The EU and US will coordinate subsidy plans for the chip sector
The EU and US will work closer together to strengthen chip and semiconductor supply chains. The two regions will do this, among other things, by exchanging information about their state aid plans for the chip sector, in order to prevent subsidy races.
Top US and EU officials let us know in a joint statement that the two regions enter into an ‘administrative agreement’ together. Among other things, the EU and the US are introducing a joint mechanism for early warning of disruptions in the semiconductor chain. This should enable imminent chip shortages to be tackled and limited. The two regions already piloted information sharing during chip supply chain disruptions last summer.
The EU and US also commit to coordinating their subsidy schemes for the chip sector. For example, the two regions will exchange ‘information and best practices’ about their public investments and the conditions they impose on recipients. Officials also say collaborations in semiconductor research are being explored. Joint research is also being done into the future demand for chips, in order to prevent overcapacity.
Several countries and regions are currently introducing laws supporting the chip sector, including the US and Europe. The US recently introduced a Chips and Science Act that frees up tens of billions in subsidies for chip production within the US. The EU is currently working on its European Chips Act with billions of dollars in subsidies for European chip production. Countries are doing this to become less dependent on other regions due to rising geopolitical tensions between China and Taiwan, for example.
However, the emergence of such initiatives also aroused fears that countries would become embroiled in subsidy races, or that overcapacity would eventually arise in the chip sector. Mutual coordination of subsidies and the exchange of information on state aid should prevent this. The EU and US have indicated that they also want to cooperate with other like-minded countries.