COM(2026) 504 Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on a framework of measures for strengthening the Union’s semiconductor ecosystem, repealing Regulation (EU) 2023/1781 (Chips Act 2.0)

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EUROPEAN COMMISSION

Brussels, 3.6.2026

COM(2026) 504 final

2026/0139 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on a framework of measures for strengthening the Union’s semiconductor ecosystem,

repealing Regulation (EU) 2023/1781 (Chips Act 2.0)

{SEC(2026) 504 final} - {SWD(2026) 504 final} - {SWD(2026) 505 final}

(Text with EEA relevance)

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EXPLANATORY MEMORANDUM

1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

Semiconductors underpin all digital technologies, from smart wearables and cars to medical,

defence and mission-critical equipment, and the data centres powering the artificial

intelligence (AI) revolution. Since 2020, a series of supply shortages and attempts to

economically coerce on the EU have highlighted the fragility of the European semiconductor

ecosystem and the vulnerability of its end-user industry. These disruptions have stemmed

from global crises such as the COVID-19 pandemic, individual shocks like the Nexperia case,

and the persistent structural mismatch between supply and demand in the global market.

Together, these factors have exposed how excessive external dependencies can leave entire

markets vulnerable.

At the same time, rising geopolitical rivalry, including Sino-American tensions, and the rapid

emergence of AI have further underscored the strategic importance of semiconductors.

Leading-edge but also mainstream chips have increasingly become a key geopolitical asset,

and several choke points have emerged along the global semiconductor value chain. This has

accelerated the race to control parts of these choke points.

The growing scale of this industry reflects its geopolitical importance. Semiconductors are the

world’s third most traded commodity – after oil and vehicles – with global revenues reaching

USD 700.9 billion in 2025.1 The market is expected to surpass USD 1 trillion by 20262 and

to grow to USD 1.6 trillion by 20303. As a critical supplier and enabler for nearly all modern

industries and the infrastructure that supports them, the semiconductor sector has evolved into

a strategic resource. In a more transactional and assertive global environment, this position

also makes it a potential source of geopolitical leverage. Regions lacking significant

capabilities in semiconductor design or manufacturing therefore risk becoming dependent on

components that others may restrict or condition.

The European Chips Act proposed in February 2022 constituted the EU’s first strategic

response to critical vulnerabilities in the global semiconductor value chain, which were

exposed by the COVID-19 pandemic and intensifying global subsidy-driven competition by

third countries. The EU decided that decisive, coordinated intervention was essential to

address structural dependencies in its semiconductor ecosystem and to support the industry.

Without substantial investments in research and manufacturing capacity, and without proper

crisis-response mechanisms, Europe would remain structurally vulnerable. The Chips Act

emerged during a period of strong focus on the green and digital transitions, and amid

growing European consensus on the need to strengthen the region’s economic

competitiveness and reverse declining industrial capacity. The September 2024 Draghi

report would later spell out these concerns, calling for urgent industrial renewal.4

The evaluation of the European Chips Act shows that it has delivered significant outputs.

For instance:

1 WSTS Semiconductor Market Forecast Spring 2025, https://www.wsts.org/76/103/WSTS-Semiconductor-Market-

Forecast-Spring-2025 2 Global Semiconductor Sales Increase Substantially in February, https://www.semiconductors.org/global-

semiconductor-sales-increase-substantially-in-february/ 3 The next era of semiconductor value creation, McKinsey,

https://www.mckinsey.com/industries/semiconductors/our-insights/the-next-era-of-semiconductor-value-creation 4 “The future of European competitiveness”, part B, Chapter 3 – Mario Draghi,

https://commission.europa.eu/topics/competitiveness/draghi-report_en

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• infrastructures have been set up including competence centres, an embryonic design

platform, and five state-of-the-art pilot lines representing some of the most

innovative technology infrastructures in the world;

• over EUR 52 billion has been committed in public and private investments

committed in ongoing production facilities under Pillar II; and

• a coordination and crisis-response mechanism has been set up under Pillar III via the

European Semiconductor Board (ESB), involving all Member States and the

Commission.

Despite this considerable progress and the Union’s strengths in key segments of the

semiconductor value chain, such as mainstream semiconductor production (power electronics,

microcontrollers, photonics, sensors), manufacturing equipment and materials, clear

capability gaps remain that still need to be addressed.

The EU produces less than 10%5 of global semiconductors and is almost entirely dependent

on the United States and Asia for the most advanced and leading-edge chips below 5

nanometres – including AI chips. These structural dependencies heighten the risk of supply

disruptions, coercive pressure, and systemic shocks affecting key EU industries, from

automotive and energy to aerospace and defence. Overall, semiconductors illustrate the

urgency of Europe’s technological sovereignty challenge.

Technological sovereignty has become a strategic imperative for the EU. The aim is to

preserve Europe’s ability to choose its own path, reduce excessive dependencies and ensure

that critical digital infrastructures and technologies remain secure, resilient and aligned with

European values.

The Chips Act 2.0 will therefore be part of the Technological Sovereignty Package along

with other initiatives such as the Cloud and AI Development Act (CADA).

Europe’s approach to technological sovereignty is grounded in openness, partnership and fair

competition. Strengthening the EU’s technological base enables it to remain open and

cooperative while safeguarding its capacity to act independently and protect its interests,

security and democratic principles.

In this context, the two key problems that the revision of the Chips Act aims to address are:

(a) overdependence on third countries for semiconductor design and

manufacturing;

(b) insufficient crisis preparedness capabilities.

Building on the objectives set out in the first Chips Act, and informed by an analysis of these

challenges and their underlying drivers, two overarching objectives for the Chips Act 2.0

have been identified:

(1) Increase the competitiveness of the European semiconductor value chain to improve

its technological sovereignty and resilience. This means providing the conditions

necessary for EU competitiveness, technological sovereignty and resilience in

semiconductor technologies by: (i) accelerating the industrial deployment of research

and innovation; (ii) ensuring security of supply; and (iii) reducing strategic

dependencies in cutting-edge and mature semiconductor technologies.

5 IDC, Semiconductors market data by feature size, sector and region, CNECT/2022/MVP/0084 – Second Interim

Report. The value chain encompasses IP, EDA, capital equipment, substrates, materials, fabless firms, IDMs,

foundries and OSAT providers. Only revenues by EU headquartered companies are considered.

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(2) Enhance crisis preparedness to ensure the EU’s security of supply. This means

improving the functioning of the internal market by enhancing crisis preparedness

and creating a uniform legal framework to protect the Union’s economic security and

increasing its indispensability, resilience and prosperity in the field of semiconductor

technologies.

Increase the competitiveness of the European semiconductor value chain to improve its

technological sovereignty and resilience

As the EU becomes increasingly reliant on foreign semiconductor supplies, it is more

vulnerable to external coercion, including the potential ‘weaponisation’ of supply chain

dependencies. Without a robust industrial base in semiconductor design and manufacturing,

the EU could fail to translate its strong research and innovation ecosystem into productivity

gains and the large-scale industrialisation of new technologies.

At the same time, European user industries face significant supply chain uncertainties,

prompting higher inventory levels and dampening investment. This, in turn, undermines the

overall competitiveness of manufacturing within the EU. Furthermore, dependencies in

semiconductor supply chains heighten geopolitical and security risks, particularly in times of

crisis when access to critical technologies may be restricted or they may be diverted to other

regions.

Against this backdrop, the initial Chips Act was predominantly supply-driven, but the

Chips Act 2.0 places greater emphasis on demand-side measures. The two dimensions are

mutually reinforcing: cultivating robust local demand helps strengthen local semiconductor

supply. In this way, the combined expansion of demand and supply contributes to greater

industrial resilience, shorter and more secure supply chains, enhanced strategic autonomy, and

better alignment between European production capacity and the needs of key industries.

This approach is closely linked to broader EU initiatives, especially CADA, which includes

actions to stimulate demand for cutting-edge AI chips by developing new data centres

across the Union. These measures are expected to generate additional demand for

semiconductors that can support the aims and objectives of the revised Chips Act. The AI

Continent Action Plan Communication6outlines how, as part of the broader effort to

develop AI Gigafactories, the Union aims to achieve strategic autonomy in the design and

production of AI semiconductors, reduce dependencies on critical technologies, and

strengthen sovereignty in cutting-edge semiconductors.

Strengthening Europe’s semiconductor value chain – including in areas critical for AI – is

essential to support the Union’s strategic objectives. At the same time, boosting Europe’s

mainstream semiconductor production capacity remains indispensable. Mature and

specialised nodes are vital for European industrial ecosystems such as automotive,

aeronautics, defence, telecom, and cloud, where demand for reliable, application-specific

chips continues to grow. Strengthening resilience in these segments is therefore essential for

safeguarding Europe’s industrial base and reducing excessive dependencies. It is equally

important to improve Europe’s chip design capabilities and foster closer cooperation

between designers, manufacturers and end-user industries, including through co-design

approaches that ensure semiconductor solutions are optimised for industrial and strategic

applications.

Building on the need to strengthen both supply and demand in the European semiconductor

ecosystem, the Chips Act 2.0 also provides for the deployment of strategic projects to

6 Communication from the Commission to the European Parliament, the Council, the European Economic and Social

Committee and the Committee of the Regions, AI Continent Action Plan, COM(2025) 165, 9.4.2025.

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strengthen key segments of the Union’s semiconductor value chain. These projects will be

prioritised and supported through a coordinated mix of public and private investment,

covering sovereign and advanced manufacturing, advanced chip design, and supply-chain

resilience. This approach complements the measures described above, strengthens cross-

border integration across the value chain, and contributes to enhancing Europe’s strategic

autonomy and technological sovereignty.

In this context, and under the Competitiveness Coordination Tool (CCT), a strategic project

on advanced manufacturing will be treated with the highest priority to support the

production of AI chips and other semiconductors. The initiative aims to establish the first

semiconductor facility in the Union combining leading-edge node manufacturing with chiplet

integration and advanced 3D packaging capabilities. Pilot production could be envisaged in

the period 2030-2033.

To further increase the resilience of the ecosystem, the scope of the provisions on first-of-a-

kind initiatives are clarified. These provisions cover the entire semiconductor value chain,

including manufacturing-centred chip design activities, specialty materials,

manufacturing equipment, printed circuit boards, advanced packaging and assembly.

First-of-a-kind assessment will also apply to national co-funding for strategic projects in case

strategic projects are also identified as first-of-a-kind, in line with competition rules.

The Chips Act 2.0 emphasises quicker industrialisation of pilot lines, transforming

successful pilot manufacturing facilities into commercially viable manufacturing capabilities.

It also adds photonics and photonic integrated circuits to the reinforced Chips for Europe

Initiative 2.0, as they are key enabling technologies for a wide range of strategic sectors,

including telecommunications, data centres, AI, healthcare, automotive and quantum. As the

Chips for Europe Initiative has demonstrated its vital role in strengthening the Union’s

leadership in semiconductors research, innovation and industrial deployment. It is therefore

essential to continue it. By sustaining proven instruments – such as pilot lines, the network of

competence centres, the Design Platform, and quantum chips activities – the Chips for Europe

Initiative 2.0 aims to ensure that Europe retains its competitive edge, accelerates commercial-

scale production, and maximises the contribution of semiconductor technologies to

sustainability and technological sovereignty.

Complementary demand-side measures will also be mobilised to accelerate market uptake of

European technologies. Innovation procurement and grand challenges will help generate

early demand, enable reference deployments and facilitate faster market entry for advanced

chips developed in the Union. In addition, public procurement involving semiconductors in

infrastructures, equipment or systems may integrate a security of supply related criterion

alongside price considerations, where such technologies are deployed in essential services or

critical infrastructures. By leveraging public demand in a coordinated manner, these measures

will complement supply-side instruments, promote the uptake of secure technologies across

the Union, and strengthen the security and resilience of downstream strategic sectors. In line

with the Union’s climate, environmental and energy objectives, energy-efficient and

sustainable chip production and operation should be prioritised. Permitting procedures will

also need to be streamlined to accelerate industrial deployment and maintain international

competitiveness, in particular on the basis of the Commission proposal for a Regulation for

speeding-up environmental assessments. In parallel with Chips Act implementation, and in

anticipation of the revision of the Cybersecurity Act, a cybersecurity risk assessment will

evaluate both technical vulnerabilities and non-technical factors affecting the cybersecurity of

semiconductors used in public procurement for specific critical sectors.

