On March 14th 2022, the proposal for a Regulation European Chips Act (henceforth, European Chips Act proposal) has been published on the European Union official website Have your say.[1]
Till May 9th 2022, it is possible to leave a comment to this proposal.
In this article, I will show that the proposal in question contains wrong definitions, European Union commercial dependence, administrative elephantiasis, strategic areas not taken into account, inadequate sanctions.
Therefore, I will offer considerations and suggestions to let the proposal be improved.
1 – Wrong definitions
Article 2 Definitions of the European Chips Act proposal says that:
- ‘semiconductor’ means a material or a component;[2]
- ‘chip’ means an electronic device comprising various functional elements on a single piece of semiconductor material, also referred to as ‘integrated circuit’.[3]
Moreover, the proposal talks about:
- semiconductor chips;[4]
- quantum chips;[5]
This shows that the European Chips Act proposal does not take into consideration the differences between semiconductor, integrated circuit and chip.
To avoid misunderstandings, we must remember that:
- semiconductor is a material such as: silicon, germanium, gallium;[6]
- integrated circuit is a miniature electronic device or component;[7]
- chip is the carrier of one or more integrated circuits;[8]
- quantum chip does not refer to a material, but to a technology (quantum technology) used to manufacture chip components.[9]
Stated this, we understand that, contrary to what is written in the European Chips Act proposal:
- semiconductor means a material, not a component;
- since the chip is the carrier of one or more integrated circuits, it cannot be said that ‘chip’ is a word that can be used also to refer to ‘integrated circuit’;
- ‘semiconductor chip’ is a wrong expression because semiconductor is the raw material at the beginning of the chain that leads to chip manufacture.
In addition to this, it must be borne in mind that the new frontiers of research and the needs of the industry make it necessary to manufacture chips not only on semiconductor materials, but also on conductive materials.
Consequently, to issue a legal act in which the word ‘semiconductor’ is used to mean ‘chip’, as well as wrong, it is also harmful because it excludes the sector of research, production and marketing of chips built starting from conductor materials from the application of the enacted act.
For this reason, any reference to the word ‘semiconductor’ in the European Chips Act proposal must be abrogated and replaced with the expression ‘semiconductor material’ if it refers to materials such as silicon, gallium, germanium, etc. or with ‘integrated circuit’, ‘integrated circuit stamping’, ‘chip’, ‘chip manufacturing’, as appropriate.
A proposal for a Regulation that governs chips must clearly assert definitions, otherwise its implementation will be very problematic.
For all these reasons, article 2 Definitions, paragraph 1, numbers 1 and 2, of the European Chips Act proposal must be replaced by the following.
Paragraph 1, number 1:
(a) Regardless of the physical state in which they are, such as solid, liquid, gas, plasma, etc.
- ‘insulators’ are materials with poor conductivity, such as coal, artificial crystals, amber, ceramics, etc.,
- ‘conductors’ are metals with better conductivity, such as gold, silver, copper, iron, tin, aluminium, etc.;
- ‘semiconductor’ refers to a material whose conductivity is between a conductor and an insulator at room temperature and whose conductivity can be controlled, ranging from insulators to conductors;
(b) ‘integrated circuit’ is a miniature electronic device or component;
Paragraph 1, number 2:
‘chip’ is the carrier of one or more integrated circuits;
Furthermore, throughout the text of the European Chips Act proposal, any reference to the word ‘semiconductor’ must be abrogated and replaced with the expression:
- ‘semiconductor material’ if it refers to materials such as silicon, germanium, gallium, etc.
- or with ‘integrated circuit’, ‘integrated circuit stamping’, ‘chip’, ‘chip manufacturing’, as appropriate.
2 – European Union commercial dependence
European Union is badly losing the world competition on the field of semiconductor materials procurement because:
- in its territory, it has not the availability of semiconductor materials in the quantity necessary to manufacture chips it needs;
- it almost totally depends from other Countries to import semiconductor materials and other critical raw materials;
- it has not effective, on-going, long-term partnerships to obtain sustainable semiconductor materials from other Countries;
- it has not an effective, on-going, long-term policy to extract and recycle semiconductor materials from devices, both in use and discarded, that contain them.
Semiconductor materials silicon, germanium, gallium are in the Fourth list of critical raw materials for the European Union of 2020.[10]
European Union is almost totally dependent from other Countries for the import of them and of other materials mentioned in the list.[11]
The Fourth list in question does not elucidate any effective, on-going, long-term agreement to obtain sustainable semiconductor materials from other Countries. It just talks about what should be done and what European Commission intends to do in the future.[12]
Even the European Chips Act questions and answers document does not give any contribution to fill this omission.[13]
For what concerns Europe’s current situation in the chips market, the document in question just talks about Europe’s global semiconductors production market share – that is to say the last ring of the chain: chips sold by Europe all over the world – instead of talking about Europe’s dramatic lack of semiconductor materials and how to face this problem.[14]
Going on reading, the same omission can be observed in the paragraph “How will the European Chips Act address current problems?”.
In it, we read just about coordination between the Member States, strengthen manufacturing activities and maintain Europe’s technological leadership.[15]
Once again nothing about Europe’s dramatic lack of semiconductor materials and how to face this problem.
Not even action at the international level foresees anything about the lack in question.
In the European Chips Act questions and answers document, the paragraph “What is being done at international level?” continues to ignore the fact that semiconductor is a material and goes on talking about semiconductor meaning semiconductor chips (see “Wrong definitions” above).
Furthermore, with this misunderstanding in mind, the paragraph says:
- “By improving its supply chain security and through its capacity to design and produce powerful and resource-efficient semiconductors, the EU is contributing to the rebalancing of the semiconductors global supply chain. Additionally, the EU has as an overall objective to serve the global demand, which will increase substantially, and to win its share of the growing market.”
How will be possible for European Union to achieve the goal “to design and produce powerful and resource-efficient semiconductors”, or even to contribute to “the rebalancing of the semiconductors global supply chain”, without the certainty of a constant supply line of semiconductor materials from abroad?
All legal provisions in the European Chips Act proposal stand up only with effective, on-going, long-term international partnerships to secure a diversified supply of sustainable semiconductor materials.
Unfortunately, in the day in which I write (March 19th, 2022), this is not yet a reality.[16]
The same consideration must be said for the effective, on-going, long-term policy to extract and recycle semiconductor materials from devices, both in use and discarded, that contain them: in the day in which I write (March 19th, 2022), this is not yet a reality.[17]
The choice to write a proposal for a Regulation about chips, without having on work the partnerships and the policy I have just told, means to focus on the final good or service while ignoring everything that is before and which is necessary to manufacture the good or to offer the service.
This is indicative of a mind-set that wants to earn money selling goods or services.
This mind-set is not bad in itself, but it is deeply wrong when it is applied to the world competition on the fields of semiconductor materials procurement, integrated circuit printing and chip manufacturing.
In this competition, what is at stake is not selling a product or a service, but the strategic independence of European Union.
What good is to have a strong chip manufacturing, if the existence of all this may be due to the sudden decision of one Country to open or close the faucet of the semiconductor material procurement?
Would this situation be easier to solve if the Country in question is a competitor of the European Union in the field of chip manufacturing or with serious human rights violations on-going?
It is counter-productive to strengthen an industrial sector before having secured the availability of the raw materials necessary for its operation.
