On Monday local time, the European Semiconductor Industry Association (ESIA) issued a statement calling on the new European Union leadership to urgently introduce "Chip Law 2.0" support policies. The focus of the new policy should be on incentives and cooperation, rather than blindly restricting and adopting protectionist measures.

Members of ESIA include top semiconductor equipment manufacturers. $ASML Holding (ASML.US)$ , as well as the top semiconductor manufacturers $INFINEON TECHNOLOG (IFNNY.US)$N/A.$NXP Semiconductors (NXPI.US)$,$STMicroelectronics (STM.US)$etc.

Background: The grand, uncertain effects of the 'Chip Act 1.0.'

As the background of this appeal, the EU once launched the first chip law in April 2023—The core element is to increase the global market share of the European semiconductor industry to 20% by 2030 through a 43 billion Euro subsidy.

As an important outcome of the law, the European Union has agreed to subsidize the 10 billion euro German factory project, as well as the 30 billion euro project planned to be built in Germany.$Taiwan Semiconductor (TSM.US)$Taiwan Semiconductor, which has received 50% subsidies from the European Union, has already started construction on the factory last month. However, due to serious business difficulties, the market is now more concerned about whether Intel will cancel its plans to build factories in Europe. $Intel (INTC.US)$ The project subsidized by 50% from the European Union and the 30 billion euro project planned to be built in Germany have attracted attention. TSMC has already started construction on the factory last month, but Intel, due to serious business difficulties, is now more concerned about whether it will cancel its plans to build factories in Europe.

The German technology policy think tank Interface pointed out in a recent report that the EU's 2030 semiconductor target is no longer 'achievable.' Interface emphasizes that it is undeniable that this policy shows the EU's attention to the semiconductor industry, and the number of announced projects is impressive, even though some of them will never be realized.

What are the ideas of the industry on the 'Chip Act 2.0'?

In the policy document released on Monday, the European Semiconductor Industry Association called on the European Union to prioritize 'industrial competitiveness', accelerate the distribution of subsidy funds, and establish a dedicated 'chip ambassador' to unify industrial policies in various fields and involve the industry in the work of the European Semiconductor Committee.

The association also devoted an entire page to calling on the European Union to adopt an 'open trade' policy for the semiconductor industry.

The document emphasizes that semiconductors are a truly global industry and therefore require a high degree of openness in the supply chain. European chip manufacturers have stated that an effective business case may involve selling 0.5 billion high-quality components, which cannot be achieved solely in the European market.

The association states that even with the premise of recognizing the necessity of protecting critical assets, a more proactive approach is needed in protecting economic security - one based on support and incentives rather than defensive measures of restriction and protection.

The European Semiconductor Industry Association also states that export controls need to remain true to their original goal of contributing to international peace and security. Therefore, it is recommended that the EU establish a structured mechanism that involves the industry permanently in this issue. For example, establishing an official institution to coordinate export controls and having the semiconductor industry serve as a permanent advisor.

The European Semiconductor Industry Association concludes that a strong European open trade policy is needed to balance the industry's need to enter international markets and the necessity of protective measures.

These calls have already been reflected in reality. For example, the export restrictions on the semiconductor industry in Europe are largely related to pressure and manipulation from the US government. Dutch Prime Minister Mark Rutte stated last Friday that the economic interests of ASML will be considered before the Dutch government considers tightening export control policies further. He said, " $ASML Holding (ASML.US)$ It is an extremely important innovation industry for the Netherlands and should not be harmed under any circumstances.

In addition, the document also calls on the European Union to avoid restricting the industry's use of certain specialty chemicals and materials, and to strengthen the training of talent in industries facing shortages.

Editor/Rocky