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To incentivise regional leadership in the semiconductor value chain, this proposal creates a

European Semiconductor Region of Excellence label for regions with a robust

semiconductor regional investment plan that is aligned with strategic priorities. These include

increasing semiconductor manufacturing, R&D collaboration, skills development, and

sustainable infrastructure. This would signal to international investors that the region has a

high-potential ecosystem for semiconductor-related business.

Enhance crisis preparedness to ensure the EU’s security of supply

Despite the monitoring and crisis-response tools created under Pillar III of the first Chips Act,

significant gaps remain in the Union’s ability to effectively address semiconductor supply

crises. The EU still lacks sufficiently developed mechanisms, tools and institutional capacities

to anticipate and assess disruptions in a timely and coordinated manner.

To improve preparedness in the semiconductor supply chain, the Commission will

support the setting up of a Business-to-Business Semiconductor Supply Chain Platform (

‘the Platform’),where companies can share non-commercially sensitive information in an

aggregated form. This will help create a digital supply chain model, increasing visibility of

structural interdependencies, enabling systematic risk identification and strengthening

resilience to disruptions. In the event of alerts, the Commission could request information

from individual undertakings and from the Platform. These requests for information must be

strictly limited to what is necessary and be proportionate. Undertakings participating in the

Platform will be exempt from the obligation to reply to requests for information. In parallel

with the Chips Act 2.0 Regulation, the Commission will develop an EU Blueprint for

semiconductor crisis management by the second quarter of 2027. The Blueprint will set out

clear procedures, roles and responsibilities across pre-crisis and crisis phases and will build on

the first simulation exercise on semiconductor supply chain disruptions conducted with the

Member States in 2025. These efforts will be coherent with the Preparedness Union Strategy

and its Action Plan.

• Consistency with existing policy provisions in the policy area

Semiconductors are critical enablers of the clean and digital transitions. Their strategic

importance for the EU is further amplified by geopolitical tensions, the Union’s current

overdependence on advanced manufacturing and design, and the increasing weaponisation of

these dependencies by third countries. In this context, the Chips Act 2.0 is indispensable for

achieving the Commission’s political priorities, especially ‘A new plan for Europe’s

sustainable prosperity and competitiveness’ and ‘A new era for European defence and

security’.7

The Chips Act 2.0 proposal can be seen as a response to the need for urgent action on

semiconductors to safeguard the EU’s future as an economic powerhouse, an investment

destination and a manufacturing centre, as acknowledged in the Clean Industrial Deal,8 the

Competitiveness Compass for the EU9 and the Joint Communication on Strengthening EU

Economic Security.10

7 Priorities 2024-2029 - European Commission 8 Communication from the Commission to the European Parliament, the Council, the European Economic and Social

Committee and the Committee of the Regions, The Clean Industrial Deal: A joint roadmap for competitiveness and

decarbonisation, COM(2025) 85, 26.2.2025. 9 Communication from the Commission to the European Parliament, the Council, the European Economic and Social

Committee and the Committee of the Regions, A Competitiveness Compass for the EU, COM(2025) 30, 29.1.2025. 10 Joint Communication to the European Parliament and the Council, Strengthening EU economic security,

JOIN(2025) 977, 3.12.2025.

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The proposal is consistent with the overall digital vision, targets and avenues for the EU’s

successful digital transformation by 2030 as presented in the Commission Communication

The 2030 Digital Compass: the European way for the Digital Decade (Digital Compass

Communication)11 and the subsequent Commission Decision on the Digital Decade Policy

Programme,12 with the specific target on semiconductors. This proposal is intended to help

equip the Union with the capabilities that will be needed to deliver on its 2030 target. The

review of the Digital Decade Policy Programme is planned for June 2026.13

This proposal helps implement the Semicon Coalition Declaration, whichwas signed by the

respective ministers of the 27 Members States on 29 September 2025 and calls for a

reinforced and forward-looking Chips Act 2.0 to strengthen Europe’s position in the global

semiconductor value chain.14

The proposal also shares some of the objectives of the Industrial Accelerator Act,15 which

sets out a framework of measures to strengthen EU competitiveness, accelerate industrial

decarbonisation, and boost strategic manufacturing capabilities.

The proposal is broadly consistent with EU initiatives pursuing related objectives, especially

the Digital Europe Programme (DEP), Horizon Europe (HE), the Critical Raw Materials

Act (CRMA),16and also the European Regional Development Fund (ERDF), InvestEU

and Erasmus+.

Out of the above-mentioned initiatives, the proposal is particularly consistent with DEP and

HE, which serve as the two funding backbones of Pillar I in the current multiannual financial

framework. DEP provides support for digital infrastructures, while HE supports upstream

research, piloting and demonstration.

Moreover, the proposal also complements the CRMA, as both pursue strategic autonomy by

addressing different segments of the value chain: the Chips Act focuses on semiconductor

design and manufacturing, while the CRMA targets critical raw materials.

The Chips Act is consistent with the EU’s strategic autonomy, economic security and

competitiveness agendas. It aligns with the European Economic Security Strategy17, dual-

use export controls18, the Foreign Subsidies Regulation19 and the Strategic Technologies

for Europe Platform (STEP).20 Together, these instruments reduce strategic dependencies

11 Communication from the Commission to the European Parliament, the Council, the European Economic and Social

Committee and the Committee of the Regions, 2030 Digital Compass: the European way for the Digital Decade,

COM(2021) 118, 9.3.2021. 12 Decision (EU) 2022/2481 of the European Parliament and of the Council of 14 December 2022 establishing the

Digital Decade Policy Programme 2030, 19.12.2022. 13 Survey opens on the future of the Digital Decade Policy Programme, https://digital-

strategy.ec.europa.eu/en/consultations/survey-opens-future-digital-decade-policy-programme 14 Semicon Coalition calls for reinforced Chips Act, https://digital-strategy.ec.europa.eu/en/news/semicon-coalition-

calls-reinforced-chips-act 15 Proposal for a Regulation of the European Parliament and of the Council establishing a framework of measures for

the acceleration of industrial capacity and decarbonisation in strategic sectors and amending Regulations (EU)

2018/1724, (EU) 2024/1735 and (EU) 2024/3110 (“Industrial Accelerator Act”), COM(2026) 100, 4.3.2026. 16 Regulation (EU) 2024/1252 of the European Parliament and of the Council of 11 April 2024 establishing a

framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU)

No 168/2013, (EU) 2018/858, (EU) 2018/1724 and (EU) 2019/1020 (“Critical Raw Materials Act”) 17 Joint Communication to the European Parliament, the European Council and the Council on ‘European Economic

Security Strategy’ JOIN (2023) 20 final. 18 Exporting dual-use items - Trade and Economic Security 19 Regulation (EU) 2022/2560 of the European Parliament and of the Council of 14 December 2022 on foreign

subsidies distorting the internal market 20 Strategic Technologies for Europe Platform, https://strategic-technologies.europa.eu/index_en

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and strengthen industrial capacity and address distortions caused by foreign subsidies in the

Single Market.

The proposal is consistent with European cybersecurity legislation. Certain categories of chips

are within the scope of the Cyber Resilience Act (CRA)21, and investments under the Chips

Act will aim to further its objectives by building on the strength of the European industry in

the secure chips market segment. The proposal will also complement the proposed revision of

the Cybersecurity Act, by adding a security of supply dimension for the public procurement

of semiconductors by critical entities.

The Industrial Action Plan for the European automotive sector underscored the

importance of the semiconductor industry for an innovative and digitalised automotive

sector.22

The Chips Act 2.0 is also designed in complementarity with other initiatives such as the

Important Projects of Common European Interest (IPCEI). Here, the preparation of the

upcoming IPCEIcandidateon Advanced Semiconductor Technologies23 is fully in line with

the spirit of the Chips Act by addressing first industrial deployments of breakthrough

innovations.

The Chips Act 2.0 is designed to be compatible with the current multiannual financial

framework (MFF) (2021-2027) and the next MFF (2028-2034), including the European

Competitiveness Fund (ECF), Framework Programme 10 (FP10), and the National and

Regional Partnership Plans (NRPPs). Its architecture will allow for immediate action and

impact under the current MFF, while ensuring continuity and scalability under the next MFF.

The proposal does not pre-empt nor prejudge the outcome of the ongoing legislative process

on the MFF.

Furthermore, the Chips Act 2.0 is without prejudice to State aid and competition rules,

including the R&D&I Framework and the IPCEI Communication, while preserving

their distinct objectives. IPCEIs and the R&D&I Framework play a central role in supporting

research, development, innovation and first industrial deployment, especially for highly

innovative and cross-border projects with strong spillover effects.

Measures under the Chips Act 2.0 will build on this architecture by further clarifying and

refining the scope of the first-of-a-kind framework under Pillar II, ensuring that the whole

value chain will be covered.

• Consistency with other Union policies

The proposal is consistent with EU competition and industrial strategy, as reflected in

industrial strategies and the Draghi Report, and it complements the digital and clean transition

frameworks.

21 Regulation (EU) 2024/2847 of the European Parliament and of the Council of 23 October 2024 on horizontal

cybersecurity requirements for products with digital elements and amending Regulations (EU) No 168/2013 and

(EU) 2019/1020 and Directive (EU) 2020/1828 (“Cyber Resilience Act”) 22 Communication from the Commission to the European Parliament, the Council, the European

Economic and Social Committee and the Committee of the Regions, Industrial Action Plan for the

European automotive sector, COM(2025) 95, 5.3.2025. 23 The IPCEI candidate AST is currently being designed to build on existing EU initiatives, in particular pilot lines

and the European design platform, ensuring continuity and acceleration rather than duplication. Driven by

megatrends such as AI, automation, security and sustainability, IPCEI candidate AST may eventually provide a

collective European response to disruptive technological change. It could focus on key technology areas including,

for example AI chips and accelerators, photonic integrated circuits, heterogeneous integration and advanced

packaging, sensors, power electronics, energy-efficient solutions and secure communication, while covering the

full semiconductor value chain, including enabling technologies such as EDA, equipment, testing, materials and

wafers. 

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This proposal will be a part of the Technological Sovereignty Package along with the Cloud

and AI Development Act (CADA) and a Strategic Roadmap for Digitalisation and AI in

Energy.The Package strives to ensure that the Union retains the capacity to decide

autonomously, act effectively, and shape global technological developments, while remaining

open, competitive, and committed to international cooperation and rules.

Coordination will be needed between the Chips Act and the proposed European

Competitiveness Fund (ECF)24 and the upcoming Quantum Act.25 Consistency with the

Quantum Act will provide an opportunity to establish a comprehensive European quantum

policy framework that makes the most of synergies across multiple instruments.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

As with the first Chips Act, the legal bases for the Chips Act 2.0 Regulation are Article 173(3)

and Article 114 of the Treaty on the Functioning of the European Union (TFEU). The Union

must contribute to the achievement of the objectives set out in Article 173(1) through the

policies and activities it pursues. Article 173(1) TFEU notes that the objectives are to ensure

that the conditions necessary for the competitiveness of the Union’s industry exist. In

accordance with a system of open and competitive markets, this action aims to: (i) speed up

adjustment of industry to structural changes; (ii) encourage an environment favourable to

initiative and to the development of undertakings throughout the Union, particularly small and

medium-sized undertakings; (iii) encourage an environment favourable to cooperation

between undertakings; and (iv) foster better exploitation of the industrial potential of policies

of innovation, research and technological development. The objective of Article 114 TFEU is

the establishment and functioning of the internal market by adopting measures for the

approximation of national rules.

The Chips Act 2.0 builds on the objectives of the current Chips Act Regulation. The first

specific objective of the Chips Act 2.0, underlying Pillar I, is creating large innovation

capacities and the adequate technological capabilities in the semiconductor industry to

accelerate and adjust to innovation. In addition, underlying Pillars II and III, the Regulation

aims to increase the Union’s resilience and security of supply in the field of semiconductor

technologies by supporting and coordinating investment in advanced semiconductor

manufacturing (Pillar II) and enabling coordinated monitoring and crisis response (Pillar III).