If you do this, the only thing that you strengthen is your commercial dependence.
This situation makes European Union not strategically independent and market leader in the field of chip manufacturing, but a commercial colony.
To avoid this happen, it is necessary to postpone the presentation, discussion and approval of European Chips Act proposal to the achievement of the partnerships and policy upper mentioned.
Only after these achievements it will be possible to identify strengths and weaknesses in the fields of integrated circuit stamping and chip manufacturing in the European Union and to write a proposal for a Regulation to let it become a global leader in these fields.
For all these reasons, presentation, discussion and approval of European Chips Act proposal must be postponed to the achievement of:
- effective, on-going, long-term international partnerships to secure a diversified supply of sustainable semiconductor materials;
- effective, on-going, long-term policy to extract and recycle semiconductor materials from devices, both in use and discarded, that contain them.
3 – Administrative elephantiasis
The European Chips Act proposal contains the institution of the following bodies:
- European Chips Infrastructure Consortium with legal personality;[18]
- European Semiconductor Board, with possible standing or temporary sub-groups, that will substitute the actual European Semiconductor Expert Group;[19]
- European network of competence centers in semiconductors with “substantial overall autonomy to lay down its organisation, composition and working methods”;[20]
- Chips Joint Undertaking, that is to say “the amended and renamed current Key Digital Technologies Joint Undertaking”;[21]
- National competent authorities.[22]
The choice made by European Chips Act proposal to keep existing bodies and establish new ones, both in Europe and in Member States, leads to elephantiasis of the administrative apparatus.
No one better than the Country of which I am citizen – the Italian Republic – can attest that a choice of this type produces a slow, expensive and complex public administration, to the point of being perceived as a burden for the community, in which different bodies, each with their own procedures and timing, are called upon to rule on the same issue.
In few words, a public administration that makes it difficult to live in one of the most beautiful Countries in the world.
With the bitterness of this consideration, I wonder what good is a European Union that makes the same wrong choices as my Country, Italy?
European Union makes sense if it does better than my Country.
As I wrote in the previous paragraph, what is at stake in the European Chips Act is the strategic independence of European Union, not the need to multiply the organisms and therefore jobs and executive seats.
Researchers, integrated circuits printers and chip assemblers do not need four bodies to be able to work.
What they really need is an administrative apparatus fast, effective and cheap that poses few clear limits beyond which severe and promptly applied sanctions forbid to go and inside which they can easily work and innovate.
An identical bitter consideration must be expressed regarding the Legislator’s habit of setting up ad hoc bodies in every field.
The above mentioned needs of celerity, effectiveness and cheapness of administrative apparatus must be implemented with a completely different choice.
For this purpose, the administrative action must be brought back within the offices that make up the structure headed by a single European Commissioner.
For all these reasons:
- all existing bodies mentioned at the beginning of this paragraph 3 Administrative elephantiasis must be abolished and no other body must be set up;
- all provisions regarding bodies mentioned at the beginning of this paragraph 3 Administrative elephantiasis must be eliminated;
- the text of Article 7 European Chips Infrastructure Consortium must be replaced by the following.
Article 7 Celerity, effectiveness and cheapness of administrative apparatus
1. European Union considers integrated circuit stamping, chip manufacturing and the research on these topics as a part of its strategic independence.
2. In the same time, European Union affirms that no action is more needed to achieve its strategic independence in the mentioned fields than celerity, effectiveness and cheapness of administrative apparatus that governs them.
3. For these purposes, the administrative action in the mentioned fields is deputed to one body: the European Union Commissioner delegated for Trade, henceforth Trade Commissioner.
4. The dialogue must be carried out around a discussion table chaired by the Trade Commissioner, to be held on a monthly basis, in which delegates from the world of production, the world of research, public and private bodies of the European Union and of Member States can participate.
5. Topics requests may come from Trade Commissioner or from the other participants. The Trade Commissioner will decide who to admit to the table and which topics to cover.
6. The topics to be discussed will be sent to all admitted participants three days before each meeting.
7. Participants to the table must have the power to engage the subject they represent.
8. Communications required by law are made to an office that the Trade Commissioner designates within the structure she/he directs.
9. The same office proposes to the Trade Commissioner measures to be taken.
4 – Strategic areas not taken into account
Given that what is at stake in the European Chips Act proposal is the strategic independence of European Union, it is surprising that strategic areas of defence and aero-space are not taken into account in the proposal in question.
The thesis according to which the proposal, if approved, would apply to all chips, and therefore also to those intended for defence and aero-space sectors, does not fill the regulatory gap now highlighted.
Making a chip for the defence or aero-space sectors requires taking into account elements that don’t necessarily matter when it comes to making a chip for the automotive sector.
For what concerns defence sector, the objectives of the European Chips Act proposal must be coordinated with those of:[23]
- the EU Global Strategy on security and defence (EEAS);
- the Permanent Structured Cooperation (PESCO) in the area of security and defence;
- the EU – NATO cooperation.
For what concerns aero-space sector, the objectives of the European Chips Act proposal must be coordinated with those of:
- the EU Aeronautics industry actions and initiatives,[24]
- the European Union Agency for the Space Program (EUSPA),[25]
- the European Space Agency (ESA).[26]
For all these reasons, presentation, discussion and approval of European Chips Act proposal must be postponed until the following actions are completed:
- the European Union Commission convenes a discussion table with the EU Global Strategy on security and defence (EEAS), the Permanent Structured Cooperation (PESCO) in the area of security and defence, the EU – NATO cooperation, the EU Aeronautics industry actions and initiatives, the European Union Agency for the Space Program (EUSPA), the European Space Agency (ESA);
- at this table, the entities now mentioned will expose the needs for which they believe that the European integrated circuits and chips industry should orient itself towards the pursuit of specific objectives;
- the aim of the discussion table is to ensure that the parties participating in the table and the above-mentioned European industry work in a coordinated way to be stronger together and so to amend the European Chips Act proposal with the objectives set out and the strategies to achieve them.
5 – Inadequate sanctions
The global chip market size was USD 425,96 billion in 2020 and it is projected to grow from USD 425,25 billion in 2021 to USD 803,15 billion in 2028.
Artificial intelligence, internet of things, machine learning technologies are providing new opportunities for market development.
Moreover, the increasing demand for faster memory chips in industrial applications will let the market to grow over the above said timeline.[27]
These data let us understand that revealing confidential information about a chip can be worth hundreds of billions of euros and change the layout of the market.
Consequently, we understand that the fine up to 300.000,00 (three hundred thousand,00) euros provided for in Article 28 Penalties and fines of the European Chips Act proposal[28] for some cases of disclosure of confidential information lacks of any real deterrent effect and so it is absolutely inadequate to protect the legal asset constituted by the strategic independence of the European Union in the sectors of integrated circuits and chips.
The same consideration is valid for the penalty that “shall not exceed 1.5% of the average daily turnover in the preceding business year for each working day of non-compliance with the obligation pursuant to Article 21 [Priority rated orders] calculated from the date established in the decision.”.[29]
What deterrent effect can a sanction that does not exceed 1.5% of the average daily turnover have for a company?
Furthermore, revealing confidential information about a chip does not attain only to the field in which chip is actually used but also to other fields.
Let’s make an example.
Tizio is an IT designer in a home appliance company.
