The EU has unveiled its much-anticipated European Technological Sovereignty Package, comprising two pieces of legislation intended to boost the continent’s independence in cloud services, AI and semiconductors.
The Cloud and AI Development Act seeks to foster the growth of AI models and apps, as well as the buildout of supporting infrastructure, with a specific goal of tripling European data centre capacity within the next five to seven years.
In addition, the Chips Act 2.0 has the goal of expanding the EU’s capacity in AI-ready semiconductor technologies, including provisions to accelerate the awarding of permits, advance cooperation between public and private partners, support investment in strategic projects, and diversify supply-chains.
Combined with strategies for fostering open source solutions, on the one hand, and digitalizing Europe’s energy system, on the other, these two acts could reduce the EU’s structural dependencies on non-European providers, according to commentators.
‘An important step towards establishing a top-level global semiconductor ecosystem in Europe’
While the proposals of the Chips Act 2.0 and the Cloud and AI Development Act may change as each bill works its way through the legislative process, the industry response to the new package has, on the whole, been positive.
“The European Chips Act is an important step towards establishing a top-level global semiconductor ecosystem in Europe and increasing resilience,” says Andre Tauber, the Head of Strategy and Business Communications at German semiconductor manufacturer Infineon Technologies.
Speaking to TechRepublic, Tauber says that revising the original Chips Act is “crucial” to boosting the European semiconductor industry’s resilience, and that a more targeted and less bureaucratic framework can stimulate the development of next-generation chip technologies and attract more investment.
Some of the Chips Act 2.0’s more notable measures include provisions to support the deployment of strategic projects that would boost semiconductor R&D and manufacturing, as well as articles to establish a “Business-to-Business Semiconductor Supply Chain Platform.”
For many commentators, one of its chief virtues is that it focuses more on demand-side (rather than supply-side) policy, something lauded by ASML CEO Christophe Fouquet in a LinkedIn post.
“It’s a positive development that in the Tech sovereignty package the European Commission recognizes the fundamental role that a demand-driven policy — rather than more supply-driven aspects — can play to strengthen the entire European technology ecosystem, and create an overall favorable business environment for the high-tech industry in the EU,” he wrote. “Commitment to that demand-driven approach is in our view essential to a successful outcome and deserves further consideration in the proposals.”
Why the Chips Act 2.0 may result in more strategic partnerships on semiconductors
For Tauber, another positive detail is that the Chips Act 2.0 takes a comprehensive approach across the full value chain, from R&D to manufacturing and applications, while also focusing on the aforementioned demand-side instruments and lab-to-fabrication scaling.
However, he cautions that the Tech Sovereignty Package’s effectiveness will depend on its implementation in practice, and not simply on how it reads.
“In particular, speed and predictability of support processes, clarity in state aid procedures and a lean administrative framework will be important going forward,” he says, before offering a reminder that the package is still subject to an ongoing legislative review.
One of the more interesting elements of the Chips Act 2.0 is that it includes numerous articles requiring public tenders to be awarded to “at least one domestic undertaking,” with ‘domestic undertaking’ defined as an undertaking “owned and controlled” by an EU-based organization.
This may create issues in view of foreign investments in European companies and infrastructure, such as SoftBank’s recent commitment to spend up to €75bn on creating 5 GW of AI-ready compute capacity in France.
However, the Chips Act 2.0 also broadens the definition of ‘domestic undertaking’ to include any entity based in a territory that has signed a strategic partnership (on semiconductors) with the EU, as Japan signed at the beginning of May.
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