The appropriate legal basis for the first objctive is Article 173(3), of the TFEU. In the case of

Article 173(3) TFEU, actions taken should not entail the harmonisation of national laws and

regulations but strengthen the competitiveness and resilience of the semiconductor industrial

base. The Chips Act 2.0 aims to bolster the strength and resilience of the European

semiconductor technology and industrial landscape, boosting the innovation potential of the

semiconductor ecosystem throughout the EU. This includes reducing reliance on a small set

of non-EU companies and regions and expanding the EU’s ability to design and manufacture

advanced semiconductors. The Chips for Europe Initiative (Pillar I), which will continue to be

supported through the new legislative action, is intended to help achieve these goals by

24 Proposal for a Regulation of the European Parliament and of the Council on establishing the European

Competitiveness Fund ('ECF’), including the specific programme for defence research and innovation activities,

repealing Regulations (EU) 2021/522, (EU) 2021/694, (EU) 2021/697, (EU) 2021/783, repealing provisions of

Regulations (EU) 2021/696, (EU) 2023/588, and amending Regulation (EU) [EDIP], COM(2025) 555, 16.7.2025 25 Commission invites contributions to shape future EU Quantum Act, https://digital-

strategy.ec.europa.eu/en/news/commission-invites-contributions-shape-future-eu-quantum-act

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closing the gap between the EU’s research excellence and its effective, sustainable industrial

deployment.

• Subsidiarity (for non-exclusive competence)

The objectives of the proposal cannot be achieved by Member States acting alone, as the

problems are of a cross-border nature, and are not limited to single Member States or to a

subset of Member States. The proposed actions focus on areas where there is a demonstrable

value added in acting at Union level due to the scale, speed and scope of the efforts needed.

Providing a comprehensive response to the semiconductor crisis requires rapid and

coordinated joint action from a variety of stakeholders, in cooperation with Member States.

No single Member State can achieve this alone. Moreover, given the complexity of the

semiconductor ecosystem, the consequence of the Union’s structural dependencies and

demand and supply shortages are so far-reaching that EU intervention is best placed to

address these issues.

Action at Union level is clearly best suited to driving European actors towards a common

vision and implementation strategy. This is key to generating economies of scale and of scope

and producing critical mass necessary for cutting-edge capacities. It will also limit, if not

prevent, fragmentation of efforts, subsidy races, and suboptimal national solutions.

Union action is needed in the areas that this proposal addresses through its three pillars.

• With regard to the first pillar (Chips for Europe Initiative 2.0), the reinforced Chips

for Europe Initiative 2.0 will continue to support the activities of the Chips for

Europe Initiative set up under the first Chips Act. This means large-scale

technological capacity building and innovation throughout the Union to enable the

development and deployment of cutting-edge and next-generation semiconductor and

quantum technologies and to address Europe’s chronic structural weaknesses in

design and production. After two successful Important Projects of Common

European Interest (IPCEIs) on microelectronics, which support cross-border

innovative projects across the microelectronics value chain, a possible third IPCEI

in this field is being designed. These initiatives are of strategic importance for the

sector. However, at this stage, they are unlikely alone to sufficiently address capacity

building in the form of pilot lines and design infrastructures. These need to be made

widely available to all interested third parties across Europe and will also enable the

Union to play a stronger role in a global and interdependent ecosystem. These large-

scale facilities can only be delivered at Union level due to the scale of investments

and know-how necessary.

• Regarding the second pillar (Security of supply and demand), actions aimed at

accelerating investment in semiconductor manufacturing can only be adequately

designed and implemented at Union level. This is because of the scale of the

investments needed and because, by definition, these manufacturing facilities will

serve the entire internal market, strengthen the whole ecosystem, and guarantee

security of supply in crises. Additionally, strategic project measureswould be

developed by fostering a mix of public and private investment with a high private

lever.

• In relation to the third pillar (Monitoring and Crisis Response), enhanced Union

cooperation will ensure necessary and comparable intelligence gathering. Together,

Member States and the Commission will be able to anticipate shortages, activate the

crisis stage in a situation of severe shortage and put in place the necessary measures

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to address such a crisis in more effective ways than through a patchwork of national

measures.

• Proportionality

The proposal is designed to strengthen Europe’s semiconductor ecosystem through: (i) short-

term preparedness and monitoring to increase the transparency of semiconductor supply

chains; (ii) mid-term security of supply actions to enhance semiconductor production capacity

in Europe; and (iii) longer-term technology and innovation leadership actions to set up design

and production facilities for advanced and emerging semiconductor technologies.

In this context, the proposal focuses on those parts of the semiconductor ecosystem that

contribute most to the resilience of the Union’s supply chain.The focus on the semiconductor

ecosystem itself – rather than the larger electronics components and systems domain, or

application areas using semiconductors and/or electronics components and systems – is

intended to limit actions to one of today’s most crucial pain points for the European economy

and society at large.

The Chips for Europe Initiative 2.0 puts in place the mechanisms necessary for ensuring the

longer-term competitiveness and innovation capacity of European industry through: (i)

research and design capabilities, (ii) pilot lines for testing and experimentation, (iii) capacities

for quantum chips and photonic integrated circuits, (iv) competence centres, and (v) a fund for

start-ups, scale-ups and SMEs.

The new security of supply actions to enhance the Union’s semiconductor production capacity

in Pillar II can recognise a facility as a European Semiconductors Technology Initiative. On

the basis of this recognition, Member States are required to ensure that permits for these

facilities and foundries are granted through fast-track procedures.

The new preparedness actions in Pillar III are based on monitoring and information exchange

by Member States and the Union to anticipate disruptions in the supply chain. In the event of

(anticipated) disruptions, coordinated measures may be taken to mitigate or prevent

semiconductor shortages and other disruptions.

• Choice of the instrument

A regulation is considered the most appropriate instrument as it makes it possible to set

requirements that apply directly to national authorities and relevant economic operators. This

will help ensure that the requirements are implemented in a timely and harmonised way,

leading to greater legal certainty and ensuring continuity with the first Chips Act.

The proposal takes the form of a Regulation of the European Parliament and of the Council.

This is the most suitable legal instrument for Pillar I of the proposal setting up the Chips for

Europe Initiative 2.0. This is because only a regulation, with its directly applicable legal

provisions, can provide the degree of uniformity needed to continue and operate a Union

initiative aimed at supporting an industrial sector across the internal market. The choice of a

regulation as a legal instrument for Pillar II is justified by the need for uniform application of

the new rules, in particular the definition of European semiconductor technology initiatives

and strategic projects, and a uniform procedure for to recognise and support them.

Additionally, a regulation is the most suitable instrument for Pillar III, as this part should

provide for a mechanism to anticipate and address serious disruptions to semiconductor

supply in the Union. Also, this mechanism should not require transposition through national

measures and will be directly applicable.

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3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER

CONSULTATIONS AND IMPACT ASSESSMENTS

• Ex-post evaluations/fitness checks of existing legislation

In accordance with Article 40 of the Chips Act Regulation, the Commission submitted a first

report on the evaluation and review of the Regulation to the European Parliament and the

Council by 20 September 2026. The purpose of the evaluation was to produce a critical,

unbiased and evidence-based judgement of the progress of the Chips Act and its ability to

strengthen the Union’s semiconductor ecosystem26.

The evaluation covered the three pillars of the Chips Act and cross-pillar elements. It

examined the impact of the Chips Act on the economy, governance and social factors, and

included an impact assessment on the Chips Act 2.0. It identified and quantified the costs and

benefits of the Chips Act under each pillar. It also outlined the lessons learnt from its

implementation and highlighted persisting and emerging issues affecting the functioning of

the Regulation. It covered the period from the entry into force of the Chips Act on 21

September 2023 until the end of November 2025.

The evaluation concluded that the Chips Act has been key to creating a European

regulatory and policy framework for semiconductors that did not previously exist and

doing so in a short period of time. It mobilised substantial public and private investment,

introduced state-of-the-art EU-level infrastructures and put in place governance mechanisms

for coordination and crisis preparedness. Stakeholder confidence in the overall strategic

direction remains high, and the Act is widely perceived as a necessary response to

geopolitical, technological and economic pressures.

At the same time, the transition from output delivery to system-wide results and impacts

is still ongoing. The main constraints are structural and economic rather than operational.

They relate to the Union’s ability to industrialise innovation, finance scale-ups, reinforce

supply chain resilience and generate system-level intelligence.

The Act has been instrumental in building technology infrastructures and early-stage

manufacturing capacity. The creation of EU-level pilot lines, competence centres and shared

infrastructures has ensured coordinated effort. These initiatives are already improving access

to advanced tools and support strong cross-border collaboration. The impact of other

components (namely, quantum chip pilots and the design platform) will only become apparent

at a later stage. In any case, a wide range of stakeholders recognise the Act’s contribution to

strengthening Europe’s R&I base and improving coordination across Member States.

By contrast, progress in manufacturing deployment and subsequent increased strategic

autonomy is still at an early stage, partly due to long lead times between investment

decisions and actual production in fabs. Europe remains structurally dependent on non-EU

suppliers in critical segments, particularly at advanced technology nodes. The loss or delay of

major investment projects also demonstrates that sovereignty has not yet materially improved.

Across the evaluation criteria, the lab-to-fab gap emerges as a major challenge. The Act

has already managed to move technologies to higher readiness levels, and – considering its

recent entry into force – stable pathways to volume manufacturing are expected to materialise

in the coming years. Many outputs operate effectively at a technical level and will generate

the industrial capacities required to secure European supply later on. The challenge

26 Link to the SWD Annex of the Evaluation Report

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confronting the EU is no longer primarily innovation generation, but industrialisation and

scale.

The evaluation also found that limited private capital continues to restrict the scaling of

European semiconductor firms. The Act mobilised unprecedented levels of public funding,

but private investment (particularly late-stage and institutional investment) remains

insufficient compared to competing regions. Support for scale-ups is constrained by structural

features of the European financial system, including the lack of a real Capital Market Union,

existing rules for pension funds and conservative investment practices. This weakens

European value capture and incentivises scale-ups to relocate or sell the business to non-EU

firms. The Act has improved early-stage innovation capacity, but the budget allocated to the

(EIC Accelerator part of the) Chips Fund was used up in its first two years and has proven

insufficient. Thematic instruments with patient capital are necessary to help semiconductor

start-ups scale up, and broader measures must be conceived to create the conditions required

for high-potential technology businesses to emerge.

In addition, the evaluation found that current EU-level instruments to address security of

supply and economic security vulnerabilities are useful, but should be further

strengthened. On the one hand, manufacturing deployment is shaped primarily by industry

investment decisions supported through national funding frameworks. Demand-side

weaknesses further undermine resilience. On the other hand, fragmented markets, low

volumes in key sectors and limited procurement coordination reduce the commercial viability

of European production. Without demand aggregation and reliable market signals, new

capacity risks being underutilised.

Finally, the evaluation concluded that the EU’s insight into EU and global semiconductor

supply chains is too limited to support strong crisis preparedness. The ESB substantially

improved coordination, and early-warning mechanisms were initiated. However, a more

integrated approach to monitoring across materials, equipment, design tools and downstream

users should be considered. Data collection remains fragmented and sensitive, limiting the

ability to anticipate disruptions. Pillar III therefore provides only partial system-level

visibility.

Overall, the Chips Act has delivered quickly and credibly on its initial goal of building

European capacity. However, effectiveness in terms of autonomy and resilience depends on

whether Europe can now convert infrastructures into industrial output, innovation into scale

and coordination into actionable intelligence.

• Stakeholder consultations

In line with the Better Regulation Guidelines, the Commission carried out a comprehensive

stakeholder consultation process, with the aim of collecting reliable information using a range

of methods, consulted parties and tools.

The Commission ran multiple activities: a public consultation between 5 September 2025

and 28 November 2025 (105 responses and 39 position papers submitted); a call for evidence

for the impact assessment (209 responses and 85 position papers submitted); a targeted

stakeholder survey (64 responses); interviews (with respondents representing a broad,

strategically selected spectrum of organisations involved in or affected by the European

semiconductor ecosystem); 16 thematic workshops conducted between September and

December 2025 with the participation of various stakeholders across the European

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semiconductor ecosystem; six workshops with Member States conducted between January

and March 2026.

Stakeholders highlighted an overdependence on non-European suppliers, particularly for

high-performance chips. Key obstacles to developing an EU AI-chip value chain include

insufficient manufacturing capacity, limited investment instruments, shortages of skilled

workforce, and weak domestic demand from hyperscalers and AI companies. Structural cost

disadvantages were also noted across the value chain: EU-based fabs face higher construction

and operating costs, longer permitting and build-and-commission timelines, and weaker

agglomeration effects compared to competitors in East Asia.