He designed a chip that makes the blades of the blender sold by the company move counter-rotating so that the smoothie is creamier.
Caio offers Tizio five hundred thousand euros for information on the new chip.
Tizio thinks that revealing the information requested only constitutes the crime of disclosing industrial secrets.
Considering that the criminal sanction provided for this crime in Tizio’s Country is very light, he is convinced that, even if he is subjected to criminal proceedings, he will have nothing to fear.
In fact, either a definitive sentence will not be reached because the criminal proceedings will last longer than the time necessary to carry out the penal prescription, or the prison that will be imposed on him with the definitive sentence will be suspended since he is without previous criminal record.
This first part of the example lets us understand that the fine of up to three hundred thousand euros provided for in the European Chips Act proposal, even if it is applied to the story concerning Tizio, it would have no deterrent effect because Tizio could have kept for himself the remaining two hundred thousand euros of the sum that Caio gave him.
But let’s move on to the second part of this example.
Caio works for Sempronio to whom he gives the information obtained.
Sempronio is an arms dealer and uses the information on the chip to improve the propellers of the combat drones that he, in violation of current regulations, sells to Mevio.
Mevio is an active fundamentalist in a Country torn by civil war that is close to the territory of the European Union.
As is known, chips operate a large number of devices in the world we live in.
To reveal information about a chip that runs a household appliance does not mean that information will be used only by a competitor company to produce better household appliances.
Aware of all this and aware of the fact that the legal asset that must be protected by European Chips Act proposal is the strategic independence of the European Union, we must proceed to strengthen the sanctions provided for in the mentioned proposal, also adding the criminal sanction.
Since the European Union does not have the competence to put in place rules that envisage and sanction a fact constituting a crime, the addition in question will take place through a suspensive condition to be inserted in the text of Article 28 Penalties and fines of the European Chips Act proposal.
This suspensive condition will have regard to criminal sanctions to be put in force by Member States in their internal legal systems before they can take advantage of any European Chips Act legal provision.
For all these reasons, Article 28 Penalties and fines must be amended as follows:
(amendments are in bold)
1. The Commission may, by decision, where deemed necessary and proportionate:
(a) impose fines, where a representative organisations of undertakings or an undertaking, intentionally or through gross negligence, supplies incorrect, incomplete or misleading information in response to a request made pursuant to Article 20, or does not supply the information within the prescribed time limit;
(b) impose fines, where an undertaking, intentionally or through gross negligence, does not comply with the obligation to inform the Commission of a third country obligation pursuant to Article 20(5) and Article 21(3);
(c) impose periodic penalty payments, where an undertaking, intentionally or through gross negligence, does not comply with an obligation to prioritise the production of crisis-relevant products pursuant to Article 21.
2. Fines imposed in the cases referred to in paragraph 1 (a) and (b) shall not be less than 300 000 (three hundred thousand) euros and shall not exceed the total value given by the sum of the price of the crime plus the product of the crime plus the profit from the crime.
3. Periodic penalty payments imposed in the cases referred to in paragraph 1 (c) shall not exceed 5 % of the average daily turnover in the preceding business year for each working day of non-compliance with the obligation pursuant to Article 21 calculated from the date established in the decision.
4. In fixing the amount of the fine or periodic penalty payment, regard shall be had to the nature, gravity and duration of the infringement, taking due account of the principles of proportionality and appropriateness.
5. Where the undertaking has satisfied the obligation which the periodic penalty payment was intended to enforce, the Commission may fix the definitive amount of the periodic penalty payment at a figure lower than that which would arise under the original decision.
6. The Court of Justice of the European Union shall have unlimited jurisdiction to review decisions whereby the Commission has fixed a fine or a periodic penalty payment. It may cancel, reduce or increase the fine or periodic penalty payment imposed.
7. Stated that the legal asset to protect is the strategic independence of the European Union, the possibility for each Member State to make use of any provision of this Regulation, to take part in any reality governed by it and to obtain any funding provided for therein is suspended until:
- in its internal legal system, the disclosure and procurement of confidential and / or secret information relating to one or more integrated circuit and / or one or more chip is punished, for civilians, with the same sanctions provided for the disclosure and procurement of State secrecy and, for the military, with the same sanctions provided for the disclosure and procurement of military secrecy;
- in its internal legal system, the disclosure and procurement of confidential and / or secret information relating to one or more integrated circuit and / or one or more chip is punished, both for civilians and for military, with the mandatory seizure and the mandatory confiscation of the price of the crime, of the product of the crime, of the profit from the crime and of the means and / or tools used to commit the crime.
I thank you for your time and attention.
FOOTNOTES
[1] https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13405-European-chips-act-package-Regulation_en
Proposal for a Regulation European Chips Act
090166e5e99d6a77
Annexes to the Proposal for a Regulation European Chips Act
090166e5e99d6a0e
[2] I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Article 2 Definitions, paragraph 1, number 1, ‘semiconductor’, pages 36 and 37 of the .pdf file.
(henceforth, underline is mine unless otherwise specified)
“‘semiconductor’ means one of the following:
(a) a material, either elemental, such as Silicon, or compound, such as Silicon Carbide, whose electrical conductivity can be modified, or
(b) a component consisting of a series of layers of semiconducting, insulating and conducting materials defined according to a predetermined pattern, and intended to perform well-defined electronic or photonic functions or both;”.
[3] I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Article 2 Definitions, paragraph 1, number 2, ‘chip’, page 37 of the .pdf file.
“‘chip’ means an electronic device comprising various functional elements on a single piece of semiconductor material, typically taking the form of memory, logic, processor and analogue devices, also referred to as ‘integrated circuit’;”
[4] See “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, (pages of the .pdf file):
- page 2, paragraph 1, first paragraph, first line;
- page 66, paragraph 1.3.2, text in the square, first line.
[5] See “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, (pages of the .pdf file):
- page 5, first paragraph;
- page 12, penultimate period;
- page 18, first line;
- page 25, whereas 12;
- page 39, article 4, paragraph 2, letter c;
- page 40, article 5, paragraph 1, letter c.
[6] I quote from: https://www.ipcb.com/ic-substrate-tech/3342.html
“Semiconductor (semiconductor) refers to a material whose conductivity is between a conductor and an insulator at room temperature.
…
Semiconductor refers to a material whose conductivity can be controlled, ranging from insulators to conductors.
…
We usually call materials with poor conductivity, such as coal, artificial crystals, amber, and ceramics, as insulators. Metals with better conductivity, such as gold, silver, copper, iron, tin, aluminum, etc., are called conductors. You can simply call the material between the conductor and the insulator a semiconductor.”
[7] See https://www.ipcb.com/ic-substrate-tech/3342.html
[8] See https://www.ipcb.com/ic-substrate-tech/3342.html
[9] I quote from “How Do Quantum Computers Work?” on:
https://www.sciencealert.com/quantum-computers
“Quantum computers perform calculations based on the probability of an object’s state before it is measured – instead of just 1s or 0s – which means they have the potential to process exponentially more data compared to classical computers.
Classical computers carry out logical operations using the definite position of a physical state. These are usually binary, meaning its operations are based on one of two positions. A single state – such as on or off, up or down, 1 or 0 – is called a bit.
In quantum computing, operations instead use the quantum state of an object to produce what’s known as a qubit. These states are the undefined properties of an object before they’ve been detected, such as the spin of an electron or the polarisation of a photon.”
