EU Nations Invest €43 Billion in Plan to Become World's Leading Semiconductor Hub

The European Union has agreed to pursue a 43 billion euro (44.4 billion dollar) plan to jump-start the bloc's semiconductor production. This clears a key hurdle in the EU's plan to bolster its high-tech industry.

The deal was approved by EU ambassadors on Wednesday, according to sources familiar with the matter. It would expand the scope of what chip plants are considered “first-of-a-kind” and qualify for state aid, but stops short of allowing all automotive chips to qualify for funds, which some countries had demanded earlier this fall.

The latest version of the EU's executive arm's emergency intervention policy also adds more safeguards for when companies' supply chains can be disrupted.

One of the most contentious issues has been the use of EU funds. Member states on Wednesday agreed not to reallocate €400 million of research funds for semiconductors after countries with small chip industries raised concerns that this money will only benefit big countries like Germany that have larger operations. Ambassadors want the commission to find the money elsewhere.

EU ministers are expected to approve Wednesday's deal at a meeting next month. The European Parliament needs to approve its own plan before the three institutions can negotiate a final agreement.

The European Union has an ambitious goal of producing 20% of the world’s semiconductors by 2030. The European Commission announced a plan, called the EU Chips Act, earlier this year that anticipates around €43 billion going toward the semiconductor industry on the continent, including research and production.

A number of companies have already announced new semiconductor manufacturing sites, including Intel Corp., GlobalFoundries Inc., STMicroelectronics NV and Infineon Technologies AG. The final plan won't be ready until next year, but these companies are already making preparations.