Financing constraints further exacerbate these challenges. A lack of venture capital and risk

finance was identified as a major barrier for design firms, while integrated device

manufacturers and other production-oriented firms pointed to lengthy permitting procedures

and high energy costs as significant impediments. In addition, systemic barriers persist in the

form of late-stage financing gaps, fragmented governance, and dependence on non-EU

foundries, which hinder firms’ ability to scale prototypes into commercial products – an issue

confirmed through the public consultation.

Skills shortages emerged as a cross-cutting concern among stakeholders. It was emphasised

that semiconductor skills pipelines require decade-long investment horizons, yet many

relevant programmes operate on shorter budgetary cycles, limiting their longer-term impact.

Stakeholders also pointed to room for improvement in terms of coordination between the EU

and the national levels.

The results of the public consultation are summarised in the factual summary report published

with the answers to the call for evidence on the ‘Have your say’ portal.

• Impact assessment

In line with the Better Regulation Guidelines, this regulatory proposal is based on an impact

assessment that analyses the problem and subproblems related to the need to strengthen the

competitiveness of the EU’s semiconductor ecosystems. The impact assessment identifies

possible policy options to address problem drivers and assesses their likely impacts. The

impact assessment was structured to reflect the consultation of the Commission’s Inter-

Service Steering Group on the Chips Act 2.0.

The impact assessment received a negative opinion from the Regulatory Scrutiny Board

(RSB) on 28 January 2026. The Board recommended to:

• further developing the analysis of the problem, including a more comprehensive

assessment of current and required EU capabilities and production capacities across

critical elements of the semiconductor value chain, for both mature and leading-edge

chips;

• clarifying and better defining the objectives, particularly with regard to the level and

scope of the technological sovereignty sought for different types of chips;

• strengthening the intervention logic by clearly demonstrating how different measures

relate to each other, including supply-side and demand-side instruments, and how

these collectively contribute to achieving the desired level of sovereignty;

• defining the proposed measures in greater detail to allow their impact to be properly

assessed, including clearer information on the overall costs of the intervention, their

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distribution of those costs and the risks related to potential inefficiencies in the

allocation of resources; and

• improving transparency regarding the uncertainties linked to the next MFF and

providing a more thorough analysis of the consistency of the measures with existing

and forthcoming policy initiatives.

All the above-mentioned points were addressed as fully as possible. When the revised impact

assessment was resubmitted, the Board issued a positive opinion with reservations on 30

March 2026. The Board’s reservations related to the following aspects:

• the measure to incentivise trusted chips is not described in sufficient detail for its

impact to be properly assessed;

• the report does not sufficiently analyse consistency with existing and forthcoming

policy initiatives and instruments and does not clearly explain how the interplay

between supply-side and demand-side measures will ensure synergies;

• the analysis of the risk of allocating resources inefficiently is not sufficiently

developed.

The Board’s opinions, the final impact assessment and the executive summary are published

together with this proposal.

The impact assessment is built around a set of three specific objectives that tackle the problem

drivers identified. It sets out three policy options for each specific objective, based on the

level of policy intervention, the scope, efficiency and coherence, as well as the proportionality

and subsidiarity principles.

Policy option 0 (PO0) would involve continuing to implement the current Chips Act without

any modification. It would maintain the existing R&D&I programme under Pillar I and

maintain the same approach to supporting investments through State aid (using the ‘first-of-a-

kind’ framework under the existing State aid rules). There would be no additional Union

budget under Pillar II. Under Pillar III, it would maintain the current crisis-response

mechanism, which operates using a voluntary data-gathering regime from the private sector

(except in a crisis). This policy option would not include any policy measures going beyond

the scope of the existing Chips Act.

Policy option 1 (PO1) – the horizontal (‘market-enabling’) policy approach – would

focus on improving overall framework conditions. This would involve increased support for

research, development and innovation, investing in skills and creating a favourable investment

environment. No additional Union-level funding would be introduced for mass-scale

manufacturing and design, notably for AI chips. Under this approach, in the long term the

EU would rely on attracting non-EU suppliers capable of fabricating leading-edge chips, and

global design companies.

Policy option 2 (PO2) – the vertical (‘proactive’) industrial policy approach – would build

on the horizontal measures but complement them with targeted financial interventions, in

particular through strategic projects that may be supported under the proposed European

Competitiveness Fund. This approach builds on European technological assets created under

of the first Chips Act, in particular pilot lines, and translates them into industrial deployment.

By introducing a clear EU-level dimension to funding industrial projects and enabling cross-

border, value-chain-wide investments, this approach would aim to reduce fragmentation while

strengthening Europe’s competitiveness, resilience and technological sovereignty. The added

value would be in the attempt to create ‘made in Europe’ technology.

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Overall, the preferred option is PO2, as it provides the most effective and proportionate

response to the problems identified, while respecting subsidiarity and minimising

administrative burden. It responds to evaluation findings calling for stronger integration

between R&I and industrial deployment activities, faster industrialisation pathways and more

effective supply chain intelligence mechanisms.

• Regulatory fitness and simplification

The preferred policy option (PO2) delivers simplification by introducing a coordinated EU-

level framework for strategic projects. A single project pipeline for large-scale semiconductor

investments prevents the duplication of administrative steps and repetitive documentation.

The clarification of the ‘first-of-a-kind’ scope further simplifies first-of-a-kind procedures for

both Member States and companies. Additionally, the concept of a European Chips

Infrastructure Consortium (‘ECIC’) will be deleted under the Chips Act 2.0 for the sake of

simplification, as it was never used under the current Act. Another efficiency gain stems from

faster and more predictable permitting procedures. Permitting and design phases for advanced

semiconductor facilities in the EU are on average 7.5 months longer than in key competing

jurisdictions. Assuming that each year of delay adds around 5% to the total project cost, this

implies an additional cost of approximately 3.125% of the overall investment. By way of

example, this would correspond to around EUR 625 million for a EUR 20 billion advanced

fabrication plant. By reducing iterative exchanges with authorities and clarifying permitting

pathways, PO2 generates substantial implicit cost savings that outweigh compliance-related

costs. Another benefit of simplification is created by replacing ad hoc crisis-driven

information requests with a structured Business-to-Business Semiconductor Supply Chain

Platform. This reduces duplication and improves coordination across Member States.

Under the ‘one-in-one-out’ approach, PO2 creates a limited additional administrative burden

and it is largely offset by structural simplification. New ‘INs’ for businesses consist primarily

of disclosures of supply chain vulnerabilities. These are estimated at up to 10 person-days per

request, corresponding to approximately EUR 2783 per large firm, with total costs of up to

EUR 1.34 million per request in a full-coverage scenario. This burden is counterbalanced by

‘OUTs’ in the form of fewer urgent and duplicative crisis-related data calls, streamlined

information exchange and reduced internal monitoring effort due to market-intelligence

activities being partially outsourced to the Platform. Businesses face a net administrative

burden, consisting of starting participation in the Platform and disclosures. However, these

will be largely offset by the security of supply that this data sharing will bring about.

Additionally, in the first stage, assessments will only be made on a qualitative basis unless

there is a formal crisis.

• Fundamental rights

Article 16 of the Charter of Fundamental Rights of the European Union (‘the Charter’)

provides for the freedom to conduct a business. The measures under Pillars I and II of this

proposal create capacity for innovation and promote the security of supply of semiconductors,

which can reinforce the freedom to conduct a business in accordance with Union law and

national laws and practices. Nevertheless, some measures under Pillar III needed to address

the fact that serious disruptions to semiconductor supply in the Union could temporarily limit

the freedom to conduct a business and the freedom of contract, protected by Article 16, and

the right to property, protected by Article 17 of the Charter. Any limitation of those rights in

this proposal will, in accordance with Article 52(1) of the Charter, be provided for by law,

respect the essence of those rights and freedoms, and comply with the principle of

proportionality.

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The obligation to disclose specific information to the Commission, provided that certain

conditions are met, respects the essence of, and will not disproportionately affect, the freedom

to conduct a business (Article 16 of the Charter). Any information request serves the objective

of general interest of the Union as it allows potential measures for mitigating a semiconductor

shortage crisis to be identified. These information requests are appropriate and effective in

order to attain the objective as they provide the information necessary to assess the crisis at

hand. The Commission, in principle, only requests information from representative

organisations. It may additionally issue requests to individual undertakings only if it is

necessary. In light of the serious economic and societal consequences of semiconductor

shortages, and the respective importance of mitigation measures, information requests are

proportionate to the desired aim. Furthermore, the limitation on the freedom to conduct a

business and the right to property are offset by appropriate safeguards. Any request for

information may only be launched in a situation of crisis in which the Commission has

activated the crisis stage through an implementing act.

The obligation to accept and prioritise priority-rated orders respects the essence of, and will

not disproportionately affect, the freedom to conduct a business and the freedom of contract

(Article 16 of the Charter), and the right to property (Article 17 of the Charter). This

obligation serves the objective of general interest of the Union as it ensures critical sectors

affected by supply disruptions due to a semiconductor shortage can continue to operate. The

obligation is appropriate and effective in order to attain this objective as it ensures that

available resources are preferentially utilised for products supplied to these sectors. No other

measure is as effective. In a situation of crisis, it is proportionate to oblige certain

undertakings to accept and prioritise certain orders. Those undertakings include

semiconductor manufacturing facilities that have applied to be recognised as ‘European

semiconductor technology initiatives’; other semiconductor manufacturing facilities which

have accepted such a possibility in return for receiving public support; or undertakings along

the semiconductor supply chain which have been subjected to a priority-rated order from a

third country to the extent that the security of supply to critical sectors is affected.

Appropriate safeguards ensure that any negative impact of the prioritisation obligation on the

freedom to conduct a business, the freedom of contract or the right to property does not

amount to a violation of those rights. Any obligation to prioritise certain orders may only be

launched in a situation of crisis in which the Commission has activated the crisis stage

through an implementing act. The undertaking concerned may ask the Commission to review

the priority-rated order if it is unable to perform the order or if performing the order would

place unreasonable economic burden on it and entail particular hardship. Furthermore, the

subject of the obligation is exempt from any liability for damages for breaching contractual

obligations resulting from compliance with the obligation.

4. BUDGETARY IMPLICATIONS

Budgetary implications relate to staffing of Commission departments and support for setting

up a Business-to-Business Semiconductor Supply Chain Platform. The proposal requires

human resources for the tasks in the proposal that would be under the responsibility of the

Commission. Some of the tasks can be implemented by redeploying existing staff currently

working on similar tasks, e.g. related to programme supervision, stakeholder liaison, and

reporting for research & development and capacity-building activities under Pillar I.

Additional staff will be needed to carry out other tasks, e.g. supervising strategic projects,

including monitoring milestones and deliverables; compliance checks (State aid,

procurement); cross-border coordination with Member States; administrative (non-fiscal)

oversight; and reporting to Council/Parliament. In addition, the proposal implies additional

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tasks related to the Business-to-Business Semiconductor Supply Chain Platform, e.g.

monitoring semiconductor supply chains; analysis and crisis preparedness functions; handling

requests for information (RFIs) and checking and aggregating data during the pre-crisis stage;

and cross-sector coordination with industry stakeholders.

Support for setting up and operating a Business-to-Business Semiconductor Supply Chain

Platform requires operational expenditure in the order of EUR 70 million. The Commission

would provide the support for the platform.

Further details regarding budgetary implications are provided in the Legislative, Financial and

Digital Statement annexed to this proposal.

In addition to the budgetary implications mentioned above operational and administrative

budgets for implementing the Chips for Europe Initiative 2.0 and strategic projects in the MFF

2028-2034 can only be requested at a later stage.

5. OTHER ASPECTS

• Implementation plans and monitoring, evaluation and reporting arrangements

The Commission will be responsible for monitoring the implementation of the intervention on

a regular basis. This may be supported by external studies and Member State and market data.

The Commission will carry out a comprehensive evaluation of the effectiveness, efficiency,

coherence, proportionality, and subsidiarity of the Chips Act 2.0. An evaluation report

presenting the main findings will be submitted to the European Parliament, the Council, the

European Economic and Social Committee, and the Committee of the Regions within four to

five years of the date of application of the legislative act. Where appropriate, the Commission

may accompany this report with proposals for improving or adapting the Chips Act 2.0.