[10] See Critical Raw Materials Resilience: Charting a Path towards greater Security and Sustainability, on:
https://ec.europa.eu/docsroom/documents/42849
[11] See, Critical Raw Materials Resilience: Charting a Path towards greater Security and Sustainability,
Figure 1: biggest supplier countries of CRMs [critical raw materials] to the EU,
page 5 of the .pdf English file, on:
https://ec.europa.eu/docsroom/documents/42849
[12] I quote from Critical Raw Materials Resilience: Charting a Path towards greater Security and Sustainability, paragraph 3. Turning Challenges into opportunities,
pages 7 and 8 of the pdf. English file, on:
https://ec.europa.eu/docsroom/documents/42849
(bold is mine)
“The EU action plan for critical raw materials should:
- Develop resilient value chains for EU industrial ecosystems;
- reduce dependency on primary critical raw materials through circular use of resources, sustainable products and innovation;
- strengthen the sustainable and responsible domestic sourcing and processing of raw materials in the European Union, and
- diversify supply with sustainable and responsible sourcing from third countries, strengthening rules-based open trade in raw materials and removing distortions to international trade.
The Commission intends to develop and implement these priority objectives and the action plan with the help of Member States and stakeholders, in particular the European Innovation Partnership on Raw Materials and the Raw Materials Supply Group. It will also draw on the support and expertise of the European Institute of Innovation and Technology (EIT) Raw Materials.”
[13] See European Chips Act – Questions and Answers, on:
https://ec.europa.eu/commission/presscorner/detail/en/qanda_22_730
[14] I quote from “What is Europe’s current situation in the chips market?”,
in European Chips Act – Questions and Answers, on:
https://ec.europa.eu/commission/presscorner/detail/en/qanda_22_730
“What is Europe’s current situation in the chips market?
Europe has many strengths and some weaknesses in the semiconductor value chain. The semiconductor sector is characterised by intense R&D activity, with first-class companies reinvesting more than 15% of their revenues into research in next generation technologies. The EU is home to world-leading research and technology organisations and many excellent universities and research institutes spread across the Union. These are pioneering the techniques behind the production of some of the world’s most advanced chips.
Moreover, Europe is very well positioned in terms of the materials and equipment needed to run large chip manufacturing plants, with many companies playing essential roles along the supply chain.
Despite these strengths, Europe has an overall global semiconductors production market share of less than 10% and is heavily dependent on third-country suppliers. In case of severe disruption of the global supply chain, Europe’s chips’ reserves in some industrial sectors (e.g. automotive or healthcare devices) could run out in a few weeks, bringing many European industries to a standstill.
As the digital transformation accelerates and penetrates every part of society, industrial needs for chips are set to increase, opening new market opportunities.”
[15] I quote from “What is Europe’s current situation in the chips market?”,
in European Chips Act – Questions and Answers, on:
https://ec.europa.eu/commission/presscorner/detail/en/qanda_22_730
“How will the European Chips Act address current problems?
The Chips Act is a unique opportunity for Europe to act jointly across all Member States, to the benefit of the whole of Europe. However, the current chips shortage is a systematic issue with no quick fix.
- In the short term, the toolbox set out in the Recommendation will immediately enable the coordination between the Member States and the Commission. This will allow to discuss and decide on timely and proportionate crisis response measures, if considered necessary.
- In the medium term, the Chips Act will strengthen manufacturing activities in the Union and support the scale-up and innovation of the whole value chain, addressing security of supply and a more resilient ecosystem.
- And, in the long-term, it will maintain Europe’s technological leadership while preparing the required technological capabilities that would support transfer of knowledge from the lab to the fab and position Europe as a technology leader in innovative downstream markets.”
[16] I quote from Action Plan on critical raw materials,
factsheet .pdf document page 4, on:
https://ec.europa.eu/docsroom/documents/42852
“Develop strategic international partnerships to secure a diversified supply of sustainable critical raw materials, starting with pilot partnerships with Canada, interested countries in Africa and the EU’s neighbourhood in 2021”.
I quote from European Parliament resolution of 24 November 2021
on a European strategy for critical raw materials (2021/2011(INI)),
.pdf document page 15, paragraph 52, on:
https://www.europarl.europa.eu/doceo/document/TA-9-2021-0468_EN.pdf
“Urges the Commission to foster relations with all existing CRM supplier countries of the EU, to systematically and strategically build new CRM partnerships, in cooperation with our allies, where possible, taking into account the sovereignty of non-EU countries over their resources, so as to ensure that CRM becomes a source of welfare for developing countries, to promote the participation of SMEs and make this endeavour a horizontal task of its external and internal policies, and to present the results in 2021; welcomes the Commission’s plans to establish strong and supportive international partnerships by endorsing a global agenda on raw materials, aiming for EU strategic partnerships that ensure both security of supply and development benefits;”
[17] I quote from Action Plan on critical raw materials,
factsheet .pdf document page 3, on:
https://ec.europa.eu/docsroom/documents/42852
“Launch research and innovation on waste processing, advanced materials and substitution of critical raw materials”.
I quote from European Parliament resolution of 24 November 2021 on a European strategy for critical raw materials (2021/2011(INI)), .pdf document page 14, paragraph 41, on:
https://www.europarl.europa.eu/doceo/document/TA-9-2021-0468_EN.pdf
“Notes that while smart product design, the reuse of materials, substitution with recycled materials and promoting the reduction of materials and consumption footprints can significantly reduce primary demand, and its potential should be fully exploited, responsible and sustainable CRM sourcing with prior impact assessment to mitigate potential social and environmental impacts is needed when CRM supply cannot be kept economically viable by the measures mentioned or would lead to lower quality products;”
[18] I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Explanatory memorandum, page 8 of the .pdf file.
“In order to accelerate the implementation of the actions, the Chips for Europe Initiative provides for a new legal instrument – the European Chips Infrastructure Consortium (ECIC) – that is specifically developed to simplify and structure the legal relationships between the private-public consortium members, including particularly RTOs, and provide a structural dialogue with the Commission for the implementation of the actions under the Initiative. This new legal instrument is voluntary and will complement the Union’s toolbox of various other legal instruments, including European Digital Infrastructure Consortium15, that allow to combine funding from Member States, the Union budget, and private investments. Legal entities, when forming a public-private consortium for the purpose of the implementing actions under the Initiative, will have a choice among the available Union’s legal instruments that better fits the specific purpose, composition and set-up of a particular consortium. The Chips Joint Undertaking entrusted with the overall implementation of the certain actions under this Initiative, may under the conditions provided in the Article 134 of the Commission’s Proposal for a Council Regulation amending Regulation (EU) 2021/2085 establishing the Joint Undertakings under Horizon Europe, as regards the Chips Joint Undertaking29 provide that certain actions may be carried out only by legal entities cooperating within a consortium that may be structured in a form of European Chips Infrastructure Consortium, or any other available Union legal instruments available for forming a consortium.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Explanatory memorandum, page 18 of the .pdf file.
