This Thursday, Margrethe Vestager , the Commissioner for Competition of the European Commission again referred to the issue in front of the European Parliament.
The official opened the door to the possibility that the member countries of the European Union subsidize the installation of new plants to face the lack of components . However, this opportunity would be tied to the fulfillment of certain conditions in order to avoid an anticompetitive scenario among the members of the bloc.
According to Reuters, Vestager said: “The Commission would consider approving public support to fill potential funding gaps in the semiconductor ecosystem for the establishment, in particular, of facilities that are the first of their kind.” Clearly, this does not mean that the decision to allow the subsidies has already been made. But it does show that government financial aid to combat the shortage of chips should go to state-of-the-art factories .
Positions found within the block
Photo by Markus Spiske on Unsplash The same report indicates that the conditions that would be imposed to allow the subsidies would not only seek to protect Europe's competitive framework; they would also aim for the benefits to be “shared widely and without discrimination” throughout the European economy.
However, there are different positions among the members of the bloc themselves. On the one hand, France would seek flexible regulations regarding financial assistance . Take into account that it would be one of the countries targeted by Intel for its European expansion plan to combat the shortage of chips. The US firm announced an investment of 80 billion euros, in an initiative aimed at reducing dependence on the Asian supply chain.
But in the opposite corner would appear countries like Ireland and the Netherlands; that they would consider that the difference in the availability of resources between the states – and their discretionary use – would provoke unfair competition within the European Union.
Vestager already warned of the danger of a “Subsidy Race” Over Chip Shortage
Subsidies for setting up new semiconductor factories to combat chip shortages are a hot topic in Europe. A few days ago, Margrethe Vestager herself warned of the danger it would mean if the EU entered a “race” of economic aid with the United States.
The official assured that companies could manipulate countries to offer exorbitant sums of money, and settle in the one that pays the best. “The risk, of course, is to allow taxpayers, whether European or American, to pay the bill and get perhaps very little of that investment,” he said.
It is worth noting that among the efforts to combat the shortage of components, a new European Chips Law is expected for 2022 . It would bet that the block increases its participation in world semiconductor production to 20% by 2030.
