Chips law: EU launches early warning system for future semiconductor bottlenecks

Chips law: EU launches early warning system for future semiconductor bottlenecks

Organizations involved in the semiconductor value chain can now report “early signs of disruption” via an online form provided by the EU Commission. This is the core of a semiconductor warning system based on the planned European chip regulation, for which the Brussels government institution started a pilot project on Wednesday. The instrument is intended to draw attention to imminent supply bottlenecks at an early stage and thus help to combat the ongoing chip crisis in some sectors.

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About the website held in the form of a survey the Commission intends to collect information required for an accurate risk assessment and a rapid response to possible crisis situations by the European Semiconductor Expert Group (ESEG). The latter serves as a platform for coordination between Member States. It is also to advise the Commission on the implementation of the regulation, which the EU legislative bodies recently agreed in principle on. With the Chips Act taking effect, the ESEG will be replaced by the European Semiconductor Board, made up of representatives from EU countries.

“Semiconductors are crucial for the functioning of our modern economy and society,” writes the Commission in its statement on the early warning system. In recent years, there have been “unprecedented supply disruptions” in the EU, “which have resulted in significant delays and negative effects on important economic sectors”. These would also have affected the repair and maintenance of “essential products for critical sectors”.

The mechanisms designed to help deal with future delivery bottlenecks are in the so-called third pillar of the Commission’s package of laws and measures. Here, the Brussels executive authority is to monitor the supply chains in cooperation with the future semiconductor committee. In times of crisis, there is also the option of intervening in the business activities of companies and imposing export controls. This pillar can be activated via emergency measures even before the Chips Act comes into force.

Jürgen Sturm from Texas Instruments recently warned of caution. Even the criteria are vague as to when one can really speak of a chip crisis. During the corona pandemic, demand increased significantly, which also has to do with the digital and green change being pushed by the EU. All interruptions in the supply chain are also unlikely to be preventable, as they could be caused by short-term power failures or water shortages. The lack of raw materials is also considered a key factor. The Spanish industrial attaché Alberto Ruiz Rodríguez advocated including like-minded countries such as the USA, some of which compete with the EU but also others, in the warning system so that central sources of error can be better eliminated.

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