“The Regulation provides for a procedural framework to facilitate combined funding from Member States, investment without prejudice with State aid rules, the Union budget and private investment. This will take the form of a new instrument with legal personality, the European Chips Infrastructure Consortium (‘ECIC’), which can be used by legal entities to structure their collaborative work within a consortium, on a voluntary basis. In addition, Section 1 sets up a mechanism for establishing a European network of Competence Centres for the purpose of implementing actions on competence centres and skills under the Chips for Europe Initiative.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Whereas number 16, pages 26 and 27 of the .pdf file.
“With a view to accelerating implementation of the actions of the Initiative, it is necessary to provide an option of implementing some of the Initiative actions, in particular on pilot lines, through a new legal instrument, the European Chips Infrastructure Consortium (ECIC). The ECIC should have legal personality. This means that when applying for the actions to be funded by the Initiative, the ECIC itself, and not individual entities forming the ECIC, can be the applicant. The main aim of the ECIC should be to encourage effective and structural collaboration between legal entities, including Research and Technology Organizations. For this reason, the ECIC has to involve the participation of at least three legal entities from three Member States and be operated as a public-private sector consortium for a specific action. The setting up of ECIC should not involve the actual setting up of a new Union body and should not be targeted at one specific action under the Initiative. It should address the gap in the Union’s toolbox to combine funding from Member States, the Union budget and private investment for the purposes of implementing actions of the Initiative. In particular, strong synergies can be attained through combined development of the different pilot lines in an ECIC, pooling the Union’s contribution with the collective resources of the Member States and other participants. The budget of the ECIC that would be made available by Member States and private sector participants over its projected period of operation should respect the timeframes of the actions implemented under this Initiative. The Commission should not be directly a party in the Consortium.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Article 2 Definitions, paragraph 1, number 7, page 37 of the .pdf file.
“‘coordinator’ means a legal entity which is a member of a European Chips Infrastructure Consortium created in accordance with Article 7 and has been appointed by all the members of that consortium to be the principal point of contact for the purpose of the consortium’s relations with the Commission;”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Article 7 European Chips Infrastructure Consortium, pages 40 – 42 of the .pdf file.
“1. For the purpose of implementing eligible actions and other related tasks funded under the Initiative a European Chips Infrastructure Consortium (‘ECIC’) may be established under the conditions set out in this Article.
2. The ECIC shall
(a) have legal personality from the date of entry into force of the Commission decision referred to in paragraph 6;
(b) have one or more statutory seats, which shall be located on the territory of one or more Member States;
(c) consist of at least three legal entities from at least three Member States and be operated as a public-private sector consortium with the participation of the Member States, and private legal entities;
(d) appoint the coordinator.
3. The coordinator shall submit an application to the Commission in writing which shall contain the following:
(a) a request to the Commission to set up the ECIC, including a list of the proposed legal entities that are forming the ECIC consortium;
(b) the draft Statutes of the ECIC that shall include at least the provisions on: the procedure for setting-up, membership, budget, legal seat, applicable law and jurisdiction, ownership of the results, governance, including decision making procedure and specific role and if applicable voting rights of Member States and the Commission, winding-up, reporting and liability.
4. The Commission shall review the application to set up the ECIC on the basis of all of the following criteria:
(a) the appropriate competences, know-how and capabilities of the proposed ECIC and of the legal entities forming it on the semiconductors;
(b) the appropriate management capacity, staff and infrastructure necessary to carry out the eligible actions under the Initiative;
(c) the operational and legal means to apply the administrative, contractual and financial management rules laid down at Union level;
(d) the appropriate financial viability corresponding to the level of Union funds it will be called upon to manage and demonstrated, where appropriate, through guarantees issued preferably by a public authority;
(e) the budget that would be made available by Member States and private sector participants for the financing of the ECIC, and related modalities;
(f) the appropriate ability of the ECIC to ensure coverage of the needs of industry.
5. The Commission by means of an implementing act and based on the criteria set out in paragraph 4, shall adopt one of the following decisions:
(a) setting up the ECIC after it has concluded that the requirements laid down in paragraphs 3 and 4 are met;
(b) rejecting the application if it concludes that the requirements laid down in paragraphs 3 and 4 are not met.
The implementing act shall be adopted in accordance with the examination procedure referred to in Article 33(2).
6. The decision referred to in paragraph 5 shall be notified to the applicants.
7. The decision setting up the ECIC shall be published in the Official Journal of the European Union.
8. The ECIC shall have substantial overall autonomy to lay down its membership, governance, funding, budget and the modalities by which the respective financial contributions from the members are called upon, voting rights and working methods. However, the organisation, composition and working methods of the ECIC, including any amendments to the Statutes, shall be in accordance with and contribute to the aims and objectives of this Regulation and the Chips for Europe Initiative and shall be notified to the Commission.
9. The ECIC shall produce an annual activity report, containing a technical description of its activities and financial statement. The annual activity report shall be transmitted to the Commission and made publicly available. The Commission may provide recommendations regarding the matters covered in the annual activity report.”
[19] I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Explanatory memorandum, page 20 of the .pdf file.
“At Union level, the proposal establishes a European Semiconductor Board, composed of representatives from the Member States and chaired by the Commission. The European Semiconductor Board will provide advice on the Initiative to the Public Authorities Board of the Chips Joint Undertaking (pillar 1); provide advice and assistance to the Commission in order to exchange information on the functioning of the IPF and OEF (pillar 2); discuss and prepare the identification of specific critical sectors and technologies, address monitoring and crisis response issues (pillar 3), and to provide support in the consistent application of the proposed Regulation and facilitate cooperation among Member States. The European Semiconductor Board shall support the Commission in international cooperation. It shall also coordinate and exchange information with relevant crisis structures established under Union law. The European Semiconductor Board will meet in different compositions and hold separate meetings for its tasks under pillar 1 and for its tasks under pillars 2 and 3. The Commission may establish standing or temporary sub-groups of the European Semiconductor Board and invite organisations representing the interests of the semiconductor industry and other stakeholders to such sub-groups as observers.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Whereas number 6, page 23 of the .pdf file.
“The achievement of these objectives will be supported by a governance mechanism. At Union level, this Regulation establishes a European Semiconductor Board, composed of representatives of the Member States and chaired by the Commission. The European Semiconductor Board will provide advice to and assist the Commission on specific questions, including the consistent application of this Regulation, facilitating cooperation among Member States and exchanging information on issues relating to this Regulation. The European Semiconductor Board should hold separate meetings for its tasks under the different chapters of this Regulation. The different meetings may include different compositions of the high-level representatives and the Commission may establish subgroups.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Whereas number 55, page 34 of the .pdf file.
“In order to facilitate a smooth, effective and harmonised implementation of this Regulation, cooperation and the exchange of information, the European Semiconductor Board should be established. The European Semiconductor Board should provide advice to and assist the Commission on specific questions. These should include providing advice on the Chips for Europe Initiative to the Public Authorities Board of the Chips Joint Undertaking; exchanging information on the functioning of the Integrated Production Facilities and Open EU Foundries; discussing and preparing the identification of specific sectors and technologies with potential high social impact and respective security significance in need of certification for trusted products and addressing coordinated monitoring and crisis response. Furthermore, the European Semiconductor Board should ensure the consistent application of this Regulation, facilitate cooperation between Member States as well as exchange of information on issues relating to this Regulation. The European Semiconductor Board should support the Commission in international cooperation in line with international obligations, including in information gathering and crisis assessment. In addition, the European Semiconductor Board should coordinate, cooperate and exchange information with other Union crisis response and crisis preparedness structures with a view to ensure a coherent and coordinated Union approach as regards crisis response and crisis preparedness measures for semiconductor crises.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Whereas number 56, page 34 of the .pdf file.
