EU readies Chips Act, and Korea not overly concerned

The European Parliament and member states on Tuesday reached an informal agreement for a 43 billion euro ($47 billion) subsidy program designed to bring the semiconductor supply chain to the region.

Thierry Breton, European Internal Market Commissioner, speaks on the European Chips Act aimed at strengthening the region's semiconductor manufacturing activities in Brussels, Belgium, in February 2022. [REUTERS/YONHAP]

Europe's Chips Act, aimed at attracting semiconductor investment into the EU, may provide an opportunity for the local parts suppliers, the government said Wednesday.

The European Parliament and member states on Tuesday reached an informal agreement for a 43 billion euro ($47 billion) subsidy program designed to bring the semiconductor supply chain to the region.

The European Chips Act, proposed by the European Commission, now awaits approval by the Parliament and the Council.

The goal is to cut dependence on non-European players, “in particular Taiwan and Southeast Asia for manufacturing of chips, and the United States for their design,” according to the European Commission’s press release on Tuesday.

Doubling its share in the global supply chain to 20 percent by 2030 is the EU's aim.

The program is expected to have a limited impact on Korea’s chipmakers, as local companies do not operate production facilities in Europe, according to the Ministry of Trade, Industry and Energy.

“The EU Chips Act is not likely to have a direct impact on Korea, as it does not include any clauses involving an explicit discrimination against companies outside the region, and currently there is no production facility run by Korean companies in the region,” the ministry said in a statement.

The Industry Ministry added that “expansion of production facilities in the European region may lead to increased export opportunities for local component and equipment suppliers.”

Intel, which plans to pour 17 billion euros into building an advanced chipmaking facility in Germany, is expected to benefit from the initiative. Taiwan’s TSMC is mulling the establishment of a chip plant in Germany.

Samsung Electronics has not announced any plans for establishing production facilities in Europe.

The European Chips Act follows the U.S. Chips and Science Act, as countries scramble stabilize chip supply amid rising protectionism.

The U.S. Chips Act, which offers subsidies and tax benefits for companies executing semiconductor-related investments in the country, sparked concerns in Korea, as it required companies to disclose the cost of materials, chemicals, human resources, public utilities and research and development while sharing excess profits in order to win the subsidies.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]