More details about the European Chips Act regulations and the amended Single Basic Act (SBA) establishing the Chips Joint Undertakings

26 Sep 2023

Paris, 22 September 2023 – On July 25, the European Chips Act was formally adopted, with the Council of the European Union approving the European Parliament’s position of July 11. On the same day, the Council also passed an amendment to the Single Basic Act (SBA), the Regulation establishing the Joint Undertakings under Horizon Europe, after consultation with the Parliament. This paves the way for establishing the Chips Joint Undertaking (JU) through an extension and transformation of the existing Key Digital Technologies (KDT) JU.

On 18 September, the Chips Act Regulations were officially published in the Official Journal of the European Union, together with the amended SBA; both Regulations enter into force on the third day following their publication i.e., the 21 September. The adoption of the Chips Act has been widely welcomed.

The creation of the Chips JU is a key element in the Chips Act’s overall ambition of doubling the EU’s global market share in semiconductors from 10% now to at least 20% by 2030. The Chips Act has two general objectives:

  1. The first objective is to ensure the conditions necessary for the competitiveness and innovation capacity of the Union, to ensure the adjustment of the industry to structural changes due to fast innovation cycles and the need for sustainability, and to strengthen the Union-wide semiconductor ecosystem with pooled knowledge, expertise, resources, and common strengths.
  2. The second objective, separate from and complementary to the first, is to improve the functioning of the internal market by laying down a uniform Union legal framework for increasing the Union’s long-term resilience and its ability to innovate and provide security of supply in the field of semiconductor technologies with a view to increasing robustness to counter disruptions.

The Chips Act has three ‘pillars’, namely:

  1. The ‘Chips for Europe Initiative’, to support large-scale technological capacity building and related research and innovation activities;
  2. A framework to ensure security of supply and resilience by attracting investments in production facilities;
  3. A Monitoring and Crisis Response system to anticipate supply shortages and provide responses in case of crisis.

Pillar 1- Chips for Europe initiative

Of most direct relevance to AENEAS is the ‘Chips for Europe initiative, which aims at bridging the gap between ‘the fab and the lab’. Its general objective is to achieve large-scale technological capacity building and support research and innovation activities throughout the EU chip value chain.

The initiative will support actions organised around 5 ‘operational objectives’:

Objective 1: Build large-scale design innovative capacities for integrated semiconductor technologies

Objective 2: Enhance existing and developing new pilot lines

Objective 3: Build advanced technology and engineering capacities for accelerating the development of quantum chips

Objective 4: Create a network of competence centres across Europe

Objective 5: Establish a Chips Fund to facilitate access to debt financing and equity by start-ups, scale-ups and SMEs and small mid-caps in the semiconductor value chains

The operational objectives 1 to 4 under the Initiative shall be entrusted to the Chips Joint Undertaking and implemented by actions set out in its work programme (WP). The activities under objective 5 are described collectively as ‘Chips Fund’ activities through a blending facility under the InvestEU Fund and via the European Innovation Council.

The Chips Joint Undertaking

 The KDT Joint Undertaking (JU) has enlarged its scope and is renamed the Chips JU. It has been equipped for its new tasks related to the Chips Act. The Chips JU will implement activities under the original KDT JU (also known as ‘non-Initiative’ activities) as well as activities under the Chips for Europe Initiative under the first 4 operational objectives detailed in the previous Chapter. The Chips JU activities are broken down into research & innovation activities and capacity building activities.

The Work Programme (WP) will be structured accordingly with:

  • One specific part dedicated to the implementation of the Chips for Europe Initiative including:
    • A sub-section on capacity building activities (funded under the Digital Europe Programme)
    • A sub-section on related research and innovation activities (funded under Horizon Europe)
  • Another specific part of the WP dedicated to the R&I activities not covered under the Chips for Europe Initiative, being the continuation of the KDT JU activities (funded under the Horizon Europe Programme).

All research & innovation activities will be based on the Strategic Research and Innovation Agenda prepared by the industry associations AENEAS, EPoSS and Inside and adopted by the Governing Board of the Chips JU. The activities of the Chips JU are:

Source EC presentation

Budgetary aspects of the Chips act and the Chips JU

All in all, the Chips Act should mobilise some €43 billion in public investments until 2030. Already, the EU Chips Act proposals have stimulated significant investments. The EC has stated that the proposed Act, along with the second Important Project of Common European Interest (IPCEI) in microelectronics that was approved recently has led to investment plans towards industrial deployment of €90 – 100 billion. The final adoption of the Act is likely to help accelerate these projects and boost investment in this crucial industry even further.

As the outcome of a long legislative process, in which Members of the European Parliament were vocal in calling for fresh money and a long-term financial approach going beyond the current EU Multi Financial Framework, the EU budget will support the Chips for Europe Initiative with a total of up to €3.3 billion, including €1.425 via HE, €1.45B via DEP and €425 M for the Chips fund via Invest EU and the EIC in the period 2023-2027. Together with €1.3 billion from the EU budget for the KDT JU, this results in a total EU budget of €4.175 billion for the Chips JU.

The Participating States are expected to provide commensurate amounts. Therefore, together with the contributions from project participants, the total public + private budget of the Chips JU for 2023-2027 will be about €11 billion.

Governance of the Chips JU- A voice for the industry

AENEAS and its partners EPoSS and Inside are particularly pleased  that in the final version of the SBA they have managed to ensure voting rights for the three associations as the ‘Private Members’ on the Governing Board of the Chips JU on all R&I activities, both in the Initiative and in the Non-Initiative parts of the Work Programme, without any increase of the €2.5 billion euro in kind and €26 million in cash that the private members had already committed to contribute to the operations and the administrative costs of the KDT JU:

  • For the sub-section on R&I activities under the Initiative, the private members hold 10% of the voting rights, and the Commission and the Member States 45% each.
  • For the sub-section on R&I activities in the non-Initiative part (i.e. the continuation of the KDT JU), the private members together will keep 33% of the voting rights.

Furthermore, the three industry associations will be involved in all preparations for and discussions on the entire WP, including the part on capacity building, and public authorities will have to take account of their advice. This way, the successful three-partite approach of the KDT JU will be maintained under the Chips JU.