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The European Chips Act and its impact on electronic component sales

The European Chips Act and its impact on electronic component sales

Semiconductors are vital for our day-to-day life. They are in all the electronics you own but are also in your kitchen appliances, your car, your electric shower and many more. But what if we lost access to these components?

The huge reliance on imported semiconductors was made abundantly clear last year. Europe’s current share of the global semiconductor market is only about 10%, and the continents is otherwise dependent on supply from abroad.

The need for independence and autonomy in the European chip market has been made very apparent due to factors like Brexit and COVID-19.

The European Chips Act was first mentioned in the EU’s 2021 State of Union Letter of Intent, calling the act a key initiative for 2022. The EU created the Industrial Alliance for Processors and Semiconductor Technologies alongside it, to plan and oversee progress on the act.

One of the aims of the alliance is to increase Europe’s share in global chip production to 20% by 2030, but they will first have to identify issues with the market and map out a way to improve design and production.

During the ‘State of the World’ Special Address by European Commission president Ursula von der Leyen on January 20, the chips act was mentioned once again, and they announced draft legislation for the chips act is due in February of this year.

The European Commission president said that there would be five steps taken to improve the chip sector, and that they would focus on research first, then design and manufacturing. After these there would be an adaptation of state aid rules to increase provisions in case of shortage.  Lastly, she said the EU would work to support smaller, innovative technology companies.

In 2020 the United States accounted for the largest share in the semiconductor industry, with 47%. Following the US was South Korea with 20% of the market. China’s share has also increased quickly in recent years, putting it narrowly behind Korea. Despite Japan previously having a larger share in the market, they are currently on equal footing with Europe with a share of around 10%.

Despite no longer being a member of the EU, and therefore not directly signing the Chips Act, the UK could also have the potential to increase its standing in the global semiconductor race.

According to some UK-based chipmakers, the country has an advantage in the area of research and development. If research facilities like the University of Manchester were given the right attention and funding, they could develop sustainable resources like graphene to replace mined silicon in processors.

The UK electronics sector will always be considerably smaller than huge countries like China and America, but with significant investment they would have the ability to make a difference in the current chip shortage. And our sister company Cyclops Electronics is a perfect example of a smaller company making a big difference.

Cyclops is an electronic component distributor with a wealth of contacts from all over the world. With unrivalled stock and suppliers, Cyclops will put you ahead of your competitors. Contact us today at sales@cyclops-electronics.com.

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