“A representative of the Commission should chair the European Semiconductor Board. Each Member State’s national single point of contact should appoint at least one high-level representative to the European Semiconductor Board. They could also appoint different representatives in relation to different tasks of the European Semiconductor Board, for example, depending on which Chapter of this Regulation is discussed in the meetings of the European Semiconductor Board. The Commission may establish sub-groups and should be entitled to establish working arrangements by inviting experts to take part in the meetings on an ad hoc basis or by inviting organisations representing the interests of the Union semiconductors industry, such as the Industrial Alliance on Processors and Semiconductor Technologies, in its sub-groups as observers.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Whereas number 57, pages 34 and 35 of the .pdf file.
“The European Semiconductor Board will hold separate meetings for its tasks under Chapter II and for its tasks under Chapter III and IV. Member States should endeavour to ensure effective and efficient cooperation in the European Semiconductor Board. The Commission should be able to facilitate exchanges between the European Semiconductor Board and other Union bodies, offices, agencies and advisory groups. In light of the importance of the supply of semiconductors for other sectors and the resulting need for coordination, the Commission should ensure participation by other Union institutions and bodies as observers in meetings of the European Semiconductor Board where relevant and appropriate in relation to the monitoring and crisis response mechanism established under Chapter IV. In order to continue and make use of the work following the implementation of Commission Recommendation on a common Union toolbox to address semiconductor shortages, the European Semiconductor Board should carry out the tasks of the European Semiconductor Expert Group. Once the European Semiconductor Board is operational, this expert group should cease to exist.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Chapter V Governance, Section 1 European Semiconductor Board, articles 23, 24 and 25, pages 52 and 53 of the .pdf file.
“CHAPTER V
GOVERNANCE
SECTION 1
EUROPEAN SEMICONDUCTOR BOARD
Article 23
Establishment and tasks of the European Semiconductor Board
1. The European Semiconductor Board is established.
2. The European Semiconductor Board shall provide the Commission with advice and assistance pursuant to this Regulation and, in particular, by:
(a) providing advice on the Initiative to the Public Authorities Board of the Chips Joint Undertaking;
(b) exchanging information on the functioning of the Integrated Production Facilities and Open EU Foundries;
(c) discussing and preparing the identification of specific sectors and technologies with potential high social impact and respective security significance in need of certification for trusted products;
(d) addressing monitoring and crisis response issues;
(e) providing advice regarding the consistent application of this Regulation, facilitate cooperation among Member States and exchange of information on issues relating to this Regulation.
3. The European Semiconductor Board shall support the Commission in international cooperation, including information gathering and crisis assessment, in line with international obligations.
4. The European Semiconductor Board shall ensure coordination, cooperation and information exchange, where appropriate, with the relevant crisis response and crisis preparedness structures established under Union law.
Article 24 Structure of the European Semiconductor Board
1. The European Semiconductor Board shall be composed of representatives of the Member States and shall be chaired by a representative of the Commission.
2. Each national single point of contact, referred to in Article 26(3), shall appoint a high-level representative to the European Semiconductor Board. Where relevant as regards the function and expertise, a Member State may have more than one representative in relation to different tasks of the European Semiconductor Board. Each member of the European Semiconductor Board shall have an alternate.
3. On a proposal by and in agreement with the Commission, the European Semiconductor Board shall adopt its rules of procedure by a simple majority of its members.
4. The Commission may establish standing or temporary sub-groups for the purpose of examining specific questions. Where appropriate, the Commission may invite organisations representing the interests of the semiconductor industry, including the Industrial Alliance on Processors and Semiconductor Technologies and users of semiconductors at Union level, to such sub-groups in the capacity of observers. A sub-group including Union Research and Technology Organisations shall be established for the purpose of examining specific aspects on strategic technology directions and reporting on this to the European Semiconductor Board.
Article 25 Operation of the European Semiconductor Board
1. The European Semiconductor Board shall hold ordinary meetings at least once a year. It may hold extraordinary meetings at the request of the Commission or a Member State and as referred to in Article 15 and Article 18.
2. The European Semiconductor Board shall hold separate meetings for its tasks referred to in Article 23(2), point (a), and for its tasks referred to in Article 23(2), points (b), (c) and (d).
3. The Chair shall convene the meetings and prepare the agenda in accordance with the tasks of the European Semiconductor Board pursuant to this Regulation and with its rules of procedure. The Commission shall provide administrative and analytical support for the activities of the European Semiconductor Board pursuant to Article 23.
4. The Commission may appoint observers to take part in the meetings, as appropriate. The Commission may invite experts with specific expertise, including from relevant stakeholder organisations, with respect to a subject matter on the agenda to take part in the meetings of the European Semiconductor Board on an ad hoc basis. The Commission may facilitate exchanges between the European Semiconductor Board and other Union bodies, offices, agencies and advisory groups. The Commission shall invite a representative from the European Parliament as an observer to the European Semiconductor Board. The Commission shall ensure the participation of relevant other Union institutions and bodies as observers to the European Semiconductor Board with respect to meetings concerning Chapter IV on monitoring and crisis response. Observers and experts shall not have voting rights and shall not participate in the formulation of opinions, recommendations or advice of the European Semiconductor Board and its sub-groups.
5. The European Semiconductor Board shall take the necessary measures to ensure the safe handling and processing of confidential information.”
[20] I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Explanatory memorandum, page 5 of the .pdf file.
“The Initiative will support a network of competence centres across the Union that will provide expertise to stakeholders, including end-user small and medium-sized enterprises (SMEs), start-ups as well as vertical sectors, and improve their skills. Competence centres will facilitate open, transparent, and non-discriminatory access to and effective use of the design infrastructure and the pilot lines. They will become poles of attraction for innovation and for new, highly skilled talent.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Explanatory memorandum, pages 17 and 18 of the .pdf file.
“To this end, this Chapter includes the general provisions and objectives of the Chips for Europe Initiative. The Initiative aims to support large-scale capacity building throughout the Union in existing and cutting-edge and next generation semiconductor technologies. The Initiative comprises five components: design capacities for integrated semiconductor technologies, pilot lines for preparing innovative production, and testing and experimentation facilities, advanced technology and engineering capacities for accelerating the development of quantum chips, a network of Competence Centres and skills development and the ‘Chips Fund’ activities for access to capital by start-ups, scale-ups and SMEs.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Explanatory memorandum, page 18 of the .pdf file.
“The Regulation provides for a procedural framework to facilitate combined funding from Member States, investment without prejudice with State aid rules, the Union budget and private investment. This will take the form of a new instrument with legal personality, the European Chips Infrastructure Consortium (‘ECIC’), which can be used by legal entities to structure their collaborative work within a consortium, on a voluntary basis. In addition, Section 1 sets up a mechanism for establishing a European network of Competence Centres for the purpose of implementing actions on competence centres and skills under the Chips for Europe Initiative.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Article 4 Objects of the initiative, paragraph 2, letter d, pages 39 and 40 of the .pdf file.
