The EU’s Digital Decade strategy set a target for the Union to gain a 20pc share of global production value in cutting‑edge and sustainable microchips by 2030. The Covid-19 pandemic gave the world a wake-up call, when a global shortage of microchips reminded us just how critical they are to our global economy. The Chips Act was introduced in February 2022, against that backdrop of global supply chain disruptions, and the aim was to tackle microchip shortages and strengthen the EU’s technological leadership. The Chips Act regulations came into force in September 2023. The EU’s Digital Decade strategy set a target for the Union to gain a 20pc share of global production value in cutting‑edge and sustainable microchips by 2030. A report published yesterday by the European Court of Auditors found “a significant gap to bridge between ambition and reality”. “The EU urgently needs a reality check in its strategy for the microchips sector”, said Annemie Turtelboom, the ECA Member in charge of the audit. “This is a fast-moving field, with intense geopolitical competition, and we are currently far off the pace needed to meet our ambitions. The 20pc target was essentially aspirational – meeting it would require us to approximately quadruple our production capacity by 2030, but we are nowhere close to that with our current rate of progress.” The report points out that the European Commission is responsible for just 5pc of the €86bn in estimated funding in the Chips Act up to 2030, while the remainder is expected to come from member states and industry. The report compares these figures the spending of the top global manufacturers, who have budgeted €405bn in investment over just a three-year period, from 2020 to 2023, outstripping any financial firepower of the Chips Act. Other challenges when it comes to EU competitiveness, and its ability to successfully implement the Chips Act include dependency on imports of raw materials, high energy costs, environmental concerns, geopolitical tensions and export controls, as well as a shortage of skilled workers, says the report. A further risk is that the EU microchip industry consists of a few large enterprises focused on high-value projects, meaning that funding is concentrated. “The cancellation, delay or failure of a single project can therefore have a significant impact on the whole sector,” said the authors of the report. In short, the report found that the Chips Act is highly unlikely to significantly increase the EU’s share of the microchips market, or to meet the objective of 20pc of global output. It points to the Commission’s own 2024 forecast which predicts that notwithstanding progress, the EU’s overall share of the global value would increase only slightly, from 9.8pc in 2022 to just 11.7pc by 2030. While the EU’s microchip production capacity has increased significantly it has failed to keep pace with global growth, says the report. Speaking at the report launch yesterday (April 28), Turtelboom pointed out that the Act had been drawn up with some urgency, and that it was now time to revisit the target and set a more realistic aim. The European Commission’s first intermediate evaluation and review of the Chips Act is due to be presented to the European Parliament and the Council by September 2026. Don’t miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic’s digest of need-to-know sci-tech news