- Regulation (EU) 2023/1781, the European Chips Act, entered into force on 21 September 2023, after publication on the 18th.
- It seeks to strengthen Europe’s design and production capacity in semiconductors and supply security, with public support and a crisis mechanism.
- It affects industries that depend on chips, from automotive to machinery: map which components and suppliers are critical.
On 21 September 2023 Regulation (EU) 2023/1781, known as the European Chips Act, entered into force. It was adopted on 13 September and published in the Official Journal of the European Union on 18 September. Its stated aim is to strengthen the competitiveness and innovation capacity of Europe’s semiconductor ecosystem, and to improve the Union’s security of supply and resilience in a component on which almost every sector depends.
The rule grew out of the experience of 2021 and 2022, when the chip shortage halted production lines in automotive, electronics and machinery, with delays and costs that ended up reaching the consumer. It also responds to geopolitical tension: much advanced manufacturing is concentrated in a few regions, and the Union wants to reduce that dependence. For a company that does not make chips, the effect is indirect, but it may be felt in prices, lead times and requirements.
What the regulation contains
The text rests on several instruments. It creates a virtual design platform and pilot lines to test technologies, including quantum chips; competence centres to train and advise companies, and a Chips Fund to facilitate financing for new companies in the sector. It also amends the Chips Joint Undertaking, which manages much of these initiatives.
It further provides a framework to support pioneering production facilities in Europe, which may receive public aid under conditions, and a system for market monitoring and response to supply crises, coordinated by the European Commission and the member states. It is an approach that combines incentives to invest with vigilance over risks. That aid is subject to the Commission’s state-aid control, so each project will have to fit the conditions set and there will be no automatic subsidies.
Security of supply
The monitoring and crisis mechanism is the part with the most potential impact on companies that use chips. It provides for tracking the value chain, early warnings and, in declared crisis situations, exceptional measures, including the possibility of requesting information from certain companies. The implementation details are left to later acts, so developments will need to be followed.
The regulation does not on its own guarantee more chips, nor does it make them cheaper in the short term. Building factories takes years and requires very large investments. It is a long-haul industrial policy whose results will depend on concrete projects materialising and on coordination with other markets. It should therefore be read as a strategic bet and not as an immediate fix.
What to review
Industrial companies should draw up an inventory of components containing semiconductors that are critical to their product, check how many suppliers they have for each and what stocks or supply contracts would cushion a new shortage. Clauses in customer contracts on delays and force majeure, which were put to the test in the previous crisis, should also be reviewed.
Companies with technology or manufacturing projects can follow the support calls and the competence centres as they are set up. For families and investors, it is an industrial-policy rule with no immediate effect on their wealth; any investment decision should be taken with your adviser and not on a headline. This note is general information, not a recommendation.
Whoever manufactures with chips depends on them; the regulation tries to make that dependence less fragile.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
