Marine Strauss & Foo Yun Chen

BRUSSELS, (Reuters) – The European Union must not separate from the global supply chain for semiconductors in order to establish a European chipmaking industry and become self-sufficient. This was the warning issued by the Netherlands this week.

The COVID-19 pandemic has disrupted global supply chains. This business model, which was popular over the last 30 years, led governments all around the globe to think about bringing production closer to their homes.

In September, the European Commission (the EU executive) proposed the European Chips Act, which covers research and production capacities. This was in response to the shortage of chips that have disrupted the telecoms industry, as well as the medical device makers and the automotive industries.

The EU is dependent on Asian-made chips, and holds a smaller share of the supply chain from design to production.

The Netherlands stated that it would be wrong to decouple from the global supply chains in a paper they published online. They cited the successes of ASML and NXP, two of the most successful chipmakers worldwide, as well as Besi and NASDAQ.

The European Chips Act demands that the “decoupling of global semiconductor value chains is an illusion” be acknowledged, according to the paper.

The best thing for European interests is an open environment that focuses on the attraction of investment, acceleration of innovation, and creating market value. Mutual interdependence and diversification promote resilience, and help to prevent dependence.

Also, the Dutch proposed that instruments be created to stop unwelcome key strategic takeovers by chipmakers.

In the 2022 Commission work program, the Chips Act will be adopted during the third quarter next year.