“creating a network of competence centres across the Union, in order to
(1) strengthen capacities and offer a wide range of expertise to the stakeholders, including end-user SMEs and start-ups, facilitating access to and effective use of the above capacities and facilities;
(2) address the skills shortage, attracting and mobilising new talent and supporting the emergence of a suitably skilled workforce for strengthening the semiconductor sector, including via reskilling and upskilling of workers.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Article 5 Components of the initiative, page 40 of the .pdf file.
“Article 5 Components of the Initiative
1. The Initiative shall have the following five components:
(a) design capacities for integrated semiconductor technologies;
(b) pilot lines for preparing innovative production, and testing and experimentation facilities;
(c) advanced technology and engineering capacities for quantum chips;
(d) a network of competence centres and skills development;
(e) ‘Chips Fund’ activities for access to debt financing and equity to start-ups, scale-ups, SMEs and other companies in the semiconductor value chain.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Article 8 European network of competence centres in semiconductors, pages 42 and 43 of the .pdf file.
“1. For the purpose of implementing actions under the Initiative’s component referred to in Article 5, point (d), a European network of competence centres in semiconductors (the ‘network’) may be established.
2. With respect to the implementation of actions under the Initiative’s component referred to in Article 5, point (d), the network may perform all or some of the following activities to the benefit of the Union industry, in particular SMEs and mid-caps, as well as the public sector:
(a) providing access to design services and design tools under the Initiative’s component referred to in Article 5, point (a), as well as to the pilot lines supported under the Initiative’s component referred to in Article 5, point (b);
(b) raising awareness and providing the necessary knowhow, expertise and skills to the stakeholders for helping them accelerate the development and integration of new semiconductor technologies, design options and system concepts by using effectively the infrastructure;
(c) raising awareness and providing or ensuring access to expertise, knowhow and services, including system design readiness, new and existing pilot lines and supporting actions necessary to build skills and competences capacities supported by this Initiative;
(d) facilitating the transfer of expertise and knowhow between Member States and regions encouraging exchanges of skills, knowledge and good practices and encouraging joint programmes;
(e) developing and managing specific training actions on semiconductor technologies to support the development of the talent pool in the Union.
3. Member States shall designate candidate competence centres in accordance with its national procedures, administrative and institutional structures through an open and competitive process. The Commission shall, by means of implementing acts, set the procedure for establishing competence centres, including selection criteria, and further tasks and functions of the centres with respect to the implementation of the actions under the Initiative, the procedure for establishing the network as well to adopt decisions on the selection of entities forming the network. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 33(2).
4. The network shall have substantial overall autonomy to lay down its organisation, composition and working methods. However, the organisation, composition and working methods of the network shall be in accordance with and contribute to the aims and objectives of this Regulation and the Initiative.”
[21] I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Explanatory memorandum, page 7 of the .pdf file.
“The actions under the Chips for Europe Initiative will be primarily implemented through the Chips Joint Undertaking, i.e. the amended and renamed current Key Digital Technologies Joint Undertaking23. This Joint Undertaking currently provides extensive support for industrially driven research, technology development, and innovation in the area of electronic components and systems, and related software and systems technologies. These activities will become part of the Chips for Europe Initiative.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Explanatory memorandum, page 8 of the .pdf file.
“In order to accelerate the implementation of the actions, the Chips for Europe Initiative provides for a new legal instrument – the European Chips Infrastructure Consortium (ECIC) – that is specifically developed to simplify and structure the legal relationships between the private-public consortium members, including particularly RTOs, and provide a structural dialogue with the Commission for the implementation of the actions under the Initiative. This new legal instrument is voluntary and will complement the Union’s toolbox of various other legal instruments, including European Digital Infrastructure Consortium15, that allow to combine funding from Member States, the Union budget, and private investments. Legal entities, when forming a public-private consortium for the purpose of the implementing actions under the Initiative, will have a choice among the available Union’s legal instruments that better fits the specific purpose, composition and set-up of a particular consortium. The Chips Joint Undertaking entrusted with the overall implementation of the certain actions under this Initiative, may under the conditions provided in the Article 134 of the Commission’s Proposal for a Council Regulation amending Regulation (EU) 2021/2085 establishing the Joint Undertakings under Horizon Europe, as regards the Chips Joint Undertaking29 provide that certain actions may be carried out only by legal entities cooperating within a consortium that may be structured in a form of European Chips Infrastructure Consortium, or any other available Union legal instruments available for forming a consortium.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Explanatory memorandum, page 16 of the .pdf file.
“The proposal establishes the Chips for Europe Initiative, which will not have a separate financial envelope, but will be supported by funding from the HE, and the DEP, to be enlarged by a new Specific Objective 6. The Regulation 2021/2085 establishing the Joint Undertakings under HE is amended and expanded to allow the Key Digital Technologies Undertaking, renamed as a Chips Joint Undertaking (Chips JU) to implement the increased contribution from HE and contributions from DEP under the Specific Objective 6. The financial consequences of the proposal on the Union budget are presented in the financial statement accompanying the proposal and will be met from the available resources of the Multiannual financial framework 2021-2027.
The EU budget will support the Chips for Europe Initiative with a total of up to EUR 3.3 billion, including EUR 1.65 billion via HE and EUR 1.65 billion via DEP. Out of this total amount, EUR 2.875 billion will be implemented through the Chips Joint Undertaking, EUR 125 million through InvestEU (to be complemented with other by 125 million under InvestEU itself) and EUR 300 million through the EIC. This comes in addition to the budget already dedicated to activities in microelectronics under this MFF to reach almost 5 billion.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Explanatory memorandum, page 18 of the .pdf file.
“The Chapter also includes provisions on the implementation. The primary implementation of the Initiative will be entrusted to the Chips Joint Undertaking as proposed in the Commission’s Proposal for a Council Regulation amending Regulation (EU) 2021/2085 . The technical description of the actions is provided in Annex I. Annex II includes measurable indicators to monitor the implementation and to report on the progress of the Initiative towards the achievement of its objectives.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Explanatory memorandum, page 20 of the .pdf file.
“Chapter V sets up the governance systems at Union and national level. At Union level, the proposal establishes a European Semiconductor Board, composed of representatives from the Member States and chaired by the Commission. The European Semiconductor Board will provide advice on the Initiative to the Public Authorities Board of the Chips Joint Undertaking (pillar 1);”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Whereas number 17, page 27 of the .pdf file.
“The primary implementation of the Initiative should be entrusted to the Chips Joint Undertaking as established by Council Regulation XX/XX amending Regulation (EU) 2021/2085 establishing the Joint Undertakings under Horizon Europe, as regards the Chips Joint Undertaking”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Whereas number 55, page 34 of the .pdf file.
“In order to facilitate a smooth, effective and harmonised implementation of this Regulation, cooperation and the exchange of information, the European Semiconductor Board should be established. The European Semiconductor Board should provide advice to and assist the Commission on specific questions. These should include providing advice on the Chips for Europe Initiative to the Public Authorities Board of the Chips Joint Undertaking; exchanging information on the functioning of the Integrated Production Facilities and Open EU Foundries; discussing and preparing the identification of specific sectors and technologies with potential high social impact and respective security significance in need of certification for trusted products and addressing coordinated monitoring and crisis response. Furthermore, the European Semiconductor Board should ensure the consistent application of this Regulation, facilitate cooperation between Member States as well as exchange of information on issues relating to this Regulation. The European Semiconductor Board should support the Commission in international cooperation in line with international obligations, including in information gathering and crisis assessment. In addition, the European Semiconductor Board should coordinate, cooperate and exchange information with other Union crisis response and crisis preparedness structures with a view to ensure a coherent and coordinated Union approach as regards crisis response and crisis preparedness measures for semiconductor crises.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, link in footnote1, Article 9 Implementation, paragraph 1, page 43 of the .pdf file.
