Foo Yun and Sabine Siebold

BRUSSELS (Reuters), – Under plans unveiled Tuesday, the European Commission will relax funding regulations for semiconductor plants. The European Union is looking to grow its chip industry as well as reduce dependence on U.S. supply.

As a result of global shortages in chips and supply chains that are causing havoc for healthcare providers and telecoms operators around the world, the Commission has taken action.

Ursula von der Leyen, President of the Commission, stated that “the European Chips Act” will allow for 15 billion euro ($17 billion) more public and private investments by 2030.

The public funds will also be matched by 30 billion euros in additional investments from NextGenerationEU Horizon Europe and other national budgets. She said that these funds would be matched by long-term, private investments. This refers to EU projects.

EU’s move is in line with the U.S. Chips Act, worth $52 Billion. It aims at increasing China’s competivity.

Von der Leyen announced that the bloc will relax its regulations on state aid for new chip factories. These rules are meant to prohibit illegal and unfair EU subsidies to companies.

“We have therefore adjusted our state aid rules to strict conditions. This will allow – for the first time – public support for European ‘first-of-a-kind’ production facilities, which benefit all of Europe.”

Margrethe Vestager, EU Digital Chief, said that these factories could be granted more funding as part of the EU’s plan to increase its market share by 20% to 2030.

These facilities wouldn’t exist in Europe without us doing something. “It may be justifiable to cover 100% of the proved funding gap using public resources,” she said at a press conference.

Vestager answered a question about whether the Commission is bending the rules on state aid. He said that the EU treaty contained a rare provision which allowed funding approval. The aid would have to be proportionate, provide a pan-European benefit, and be no greater than necessary.

Her warnings to EU countries against unjustified tactics for attracting investments were also a part of her message.

We cannot authorize subsidy in any way that is more expensive than the others. “We have been always very careful to the fact, that one government should not try to lure investment in one territory through jacking up state aid promises,” she stated.

A diplomat from EU stated that the EU has heard complaints about the looser rules. They fear a subsidy race which favors companies in larger EU countries, such as France and Germany.

This chip push is occurring as EU countries attract U.S. chipmaker Intel (NASDAQ :). The company has not yet announced where it will locate its European megafab plant. It raises concerns about a subsidy race.

Intel welcomes the EU chip push and urges authorities from both sides to unite.

According to the statement, “We are currently contemplating a substantial increase in our European footprint. We expect that the EU Chips Act (the EU Chips Act) will facilitate these plans.”

Britain’s Arm Ltd named Tuesday a new CEO. Masayoshi son, the boss of SoftBank, stated that the company would become public in March 2023.

SoftBank announced that it will not sell Arm to U.S.-based chipmaker Nvidia Corp (NASDAQ:) Corp. However, the company has decided to IPO plan. Due to regulatory hurdles, a deal could be worth $80 billion.

GlobalWafers, which is looking to purchase a site on the greenfield side of its $3.6bn expansion plan after it failed to take over Siltronic of Germany, has also been searching for new sites.

European Chips Act must be approved by EU governments and EU lawmakers to become law. The toolbox allows the Commission, as a regulator, to request key chips from companies during crisis situations.

($1 = 0.8763 euros)