What is the CHIPS Act and why does it matter?
Photo by Vishnu Mohanan on Unsplash
The CHIP Act is the intention of the EU bloc to invest in and develop the semiconductor industry in the region. The Act was announced in September and is in response to a decline in global leadership in the CHIPS industry. The US faces a similar dilemma in the semiconductor industry.
What is the CHIPs Act
Like the US, the EU is losing ground in the battle to become a global leader in semiconductors or CHIPS. There is competition in these sectors for China, Taiwan, Japan, and several other Asian nations. In response, the EU intends to issue the CHIPS Act to improve competitiveness.
The CHIPS act will create an ecosystem of CHIP development companies in the European area, making it easier and cheaper for CHIPS to be manufactured and sold. The Act will also help to open up new markets and create the conditions for new CHIP businesses to flourish.
What does the CHIPS Act do?
The EU CHIPS Act is designed to create an ecosystem out of semiconductor research, design, and testing that is set to increase the production and quality of European CHIPS. As the production of CHIPS increases, so too does the development of new markets in the region.
The EU CHIPS act will fund research into semiconductor design and performance, improving existing partnerships. Semiconductor production will also be funded and streamlined to create more efficient CHIPS. The Act will also seek to create international partnerships for progress.
Who benefits from CHIPS Act?
Current semiconductor companies based within the EU will receive more funding from the bloc to research, develop, and scale their EU CHIPS. Present semiconductor companies will be the first to benefit from further funding, but the bloc can expect new companies to also emerge.
The new Act is set to be a substantial boost for CHIPS businesses, but it should also encourage funding from overseas and new partnerships within the industry. It is hoped the changes will make the industry for EU CHIPS more viable and lead to more competition with Asian CHIPS.
The future of CHIPS Act
The intention of creating the CHIPS Act was announced in September. When it is introduced, it should revolutionalise the CHIPS industry in the EU. Funding from the EU will increase, new companies will develop CHIPS of the market, and investment will also come in from overseas.
Countries that develop their CHIP businesses should see increases in their GDP and global trade, making it a progressive and beneficial strategy for the region. The success of the CHIPS Act will have to be tracked and updated over time, but it seems likely that the Act has a future.
Conclusion
With technology at the forefront of industry, trade and development, it seems sensible that the EU has signalled the intention to introduce the CHIPS Act. This Act should make the European bloc more competitive in the CHIPS industry and more profitable. It remains to be seen if the US will follow suit with a CHIPS Act to resolve a similar decline in leadership for global CHIPS.