“1. The components listed in points (a) to (d) of Article 5 under the Initiative may be entrusted to the Chips Joint Undertaking referred to in Council Regulation XX/XX amending Council Regulation (EU) 2021/2085 and implemented in the work programme of the Chips Joint Undertaking.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Legislative financial statement, page 63 of the .pdf file.
“Expenditure for the Chips for Europe Initiative (with the exception of the Chips Fund) and ongoing activities under the KDT JU, to be managed by the Chips JU. The total expenditure to be managed by the Chips Joint Undertaking, formerly known as the ‘Key Digital Technologies Joint Undertaking’, is EUR 4.175 billion, of which EUR 1.8 billion was committed under the KDT JU before.”
[22] I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Explanatory memorandum, page 17 of the .pdf file.
“The Commission will evaluate the output, results and impact of this proposal three years after the date on which it becomes applicable and every four years thereafter. The main findings of the evaluation will be presented in a report to the European Parliament and the Council, which will be made public. In order to conduct the evaluation, the European Semiconductor Board, the Member States and national competent authorities will provide information to the Commission on its request.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Explanatory memorandum, page 20 of the .pdf file.
“At national level, Member States will designate one or more national competent authorities and, among them, a national single point of contact for the purpose of implementing the Regulation.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Whereas number 35, page 30 of the .pdf file.
“As part of the monitoring, national competent authorities should also do a mapping of undertakings operating in the Union along the semiconductor supply chain established in their national territory and notify this information to the Commission.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Whereas number 58, page 35 of the .pdf file.
“Member States hold a key role in the application and enforcement of this Regulation. In this respect, each Member State should designate one or more national competent authorities for the purpose of effective implementation of this Regulation and ensure that those authorities are adequately empowered and resourced. Member States could designate an existing authority or authorities. In order to increase organisation efficiency in the Member States and to set an official point of contact vis-a-vis the public and other counterparts at Member State and Union levels, including the Commission and the European Semiconductor Board, each Member State should designate, within one of the authorities it designated as competent authority under this Regulation, one national single point of contact responsible for coordinating issues related to this Regulation and cross-border cooperation with competent authorities of other Member States.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Article 15 Monitoring and alerting, paragraphs 3 and 7, pages 46 and 47 of the .pdf file.
“3. National competent authorities designated pursuant to Article 26(1) may request information from representative organisations of undertakings or individual undertakings operating along the semiconductor supply chain where necessary and proportionate for the purpose of paragraph 1. National competent authorities in such case will pay particular attention to SMEs to minimise administrative burden resulting from the request and will privilege digital solutions for obtaining such information. Any information obtained pursuant to this paragraph shall be treated in compliance with the confidentiality obligations set out in Article 27.
…
7. National competent authorities designated pursuant to Article 26(1) shall map undertakings operating along the semiconductor supply chain in their national territory, including non-confidential information on the services or goods, and contact information. They shall notify this list and any subsequent update to the Commission. The Commission may issue guidance, after consulting the European Semiconductor Board, to further specify the information to be gathered and define the technical specifications and formats.”
I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Article 26 Designation of national competent authorities and single points of contact, page 54 of the .pdf file.
“1. Each Member State shall designate one or more national competent authorities for the purpose of ensuring the application and implementation of this Regulation at national level.
2. Where Member States designates more than one national competent authority, they shall clearly set out the respective responsibilities of the authorities concerned and ensure that they cooperate effectively and efficiently to fulfil their tasks under this Regulation, including with regard to the designation and activities of the national single point of contact referred to in paragraph 3.
3. Each Member State shall designate one national single point of contact to exercise a liaison function to ensure cross-border cooperation with national competent authorities of other Member States, with the Commission and with the European Semiconductor Board (‘single point of contact’). Where a Member State designates only one competent authority, that competent authority shall also be the single point of contact.
4. Each Member State shall notify the Commission of the designation of the national competent authority and, where applicable, the reasons for designating more than one national competent authority, and the national single point of contact, including their precise tasks and responsibilities under this Regulation, their contact information and any subsequent changes thereto.
5. Member States shall ensure that national competent authorities, including the single point of contact designated, exercise their powers impartially, transparently and in a timely manner and that they are provided with the powers and the adequate technical, financial and human resources to fulfil their tasks under this Regulation.
6. Member States shall ensure that national competent authorities, whenever appropriate, and in accordance with Union and national law, consult and cooperate with other relevant national authorities, as well as with relevant interested parties. The Commission shall facilitate the exchange of experience between national competent authorities.”
[23] See https://www.consilium.europa.eu/en/policies/defence-security/
and its links.
[24] See https://ec.europa.eu/defence-industry-space/eu-aeronautics-industry_en
and its links.
[25] See https://www.euspa.europa.eu/
[26] See https://www.esa.int/
[27] See Semiconductor market size, Key market insights, on:
https://www.fortunebusinessinsights.com/semiconductor-market-102365
[28] I quote from “Proposal for a regulation – COM(2022)46 English (2.2 MB – PDF – 101 pages)”, see link in footnote 1, Article 28 Penalties and fines, pages 55 and 56 of the .pdf file.
“1. The Commission may, by decision, where deemed necessary and proportionate:
(a) impose fines, where a representative organisations of undertakings or an undertaking, intentionally or through gross negligence, supplies incorrect, incomplete or misleading information in response to a request made pursuant to Article 20, or does not supply the information within the prescribed time limit;
(b) impose fines, where an undertaking, intentionally or through gross negligence, does not comply with the obligation to inform the Commission of a third country obligation pursuant to Article 20(5) and Article 21(3);
(c) impose periodic penalty payments, where an undertaking, intentionally or through gross negligence, does not comply with an obligation to prioritise the production of crisis-relevant products pursuant to Article 21.
2. Fines imposed in the cases referred to in paragraph 1 (a) and (b) shall not exceed 300 000 EUR.
3. Periodic penalty payments imposed in the cases referred to in paragraph 1 (c) shall not exceed 1.5 % of the average daily turnover in the preceding business year for each working day of non-compliance with the obligation pursuant to Article 21 calculated from the date established in the decision.
4. In fixing the amount of the fine or periodic penalty payment, regard shall be had to the nature, gravity and duration of the infringement, taking due account of the principles of proportionality and appropriateness.
5. Where the undertaking has satisfied the obligation which the periodic penalty payment was intended to enforce, the Commission may fix the definitive amount of the periodic penalty payment at a figure lower than that which would arise under the original decision.
6. The Court of Justice of the European Union shall have unlimited jurisdiction to review decisions whereby the Commission has fixed a fine or a periodic penalty payment. It may cancel, reduce or increase the fine or periodic penalty payment imposed.”
[29] European Chips Act proposal for a Regulation, Article 28 Penalties and fines, paragraph 3.
See the full text of the article in footnote number 28 above.
Quotes have been verified at the date of publication of this article on the website https://giorgiocannella.com/