This review mechanism follows the approach established under the first Chips Act. It ensures

continuity, comparability of results, and a long-term perspective on policy results. The

Commission, in close cooperation with the Member States, will regularly monitor the

implementation and application of the legal provisions, paying particular attention to the

effectiveness of the measures adopted. Monitoring activities will rely on quantitative and

qualitative indicators, drawing from data provided by stakeholders across the semiconductor

value chain, Member States, and relevant EU bodies. The overall success of the initiative will

be assessed using evidence of strengthened security of supply. This will include progress in

relevant measurable aspects such as the EU’s share of global semiconductor production and

changes in market concentration. The implementation of the Chips Act 2.0 and its

accompanying measures will allow the specific objectives, expected benefits and related

impacts to be systematically tracked.

In order to conduct the evaluation, Member States and national competent authorities will

provide necessary and relevant information to the Commission at its request.

• Detailed explanation of the specific provisions of the proposal

1.1. Chapter I – General Provisions

Chapter I lays out the subject matter of the Regulation. It also sets out the definitions used

throughout the instrument. The Regulation continues and further develops the Chips for

Europe Initiative (now Chips for Europe Initiative 2.0). Under Pillar I it creates the conditions

necessary to strengthen the Union’s capacity for industrial innovation and sets out demand

stimulation measures. Under Pillar II it sets the criteria for recognising European

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semiconductor technology initiatives that are first-of-a-kind initiatives and strategic projects

that foster the security of supply and the resilience of the Union’s semiconductor ecosystem.

Under Pillar III it sets out measures for improving the coordination mechanism between the

Member States and the Commission, which was originally established under Regulation (EU)

2023/1781 (Chips Act).

1.2. Chapter II – Chips for Europe Initiative 2.0

Chapter II focuses on the Chips for Europe Initiative 2.0, which aims to reinforce the

Union’s competitiveness, resilience and capacity for innovation. By investing in the Chips for

Europe Initiative 2.0, the Union should become more effective at turning its research and

technology developments into demand-oriented, application-driven, secure and energy-

efficient semiconductor technologies of the highest quality. At the same time, the Union

should provide an opportunity for its supply industry to benefit from those investments.

To this end, this Chapter includes the general provisions and objectives of the Chips for

Europe Initiative, which was originally established under Regulation (EU) 2023/1781. The

Chips for Europe Initiative 2.0 aims to support large-scale capacity building throughout the

Union in existing cutting-edge and next-generation semiconductor technologies. The Chips

for Europe Initiative 2.0 now comprises six components: (1) design capacities for integrated

semiconductor technologies; (2) pilot lines for preparing innovative production, and testing

and experimentation facilities; (3) advanced technology and engineering capacities for

accelerating the development of quantum chips; (4) a network of competence centres and

skills development; (5) ‘Chips Fund’ activities for access to capital by start-ups, scale-ups and

SMEs; and (6) building and strengthening advanced design, prototyping, and industrial

deployment capacities for photonic integrated circuit technologies across the Union. The

Chips for Europe Initiative 2.0 puts a strong focus on industrialisation and demand

stimulating measures such as Grand Challenges, Demand Forum and Demand Accelerators.

The Chips for Europe Initiative 2.0 is to be supported by funding from HE and DEP under the

current MFF, in particular the new Specific Objective 6, of DEP and implemented in

accordance with the Regulations establishing those programmes and, where relevant and

without prejudice to the MFF negotiations, their successors.

The Regulation provides for a procedural framework to facilitate combined funding by

Member States, without prejudice to State aid rules, the Union budget and private investment.

The Chapter also includes provisions on implementation. Implementing the Chips for Europe

Initiative 2.0 will also be primarily entrusted to the Chips Joint Undertaking and, where

applicable, to the joint undertaking or any other similar entity or initiative succeeding it

established by Union law under a subsequent Multiannual Financial Framework. The

technical description of the actions is provided in Annex I. Annex III includes measurable

indicators to monitor implementation and to report on the Chips for Europe Initiative 2.0’s

progress towards achieving its objectives. The Commission is empowered to adopt delegated

acts to amend the list of measurable indicators. The Chips for Europe Initiative 2.0 builds on

Europe’s existing strengths in the global semiconductor value chain and increases synergies

with actions currently supported by the Union and Member States. Therefore, in order to

maximise its positive impacts, the Chips for Europe Initiative 2.0 should allow synergies to be

created with the Union programmes described in Annex IV.

1.3. Chapter III – Security of Supply and Demand

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Section 1 of Chapter III sets out the framework for European semiconductor technology

initiatives and strategic projects. The Commission may recognise projects within the

semiconductor value chain in the Union or in a third country as strategic projects, where the

projects meet the following criteria: they create EU added value by substantially contributing

to objectives of common Union interest; they have a clear cross-border dimension; they

contribute to improving the indispensability, resilience and prosperity of the Union’s

semiconductor value chain; and they contribute to significantly increasing European

technological sovereignty and technological leadership.

Technological areas identified as potential areas for the recognition of strategic projects are

set out in Annex II.

Section 2 of this Chapter sets out provisions for fast-tracking permit-granting procedures for

European semiconductor technology initiatives and strategic projects. It also describes the use

of European Business Wallets as single access portals for submitting a single permit

application for European semiconductor technology initiatives and strategic projects.

Section 3 of Chapter IIIdescribes the objectives of the Semiconductor Region of Excellence

label, and sets out the vision and scope of the European Semiconductor Region Investment

Plan.

Section 4 of Chapter III focuses on measures to increase supply chain resilience, namely for

the public procurement of critical infrastructures and in certain sectors of the economy

identified as risk-prone sectors.

1.4. Chapter IV – Monitoring and Crisis Response

Chapter IV contains a mechanism for coordinated monitoring of the semiconductor value

chain and responding to disruptions to the supply of semiconductors that have an impact on

the proper functioning of the internal market.

Section 1 sets out a comprehensive strategic mapping system for the EU’s semiconductor

sector, designed to identify vulnerabilities, dependencies, and future needs to increase supply

chain resilience. The Commission, in collaboration with the ESB, must conduct an in-depth

analysis covering critical aspects. These include key semiconductor-dependent industries and

infrastructures (e.g. the healthcare, defence, and digital sectors), supply chain segments (from

design to manufacturing and materials), technological dependencies (particularly on third

countries), skills shortages, and potential risks, including those arising from underinvestment

or geopolitical disruptions. The mapping also assesses the possible impacts of crisis

interventions (e.g., priority-rated orders or export controls under Articles 41-43). The results

are regularly shared with the ESB to inform policy decisions.

To proactively monitor risks, the Commission must develop and regularly update a list of

early-warning indicators (e.g. supply bottlenecks, demand surges, or geopolitical tensions)

based on the mapping’s findings. The process relies primarily on publicly available data and

non-confidential industry inputs. However, the Commission can request additional voluntary

information from semiconductor firms if gaps exist, using standardised, secure channels to

protect confidentiality. All data collected is handled under strict confidentiality rules (Article

50), and the Commission provides guidance to ensure consistent and secure information-

sharing. The framework and methodology for the mapping are also periodically reviewed to

adapt to evolving sectoral challenges. Ultimately, this system aims to anticipate disruptions,

guide strategic investments and strengthen the EU’s semiconductor autonomy.

Section 1 also describes the set-up and objectives of the Business-to-Business Semiconductor

Supply Chain Platform.The Platform will be a digital twin of the semiconductor supply chain

with the objective of increasing its transparency and resilience. The legal representative of the

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Platform will inform the Commission of current or expected disruptions to the semiconductor

supply chain.

Section 2 provides the rules for activating the semiconductor crisis stage and details the

emergency measures that can be used to respond to the crisis.

The first aspect is the obligation on national competent authorities to alert the Commission as

soon as possible if they identify a risk of serious supply disruption or other credible threats to

semiconductor availability. This triggers a preventive phase, where the Commission must act

swiftly by convening an extraordinary meeting of the ESB. The ESB’s role includes assessing

the severity of the disruption, including by issuing preventive requests for information and

discussing whether to initiate a formal crisis procedure. Additionally, the Commission may

consult third countries to seek cooperative solutions and ask national authorities to evaluate

the preparedness of key market players.

If joint procurement is deemed necessary, it must comply with EU public procurement rules

(Directives 2014/23/EU, 2014/24/EU and 2014/25/EU), ensuring transparency and

competition. Information gathering is another critical tool. The Commission can issue

preventive requests for information from the Business-to-Business Semiconductor Supply

Chain Platform, with safeguards for sensitive commercial information. The Commission may

also issue preventive requests for information to individual companies if they are not

participating in the Platform. Responses are shared with the ESB and relevant Member States,

ensuring collective awareness.

The framework escalates to a crisis stage only if two conditions are met: (1) serious supply

chain disruptions causing significant shortages; and (2) severe impacts on critical sectors (e.g.,

healthcare, defence, or digital infrastructure) that threaten societal, economic, or security

stability. The Commission, after consulting the ESB, may propose activating the crisis stage

to the Council, which decides by qualified majority. The crisis stage lasts up to 12 months,

with possible extensions if justified, and requires regular reporting to the ESB and European

Parliament. During this phase, Member States must coordinate national measures through the

ESB to avoid fragmented responses. Once the crisis ends, the Commission must update

supply chain monitoring within six months, incorporating the lessons learnt. The provisions

governing the activation of the crisis stage remain unaltered from those established in the

Chips Act, as a result of co-legislators agreement, and remain fit for purpose.

Section 3 sets out the measures needed to address semiconductor crises in the Union.

Under Article 41, the Commission can demand production and disruption data from

semiconductor supply chain companies to assess the crisis and potential solutions. Requests

must be strictly necessary and cannot compromise national security.

Article 42 allows the Commission to oblige semiconductor manufacturers to prioritise orders

for crisis-critical products, overriding existing contracts.

Article 43 introduces common purchasing, where the Commission acts as a central buyer for

multiple Member States facing severe shortages. This mechanism strengthens negotiating

power and prevents EU countries competing for limited supplies.

The Commission is empowered to activate the crisis stage by means of an implementing act

when there is concrete, serious and reliable evidence of a semiconductor crisis. A

semiconductor crisis occurs when there are serious disruptions to the supply of

semiconductors, leading to significant shortages. They lead to significant negative effects on

one or more important sectors of the Union, or prevent the supply, repair and maintenance of

essential products used by critical sectors. The implementing act is to specify the duration of

the crisis stage or its prolongation. Before the crisis stage expires, the Commission is to

EN 20 EN

assess, taking into account the opinion of the ESB, whether the crisis stage should be

prolonged. During the crisis stage, the ESB will hold extraordinary meetings to allow Member

States to work closely with the Commission and coordinate any national measures taken with

regard to the semiconductor supply chain.

1.5. Chapter V – Governance

Chapter V sets out the framework for the continuation of the ESB, which is composed of

representatives from the Member States and is chaired by the Commission. The ESB will

provide advice on the Chips for Europe Initiative 2.0 to the Public Authorities Board of the

Chips Joint Undertaking (Pillar I). It will provide advice and assistance to the Commission in

relation to assessing applications for European semiconductor technology initiatives and

strategic projects (Pillar II). It will exchange views with the Commission on the progress of

implementing the Semiconductor Region Investments Plan; discuss and prepare for the

identification of specific critical sectors and technologies; and address monitoring and crisis

response issues (Pillar III). Finally, it will provide support in order to consistently apply the

proposed Regulation and facilitate cooperation among Member States. The ESB will support

the Commission in international cooperation and strategic partnerships on semiconductors. It

will also coordinate and exchange information with relevant crisis structures established under

Union law. The ESB will meet in different compositions and hold separate meetings for its

tasks under Pillar I and for its tasks under Pillars II and III. The Commission may establish

standing or temporary sub-groups of the ESB and invite organisations representing the

interests of the semiconductor industry and other stakeholders to such sub-groups as

observers. The ESB should ensure that the Steering Committee of the Industrial Alliance for

Semiconductors, which will take over the operations of the Industrial Alliance on Processors

and Semiconductor Technologies, is invited to present updates at least yearly.

At national level, Member States will designate one or more national competent authorities

and, among them, a national single point of contact for the purpose of implementing the

Regulation.

