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EU opens door to aid for semiconductor production

BRUSSELS (AP) – The European Commission said on Thursday it could approve aid to finance semiconductor production in the 27-country bloc amid a global chip shortage and intense global competition to fill the need.

The EU executive branch expects the scarcity of semiconductors – a key element in everything from smartphones to cars – to persist, affecting the region’s economy.

Automakers have been among the hardest hit by the shortage, which has slowed or halted production.

Most of the chipmakers are based in Asia, and the bloc wants to reduce its dependence by increasing production on its soil.

“The committee will consider approving support to close possible funding gaps in the semiconductor ecosystem, in particular for cutting-edge European facilities,” said Margrethe Vestager, EU competition commissioner.

She said safeguards will be in place to ensure that aid is “necessary, appropriate, proportionate and of course to ensure that undue distortions of competition are limited”.

Vestager’s announcement follows the September presentation of the European Chips Act, which aims to make the bloc competitive in the most advanced flea race by expanding research and production in the EU. Earlier this year, the bloc also launched an industry alliance with the aim of increasing the EU’s share in global semiconductor production to 20% by 2030.

In the global race, the United States has stepped up its efforts to support the industry. U.S. lawmakers approved a bill earlier this year aimed at boosting domestic production of semiconductors, as part of a broader rivalry with China over trade and technology.

While presenting a review of the European Union’s competition policy, Vestager said that “self-sufficiency is an illusion”, but insisted that the EU cannot rely on just one country or one company for chips.

“The goal should be diversification among like-minded partners to build a resilient supply chain and avoid single points of failure,” she said.

Meanwhile, the committee extended the temporary state aid framework to support businesses affected by the coronavirus pandemic until the end of June, Vestager said. Under this program, more than 3.1 trillion euros ($ 3.5 trillion) in aid across the bloc has been approved.

“On the one hand, the limited extension gives the opportunity for a gradual and coordinated exit from crisis measures, without creating cliff-edge effects,” she said. “This reflects the expected strong recovery of the European economy as a whole. On the other hand, we will continue to closely monitor the worrying increase in COVID-19 infections and other risks to the economic recovery. “

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