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24 min ago 2 min read
The EU is drafting crisis powers to prevent semiconductor chip shortages disrupting critical sectors.
The EU is set to officially present its Chips Act 2.0 legislative package, which includes proposed sweeping powers for the European Commission to seize control of chip supply chains and mandate supplier diversification, in early June.
Under the Act, the Commission can officially trigger a “crisis stage” if severe shortages persist and it can force semiconductor manufacturers to prioritise orders for crisis-critical products, overriding existing private contracts.
Companies face fines up to €300,000 if they refuse to supply information or provide misleading data.
It builds on existing legislation from 2023 and is in response to new geopolitical vulnerabilities exposed by the Middle East crisis.
The challenge today is so many key sectors – from energy and transport, and digital infrastructure, to health and medical, and defence and security – are underpinned by chips, and could be deemed critical.
DigitalEurope, the primary trade association for the European digital technology industry, has strongly urged the EU to pivot its semiconductor strategy.
In response to proposed sweeping emergency powers, including joint purchasing and the overriding of contracts during shortages, the group has criticised mandatory data-sharing and called for policies that prioritise long-term, market-driven business competitiveness over reactive crisis controls.
Under the new Act, the EU wants to mobilise between €120-€200bn in public and private funding by 2035, coupled with fast-tracked environmental approvals for new semiconductor facilities.
The Middle East conflict is straining European semiconductor supply chains by inflating transport costs, shrinking air freight capacity, and restricting access to vital raw materials like and .
Since chip fabrication plants are highly energy-intensive, fluctuating oil and gas prices driven by tensions in the Middle East are raising operational overheads.