1.6. Chapters VI, VII, VIII – Final Provisions

Chapter VI emphasises that all parties are obliged to respect the confidentiality of sensitive

business information and trade secrets. The obligation applies to the Commission, the national

competent authorities and other authorities of the Member States, as well as all

representatives and experts attending meetings of the ESB and the Committee. The Chapter

also establishes rules on effective, proportionate, and dissuasive penalties and fines for not

complying with the obligations under this Regulation, subject to appropriate safeguards. The

Commission may impose periodic penalty payments if the relevant undertakings fail to accept

and prioritise certain orders in a semiconductor crisis. Furthermore, the Commission may

impose fines on an undertaking that provides incorrect, incomplete or misleading information,

or does not supply information within the prescribed time limit.

Chapter VII sets out rules and conditions for exercising delegation and implementing

powers. The proposal empowers the Commission to adopt, where appropriate, implementing

acts to allow procedures to be specified and ensure uniform application of the Regulation, and

delegated acts to amend Annex I (the activities set out therein in a manner consistent with the

objectives of the Chips for Europe Initiative 2.0) and Annex III (the measurable indicators and

the provisions on establishing a monitoring and evaluation framework to supplement this

Regulation).

Chapter VIII puts an obligation for the Commission to prepare regular reports for the

evaluation and review of the Regulation to the European Parliament and to the Council.

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2026/0139 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on a framework of measures for strengthening the Union’s semiconductor ecosystem,

repealing Regulation (EU) 2023/1781 (Chips Act 2.0)

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular

Article 173(3) and Article 114 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee27,

Having regard to the opinion of the Committee of the Regions28,

Acting in accordance with the ordinary legislative procedure,

Whereas:

(1) Regulation (EU) 2023/1781 of the European Parliament and of the Council29

establishing a framework of measures for strengthening Europe’s semiconductor

ecosystem and amending Regulation (EU) 2021/694 (Chips Act) established a

comprehensive framework at Union level to support the semiconductor ecosystem,

with a view to strengthening the Union’s technological capacity, enhancing resilience

and ensuring security of supply.

(2) The evaluation30 of the Regulation (EU) 2023/1781 shows that it has enabled the

mobilisation of significant public and private investment, the deployment of advanced

infrastructures and the establishment of coordination and crisis preparedness

mechanisms, thereby contributing to improved cooperation across Member States and

to the functioning of the internal market. The evaluation has shown that Regulation

(EU) 2023/1781 has served as a catalyst for a coordinated Union approach to

semiconductors, strengthening research and innovation capacities, proving access to

technological infrastructures, putting in place a framework for manufacturing capacity,

as well as a crisis and response mechanism to anticipate potential disruptions. At the

same time, the evaluation has identified structural shortcomings and persisting

27 OJ C , , p. . 28 OJ C , , p. . 29 Regulation (EU) 2023/1781 of the European Parliament and of the Council of 13 September 2023

establishing a framework of measures for strengthening Europe’s semiconductor ecosystem and

amending Regulation (EU) 2021/694 (Chips Act) (OJ L 229, 18.9.2023, p. 1, ELI:

http://data.europa.eu/eli/reg/2023/1781/oj). 30 [reference to the published evaluation report to be added]

EN 22 EN

challenges that limit its effectiveness in addressing evolving industrial and economic

needs.

(3) While the framework established by Regulation (EU) 2023/1781 has proven effective

in supporting innovation and early-stage capacity, the transition from technological

development to large-scale industrial deployment remains at an early stage. Long

investment cycles, structural dependencies in critical segments of the value chain, and

constraints in scaling up production continue to affect the Union’s capacity to achieve

a resilient and competitive semiconductor ecosystem.

(4) In addition, the evaluation has shown that limited availability of private capital, in

particular for later-stage financing, and structural features of financial markets

constrain the growth and scaling of Union semiconductor undertakings. At the same

time, fragmentation of demand across industrial sectors, limited market scale, and

insufficient coordination among purchasers reduce the commercial viability of

manufacturing investments and risk underutilisation of emerging capacities.

(5) Moreover, the semiconductor sector has become a cornerstone of the Union’s

economic stability, technological sovereignty, and security. The accelerating

integration of advanced digital technologies, most notably artificial intelligence (AI),

has significantly increased global demand for semiconductors, while simultaneously

intensifying competition across international markets. Those developments have

exposed structural vulnerabilities in the Union’s semiconductor supply chains,

including dependencies on limited external suppliers, insufficient domestic production

capacity, and fragmentation across Member States.

(6) The growing prominence of AI applications, in particular, has led to a surge in demand

for highly specialized chips, such as advanced logic and memory semiconductors,

which are critical for training and deploying complex AI models. This trend is

expected to continue, amplifying existing supply-demand imbalances and placing

additional strain on already fragile global supply chains. At the same time, geopolitical

tensions, export restrictions, and disruptions linked to global crises have further

underscored the risks associated with excessive reliance on third country

manufacturing and limited diversification.

(7) In light of those developments, it is necessary to reinforce and complement the

framework established by Regulation (EU) 2023/1781 in order to support the

transition from innovation to industrial scale, to enhance resilience and economic

security, and to ensure the effective functioning of the internal market. Therefore,

Regulation (EU) 2023/1781 should be repealed and replaced by this Regulation.

(8) Since this Regulation reinforces and complements the framework established by

Regulation (EU) 2023/1781 without altering its fundamental objectives, the legal

bases underpinning that framework remain unchanged.

(9) Therefore, this Regulation should also be based on Article 173(3) of the Treaty on the

Functioning of the European Union (TFEU) in order to allow the Union to take

measures to further maintain and build capacity and strengthen its semiconductor

ecosystem. Those measures should not entail the harmonisation of national laws and

regulations. In that regard, the Union should reinforce the competitiveness and

resilience of the semiconductor technological and industrial base, whilst strengthening

the innovation capacity of its semiconductor ecosystem across the Union, reducing

dependence on a limited number of third-country undertakings and geographies, and

strengthening its capacity to design and produce, package, reuse and recycle advanced

EN 23 EN

semiconductors. The Chips for Europe Initiative first established by Regulation (EU)

2023/1781 should keep supporting those aims under this Regulation by further

stepping up efforts beyond bridging the gap between the Union’s advanced research

and innovation capabilities and their sustainable industrial exploitation, and by

ensuring the effective translation of such capabilities into industrial-scale production

and market deployment within the Union. The Chips for Europe Initiative 2.0 should

continue promoting capacity building to enable design, production and systems

integration in next-generation semiconductor technologies, and should continue

supporting collaboration among key players across the Union, strengthening the

Union’s semiconductor supply and value chains, serving key industrial sectors and

creating new markets.

(10) In addition, and in order to ensure the effective functioning of the internal market, this

Regulation should contribute to establishing a coherent Union framework

approximating certain conditions and coordination mechanisms, in accordance with

Article 114 TFEU. Such a framework is necessary to prevent obstacles to the

functioning of the internal market, reduce fragmentation and ensure a consistent and

effective response to supply chain risks, while remaining consistent with Union law

and international obligations. This is particularly critical taking into account that

semiconductors are a foundational technology underpinning a wide range of economic

activities and critical infrastructures across the Union. In a context of heightened

geopolitical tensions, strategic global competition and increasing economic security

considerations, the semiconductor ecosystem has become a key factor for the stability

and functioning of the internal market. The semiconductor sector is characterised by

complex cross-border interdependencies across the value chain, with highly

specialised activities concentrated in different geographies, while downstream user

industries are widely distributed across the Union. Those characteristics mean that

disruptions, restrictions or distortions affecting semiconductor supply chains are likely

to have significant cross-border effects and to impact the functioning of the internal

market. Divergent national measures aimed at addressing such risks may create

fragmentation, distort competition and undermine the level playing field within the

internal market, particularly given the integrated nature of production and distribution

networks. Therefore, the objectives of ensuring the resilience, security and proper

functioning of semiconductor supply chains within the Union cannot be sufficiently

achieved by the Member States acting alone, but can be better achieved at Union level,

by reason of their scale and cross-border effects.

(11) The achievement of those objectives should continue being supported by the European

Semiconductor Board, composed of representatives of the Member States and chaired

by the Commission, to facilitate a smooth, effective, and harmonised implementation

of this Regulation, cooperation, and the exchange of information. The European

Semiconductor Board should provide advice to and assist the Commission on specific

questions, including the consistent implementation of this Regulation, facilitating

cooperation among Member States, and exchanging information on issues relating to

this Regulation. The European Semiconductor Board should also advise the

Commission on international cooperation related to semiconductors, including

strategic partnerships on semiconductors and on information gathering tasks. Meetings

may include different subgroups.

(12) Given the globalised nature of the semiconductor supply chain, international

cooperation with third countries is an important element to achieve resilience of the

Union’s semiconductor ecosystem. The actions taken under this Regulation should

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also enable the Union to play a stronger role, as a centre of excellence, in a better

functioning global, interdependent semiconductor ecosystem. Where relevant, the

views of the Industrial Alliance for Semiconductors31, which takes over the operations

of the Industrial Alliance on Processors and Semiconductor Technologies, and of

other stakeholders should be considered. In accordance with international obligations,

the Union and Member States could engage, including diplomatically, with

international strategic partners that have advantages in the semiconductor industry,

with a view to seeking solutions to strengthen the security of supply and to address

future disruptions of the semiconductor supply chain, such as those resulting from

third-country export restrictions, and to identify the availability of raw materials and

intermediate products. The Commission and Member States should coordinate their

international efforts, notably with support of the European Semiconductor Board. This

may involve, where appropriate, coordination in relevant international fora,

concluding investment and trade agreements, or other diplomatic efforts or

engagement with relevant stakeholders.

(13) Strengthening the Union’s critical infrastructure, security, industrial base and

technological leadership requires secure and reliable access to both leading-edge and

mainstream semiconductor technologies, including processors, memory, analogue,

power, sensor, radiofrequency and connectivity chips, which are essential for future-

proofing strategic sectors such as energy, defence, automotive, aviation,

telecommunications, healthcare, cloud computing, and industrial automation. The

Union possesses strong capabilities across a broad range of mature nodes, including in

automotive-grade, power-efficient and secure chips, and should continue to reinforce

its competitiveness, resilience, and strategic autonomy throughout the semiconductor

value chain.

(14) The semiconductor industry entails substantial investment requirements, both for

research, development and innovation activities and for the construction of cutting-

edge facilities dedicated to testing and validation in support of industrial-scale

production. Those cost-intensive characteristics have a direct bearing on the Union’s

capacity to compete and innovate, and affect the security of supply and overall

resilience of its semiconductor ecosystem. At the same time, the Union’s

competitiveness and resilience depend on the continued availability and development

of mainstream and mature semiconductor technologies, including analogue, power,

sensor, connectivity, automotive-grade and aeronautical-grade chips, which remain

indispensable across strategic industrial value chains and critical infrastructures. In the

current context of increased global competition, geopolitical tensions, and structural

supply chain vulnerabilities, semiconductors have become a strategic asset

underpinning the Union’s economic security, technological leadership, and industrial

resilience. In light of the lessons learnt from past shortages and supply chain

disruptions in the Union and worldwide, as well as export restrictions or regulatory

actions by third countries and the rapid evolution of technology challenges and

innovation cycles affecting the semiconductor value chain, it is necessary to reinforce

the Union’s existing strengths, including its leading position in several mainstream

semiconductor segments, thus increasing market uptake, competitiveness, resilience,

research and innovation capacity by further reinforcing the Chips for Europe Initiative.

(15) The enhanced Chips for Europe Initiative 2.0 should take into account the experience

already gained through the implementation of the Chips for Europe Initiative in order

31 Terms of Reference - https://ec.europa.eu/newsroom/dae/redirection/document/78326

EN 25 EN

to continue and reinforce it with a view to addressing remaining structural weaknesses

and to responding to emerging strategic needs. In particular, it is necessary to step up

efforts to ensure that the Union’s advanced research and innovation capabilities

effectively translate into industrial deployment, scale-up and production at commercial

scale within the Union.

(16) Member States are primarily responsible for sustaining a strong Union industrial,

competitive, sustainable and innovative base. However, the nature and scale of the

research and innovation challenges in semiconductors requires action to be taken

collaboratively at Union level. In order to equip the Union with the semiconductor

technology research and innovation capacities needed to maintain the leading role of

its research and industrial investments at the leading edge and building on the

experience gained and lessons learnt from the implementation of the Chips for Europe

Initiative, it is necessary to further strengthen and extend those capacities to ensure

their effective industrial deployment, scale-up, and production at commercial scale

within the Union. To this end, the Union and Member States should continue

coordinating their efforts and co-invest.

(17) In light of increased global competition, geopolitical tensions, and the risk of

disruptions of the semiconductor supply chain, including those arising from regulatory

measures adopted by third countries that may affect access to critical semiconductor

technologies and related inputs, reinforcing the Union’s capacity to develop, produce,

and deploy such technologies within its territory has become a strategic priority for the

Union’s competitiveness, economic security, and technological sovereignty, as

highlighted in the report by Mario Draghi entitled ‘The future of European

competitiveness’. These challenges of the Union’s semiconductor ecosystem call for

the achievement of large-scale capacity and require a collective effort by Member

States, with the Union supporting the development and deployment of large-scale

capacity across the full innovation and industrial value chain, including pilot lines,

manufacturing scale-up, and commercial deployment, thereby ensuring the effective

translation of research excellence into industrial leadership and sustainable production

capacity within the Union.

(18) As concluded in the evaluation of Regulation (EU) 2023/1781, the instruments put in

place by the Chips for Europe Initiative provided for by that Regulation, namely the

design platform, pilot lines, quantum chips pilots, and the diffusion of knowledge, the

EU Chips Skills Academy under the Alliances for Sectoral Cooperation on Skills and

the Pact for Skills, and competences for the benefit of the entire semiconductor

ecosystem are fit for purpose and should continue being supported under this

Regulation. Those efforts should also contribute to the Union’s broader objective of

strengthening its long-term competitiveness, innovation capacity, and industrial base,

including through synergies with future Union programmes supporting research and

innovation and industrial deployment, such as the proposed32 successor framework

programme to Horizon Europe – the Framework Programme for Research and

Innovation established by Regulation (EU) 2021/695 of the European Parliament and

of the Council33 (Horizon Europe) (FP10), and the proposed European

32 Proposal for a regulation of the European Parliament and of the Council establishing Horizon Europe,

the Framework Programme for Research and Innovation, for the period 2028-2034 laying down its rules

for participation and dissemination, and repealing Regulation (EU) 2021/695 33 Regulation (EU) 2021/695 of the European Parliament and of the Council of 28 April 2021 establishing

Horizon Europe – the Framework Programme for Research and Innovation, laying down its rules for

EN 26 EN

Competitiveness Fund34, while the Chips for Europe Initiative 2.0 should throughout

all components and actions, to the extent possible, mainstream and maximise the

benefits of the application of semiconductor technologies as powerful enablers, for

instance, for the sustainability transition that can lead to new products and more

efficient, effective, clean, and durable use of resources, including energy and materials

necessary for the production and whole lifecycle use of semiconductors.

(19) In order to achieve its general objective and address both the supply and demand side

challenges of the current semiconductor ecosystem, and building on the experience

gained and lessons learnt from the implementation of Regulation (EU) 2023/1781,

which demonstrated the continued need to strengthen the Union’s capacity not only in

research and innovation but also in industrial deployment and manufacturing scale-up,

the Chips for Europe Initiative 2.0 should keep supporting and further enhancing the

five operational objectives put in place under Regulation (EU) 2023/1781. It should

also introduce a new operational objective aimed at strengthening the Union’s

capabilities in photonic technologies and support ‘grand challenges’ as instruments to

support large-scale, cross-sectoral initiatives addressing major technological and

industrial challenges of strategic relevance for the Union. The primary implementation

of the Chips for Europe Initiative 2.0 should continue being entrusted to the Chips

Joint Undertaking and, where applicable, to the joint undertaking or any other similar

entity or initiative succeeding it established by Union law under a subsequent

Multiannual Financial Framework.

(20) First, the Chips for Europe Initiative 2.0 should reinforce the Union’s design capacity.

To that end, it should keep supporting the virtual design platform set up under the

Chips for Europe Initiative to connect the communities of design houses, start-ups,

small and medium-sized enterprises (SMEs) and IP and tool suppliers and research

and technology organisations to provide virtual prototype solutions based on co-

development of technology, and to facilitate the transition from design to industrial

production and commercial deployment within the Union.

(21) Second, in order to provide the basis for strengthening the security of supply and the

Union’s semiconductor ecosystem, the Chips for Europe Initiative 2.0 should keep

supporting the enhancement of existing and development of new advanced pilot lines

to enable development and deployment of cutting-edge semiconductor technologies

and next-generation semiconductor technologies. The pilot lines should provide

industry with a facility to test, experiment, and validate semiconductor technologies as

well as system design concepts, while reducing environmental impacts as much as

possible, in order to accelerate their transition to industrial-scale semiconductor

manufacturing within the Union. Investments from the Union, alongside with Member

States and the private sector, in pilot lines remain necessary to address persistent

structural challenges and market failures, including insufficient availability of

industrial-scale testing, validation, and semiconductor manufacturing scale-up

capacities in the Union, which continue to hinder innovation, industrial deployment,

and global competitiveness.

participation and dissemination, and repealing Regulations (EU) No 1290/2013 and (EU) No 1291/2013

(OJ L 170, 12.5.2021, p. 1, ELI: http://data.europa.eu/eli/reg/2021/695/oj). 34 Proposal for a regulation of the European Parliament and of the Council on establishing the European

Competitiveness Fund ('ECF’), including the specific programme for defence research and innovation

activities, repealing Regulations (EU) 2021/522, (EU) 2021/694, (EU) 2021/697, (EU) 2021/783,

repealing provisions of Regulations (EU) 2021/696, (EU) 2023/588, and amending Regulation (EU)

[EDIP]

EN 27 EN

(22) Third, in order to accelerate the innovative development of quantum chips and

associated semiconductor technologies, including those based on semiconductor

material or integrated with photonics, conducive to the development of the

semiconductor sector, the Chips for Europe Initiative 2.0 should support actions,

including on design libraries for quantum chips, pilot lines for building quantum chips

and facilities for testing and validating quantum chips produced by the pilot lines with

a view to enabling their industrial deployment and strengthening the Union’s

technological leadership in emerging semiconductor technologies.

(23) Fourth, in order to promote the use of semiconductor technologies, to provide access

to design and pilot line facilities, and to address skills gaps across the Union, the Chips

for Europe Initiative 2.0 should continue providing Member States with the possibility

to support at least one competence centre on semiconductors in each Member State, by

enhancing existing centres or creating new facilities.

(24) Fifth, photonics and photonic integrated circuits are key enabling technologies for a

wide range of strategic sectors, including telecommunications, data centres, artificial

intelligence, sensing, healthcare, automotive, aeronautical and quantum technologies.

They enable high-speed data transmission, energy-efficient processing, and advanced

sensing capabilities, and are therefore critical to the Union’s technological leadership,

competitiveness, and security of supply. The Union has established strong research

and innovation capabilities and holds leading positions in several segments of the

photonics value chain. However, further efforts are needed to strengthen the Union’s

capacity to design, prototype, industrialise, and manufacture photonic integrated

circuits and associated photonic semiconductor technologies at scale. To advance

technology development in photonics and photonic integrated circuits, it is therefore

necessary to support the development of design libraries and design tools, strengthen

production technologies and material platforms, and reinforce pilot lines and open-

access manufacturing facilities across multiple material platforms. Those actions

should facilitate prototyping, testing, validation and industrial uptake, including

through advanced integration and packaging technologies, and contribute to

strengthening the Union’s photonics ecosystem, enhancing its technological

sovereignty, and accelerating the industrial deployment of innovative photonic

technologies across the Union.

(25) Sixth, the Commission should continue supporting the ‘Chips Fund’, that is to say, a

dedicated semiconductor investment facility designed to strengthen the European

semiconductor ecosystem by supporting start-ups, scale-ups, and SMEs proposing

both equity and debt solutions, including a blending facility under the InvestEU Fund

established by Regulation (EU) 2021/523 of the European Parliament and of the

Council35, and, if applicable, any other relevant investment scheme under the

Multiannual Financial Framework 2028-2034, in close cooperation with the European

Investment Bank Group and together with other implementing partners such as

national promotional banks and institutions. The Chips Fund activities should support

the development of a dynamic and resilient semiconductor ecosystem by providing

opportunities for increased availability of funds to support the growth of start-ups and

SMEs as well as investments across the semiconductor value chain, including for other

companies in the semiconductor value chain. In this regard, support and clear guidance

should be provided, in particular to SMEs, with the aim of assisting them in the

35 Regulation (EU) 2021/523 of the European Parliament and of the Council of 24 March 2021

establishing the InvestEU Programme and amending Regulation (EU) 2015/1017 (OJ L 107, 26.3.2021,

p. 30, ELI: http://data.europa.eu/eli/reg/2021/523/oj).

EN 28 EN

application process. In that context, the European Innovation Council is expected to

provide further dedicated support through grants and equity investments to high risk,

market creating innovators.

(26) In order to further strengthen the Union’s technological leadership and industrial

competitiveness in semiconductors, it is appropriate to introduce the concept of ‘grand

challenges’ as part of the Chips for Europe Initiative 2.0. Those grand challenges

should focus on the development, integration and industrial deployment of promising

and critical semiconductor and related technologies of key importance for the Union.

Grand challenges should support advanced research and development activities aimed

at enabling the next generation of semiconductor technologies, including those

underpinning AI, cloud, data centres and edge infrastructures, with a particular focus

on enhancing energy efficiency, securing capacities in leading-edge technologies and

reinforcing the Union’s manufacturing strengths. They should also address key

technological roadblocks, including challenges related to miniaturisation, energy

efficiency, sustainability, heterogeneous integration, security, reliability and

manufacturability. In order to maximise their impact, grand challenges should

contribute to strengthening the semiconductor ecosystem across the Union by fostering

collaboration along the semiconductor value chain, including with relevant vertical

sectors. In particular, they should support structured cooperation between

semiconductor developers and user industries, with a view to achieving a competitive

edge in applications critical for the Union’s technological sovereignty and industrial

base. Finally, grand challenges should further ensure the integration and alignment of

efforts across existing infrastructures, including pilot lines, and promote their

orientation towards industrial use. They should facilitate the transfer, maturation and

uptake of technologies developed under the Chips for Europe Initiative 2.0, including

through activities related to prototyping, testing, validation, demonstration, initial

industrial deployment and integration into production environments.

(27) Competence centres should contribute to maintaining the Union’s lead with regard to

chip research, development and innovation and design capabilities. The promotion of

human potential and skills through education in science, technology, engineering and

mathematics subjects up to the postdoctoral level is crucial for achieving that

objective. In particular, competence centres should provide services to the

semiconductor stakeholders, including start-ups and SMEs. Examples include

facilitating access to pilot lines and to the virtual design platform, providing training

and skills development, support to finding investors, making use of existing local

competencies or reaching out to the relevant verticals. The services should be provided

on an open, transparent and non-discriminatory basis. Each competence centre should

connect and be part of the European network of competence centres in semiconductors

and should act as an access point to other nodes of the network. In that regard,

synergies with existing similar structures, such as European Digital Innovation Hubs

set up under the Digital Europe Programme established by Regulation (EU) 2021/694

of the European Parliament and of the Council36, should be maximised. For example,

Member States could designate an existing European Digital Innovation Hub focused

on semiconductors as a competence centre for the purposes of this Regulation,

provided that the prohibition of double financing is not breached.

36 Regulation (EU) 2021/694 of the European Parliament and of the Council of 29 April 2021 establishing

the Digital Europe Programme and repealing Decision (EU) 2015/2240 (OJ L 166, 11.5.2021, p. 1, ELI:

http://data.europa.eu/eli/reg/2021/694/oj).

EN 29 EN

(28) To facilitate access to technical expertise and ensure dissemination of knowledge

across the Union, as well as support to diverse skills initiatives, the network of

competence centres established under the Chips for Europe Initiative should continue

being supported under the Chips for Europe Initiative 2.0. To that end, the Chips Joint

Undertaking established by Council Regulation (EU) 2021/208537 should establish the

procedure for continuing the support for competence centres, including the selection

criteria, as well as further details on the implementation of the tasks and functions

referred to in this Regulation. The competence centres forming the network should be

selected by the Chips Joint Undertaking and should have substantial overall autonomy

to lay down their organisation, composition, and working methods. However, their

organisation, composition, and working methods should comply with and contribute to

the objectives of this Regulation.

(29) Skills and education related work that is being carried out by the Union is fundamental

to further flourishing the Union’s semiconductor ecosystem. For that purpose, the

STEM Education Strategic Plan38 and its actions should be leveraged, and initiatives

like the Pact for Skills39, Skills Academies40, joint European study programmes41, the

Skills Portability Initiative42 and the European Universities Alliances43 should

contribute to the development of specific actions for the semiconductor sector.

Similarly, in order to attract external talent to the Union, synergies with initiatives that

facilitate international recruitment like the EU Talent Pool44 should be explored.

(30) Access to publicly funded infrastructure, such as pilot and testing facilities, and to the

competence centres, should be open to a wide range of users and should be granted on

a transparent and non-discriminatory basis and on market terms (or cost plus

reasonable margin basis) for large undertakings, while SMEs and academic institutes

may benefit from preferential access or reduced prices thereby facilitating broader

participation in semiconductor innovation and supporting the development and

diffusion of industrial capabilities across the Union. Moreover, the research and

innovation activities under the Chips for Europe Initiative 2.0, including technology

infrastructures, should also be to the benefit of the defence sector, without prejudice to

further activities for the development of defence products and technologies that may

take place under Regulation (EU) 2025/2643.

(31) The success of the Chips for Europe Initiative 2.0 can only be built on a collective

effort of Member States and the Union to support the significant capital costs, to

widen the availability of resources for virtual design, testing and piloting, and the

37 Council Regulation (EU) 2021/2085 of 19 November 2021 establishing the Joint Undertakings under

Horizon Europe and repealing Regulations (EC) No 219/2007, (EU) No 557/2014, (EU) No 558/2014,

(EU) No 559/2014, (EU) No 560/2014, (EU) No 561/2014 and (EU) No 642/2014 (OJ L 427,

30.11.2021, p. 17, ELI: http://data.europa.eu/eli/reg/2021/2085/oj). 38 Communication from the Commission to the European Parliament, the Council, the European

Economic and Social Committee and the Committee of the Regions ‘A STEM Education Strategic

Plan: skills for competitiveness and innovation’ 39 https://pact-for-skills.ec.europa.eu/index_en 40 https://digital-strategy.ec.europa.eu/en/news/new-digital-skills-academies-support-eus-technological-

sovereignty-competitiveness-and-preparedness 41 Communication from the Commission to the European Parliament, the Council, the European

Economic and Social Committee and the Committee of the Regions ‘a blueprint for a European degree’ 42 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/15892-Fair-labour-mobility-

package-Skills-portability-1-digitalised-cross-border-portability-of-qualifications-and-skills_en 43 https://education.ec.europa.eu/education-levels/higher-education/european-universities-initiative/map 44 Regulation (EU) 2026/1047 of the European Parliament and of the Council of 29 April 2026

establishing an EU Talent Pool

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diffusion of knowledge, skills and competences. Where appropriate, in view of the

specificities of the actions concerned, the objectives of the Chips for Europe Initiative

2.0, in particular the Chips Fund activities, should also be supported through a

blending facility under the InvestEU Fund. Support from the Chips for Europe

Initiative 2.0 should be used to address, in a proportionate and cost-effective manner,

market failures or sub-optimal investment situations as a consequence of high capital

intensity, high risk, and complex landscape of the semiconductor ecosystem and

actions should not duplicate or crowd out private financing or distort competition in

the internal market. Actions should have a clear added value throughout the Union.

(32) Moreover, the Chips for Europe Initiative 2.0 should continue building upon the strong

knowledge base and enhance synergies with actions currently supported by the Union

and Member States through programmes and actions in research and innovation in

semiconductors and in developments of part of the value chain, in particular Horizon

Europe and the Digital Europe Programme with the aim to reinforce the Union as

global player in semiconductor technology and its applications, with a growing global

share in manufacturing, in accordance with Commission communication entitled

‘2030 Digital Compass: the European way for the Digital Decade’45. Furthermore,

private investments are expected to be mobilised to complement the funding of the

Chips for Europe Initiative 2.0 contributing to achieving its objectives.

Complementing those activities, the Chips for Europe Initiative 2.0 would closely

collaborate with other relevant stakeholders, including with the Industrial Alliance for

Semiconductors.

(33) Research and development (R&D) within the Union is increasingly exposed to

practices aiming to misappropriate confidential information, trade secrets, and

protected data, such as IP theft, forced technology transfers and economic espionage.

In order to prevent adverse impacts on the interests of the Union and the objectives of

the Chips for Europe Initiative 2.0, it is necessary to adopt an approach to ensure that

the access to and use of commercially sensitive information or results, including data

and know-how, security and transfer of ownership of results as well as content

protected by IP rights generated in connection to or as a result of actions supported by

the Chips for Europe Initiative 2.0, are protected. To ensure that protection, any

actions supported by the Chips for Europe Initiative 2.0 and funded by Horizon

Europe and the Digital Europe Programme, as well as their successors under a

subsequent Multiannual Financial Framework, should follow the relevant provisions

of those programmes, such as on participation of entities established in third countries

associated with the programme, grant agreements, ownership and protection, security,

exploitation and dissemination, transfer and licensing, and access rights. It is possible

to set specific provisions when implementing those programmes, in particular with

regard to limitations to transfers and licensing in accordance with Article 40(4) of

Regulation (EU) 2021/695, and limitation of participation of legal entities established

in specified associated or other third countries due to reasons based on the Union’s and

the Member States’ strategic assets, interests, autonomy or security, in accordance

with Article 22(5) of Regulation (EU) 2021/695 and Article 12(6) of Regulation (EU)

2021/694. Additionally, the handling of commercially sensitive information, security,

confidentiality, protection of trade secrets and IP rights should be governed by Union

45 Communication from the Commission to the European Parliament, the Council, the European

Economic and Social Committee and the Committee of the Regions, 2030 Digital Compass: the

European way for the Digital Decade, COM(2021) 118 final, 9 March 2021.

EN 31 EN

law, including Directives (EU) 2004/48/EC and (EU) 2016/94346 and of the European

Parliament and of the Council, and national law. It is possible for the Commission and

the Member States to protect technology transfers for reasons related to Union and

national security interests in relation to investments made in facilities falling within

the scope of this Regulation in accordance with Regulation (EU) 2019/452 of the

European Parliament and of the Council.

(34) In order to strengthen the uptake of semiconductors designed in the Union,

manufactured in the Union, or both, across industrial value chains, it is necessary to

promote closer linkages between semiconductor supply and downstream industrial

demand, while remaining consistent with the Union’s international obligations and

competition rules. In particular, enhanced coordination between semiconductor

technology providers and users should facilitate the identification of aggregate

demand, the development of common technical requirements, and the development of

solutions tailored to Union industrial needs. Such coordination is especially relevant in

key sectors such as cloud computing, automotive, aeronautical, telecommunications,

defence and robotics, which are characterised by high-performance, security,

reliability, and energy-efficiency requirements, and where semiconductors constitute a

critical enabling technology for innovation, digital transformation, and strategic

autonomy. In those sectors, early engagement of users in the design and development

phase can significantly reduce time-to-market, improve system integration, and ensure

that semiconductor solutions are fit for purpose and aligned with evolving industrial

standards and operational constraints. To that end, the Commission should, in

cooperation with Member States and relevant stakeholders, put in place the necessary

conditions for the Alliance for Semiconductor to facilitate industrial matchmaking, co-

design activities and collaborative initiatives, including through a demand forum, with

a view to bridging the gap between supply and demand, fostering innovation

ecosystems and accelerating the deployment of semiconductor-based solutions within

the Union, in compliance with Union competition rules and in a manner consistent

with the Union’s international obligations. For semiconductors used in defence and

space sectors, which are highly specialised and must operate reliably in extreme and

hostile environments, the Commission should continue to coordinate the activities

within the EU Observatory of Critical Technologies for space and defence.

(35) In the space and defence sector, activities aimed at identifying gaps, vulnerabilities

and needs will continue within the already established EU Observatory of Critical

Technologies (OCT). Specific EU technology roadmaps for space and defence,

including semiconductors, responding to the OCT and covering research, innovation

and industrialisation, will inform the EU work programme for space and defence

development activities.

(36) The demand forum should allow potential offtakers of semiconductor technologies to

express their needs and expected specifications from an aggregated or industry-wide

perspective, while enabling European semiconductor technology initiatives and

strategic projects to present their technological capabilities and proposed solutions.

Demand accelerator measures should facilitate collaborative platforms, pilot projects

and design partnerships, enabling the early validation and deployment of innovative

semiconductor solutions within the Union. They can also contribute to growth of

46 Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the

protection of undisclosed know-how and business information (trade secrets) against their unlawful

acquisition, use and disclosure (OJ L 157, 15.6.2016, p. 1, ELI:

http://data.europa.eu/eli/dir/2016/943/oj).

EN 32 EN

innovative ecosystems and facilitate the emergence of lead markets in key sectors,

thereby enhancing the Union’s industrial competitiveness and technological

sovereignty. All activities carried out under the demand forum and demand accelerator

measures should be implemented in full compliance with Union competition law and

other relevant provisions of Union law, ensuring that cooperation between

undertakings does not lead to distortions of competition or the exchange of

commercially sensitive information.

(37) In order to foster the widespread deployment of systems integrating advanced

semiconductor technologies within the Union, it is necessary to support targeted

actions that enhance cooperation and innovation. In particular, facilitating the

formation of cross-border joint procurement arrangements between contracting

authorities or entities can help aggregate demand, reduce market fragmentation, and

enable more efficient investment in complex and costly semiconductor-based systems.

At the same time, supporting the integration and deployment of innovative

semiconductor technologies is essential to accelerate their uptake in key sectors,

including digital infrastructure, artificial intelligence, and industrial applications,

thereby strengthening the Union’s technological capacity and competitiveness. To

ensure the effective implementation of such actions, the Commission should provide

technical and legal guidance to contracting authorities. This guidance should support

contracting authorities in using security of supply, cybersecurity, resilience, energy

efficiency, lifecycle performance, supply-chain transparency and Union added-value

criteria when procuring systems integrating innovative semiconductor design and

solutions, in compliance with applicable Union law and international obligations. In

particular, it should promote pre-commercial procurement, innovation partnerships

and joint procurement of procedures capable of creating early demand for trusted

semiconductor technologies developed, produced or both, in the Union.

(38) In light of their importance for ensuring the security of supply and enabling a resilient

semiconductor ecosystem, European semiconductor technology initiatives and

strategic projects should be considered to be in the public interest. Ensuring the

security of supply of semiconductors is also important for digitalisation, which enables

the green transition of many other sectors. To attract investments to the Union’s

semiconductor sector and contribute towards security of supply of semiconductors and

resilience of the Union’s semiconductor ecosystem, Member States may apply support

measures, including incentives, and provide for administrative support in national

permit-granting procedures for European semiconductor technology initiatives. In the

Multiannual Financial Framework 2028-2034, National and Regional Partnership

Plans may constitute part of the support, subject to the provisions of those plans. The

possibility of support by Member States should be without prejudice to the

competence of the Commission in the field of State aid under Articles 107 and 108

TFEU, where relevant. To ensure the correct and efficient application of the State aid

rules, in its communication ‘A Chips Act for Europe’47, the Commission has already

recognised the need for a case-by-case assessment regarding State aid granted to

semiconductor production facilities with a view to safeguarding the Union’s security

of supply and supply-chain resilience while generating significant positive impacts on

the wider economy. Furthermore, the procedures for the recognition as European

semiconductor technology initiatives and for the authorisation of State aid, where

47 Communication from the Commission to the European Parliament, the Council, the European

Economic and Social Committee and the Committee of the Regions, A Chips Act for Europe,

COM(2022) 45 final, 8 February 2022.

EN 33 EN

applicable, should be conducted in parallel in order to accelerate the decision-making

process. Member States should support the establishment of European semiconductor

technology initiatives in accordance with Union law. When providing support

measures for European semiconductor technology initiatives, Member States should

consider setting non-discriminatory requirements related to intellectual property

protection and security, including cyber-security, and confidentiality and could

recommend mitigation measures to address specific risks related to the interference,

forced technology transfers, and IP theft by entities from third countries.

(39) In order to encourage the establishment of the necessary related design capabilities,

Member States may provide support for such activities in accordance with State aid

rules, including under framework for State aid for research and development and

innovation48 or Commission Regulation (EU) No 651/201449.

(40) In order to encourage the establishment of the necessary manufacturing and related

design capabilities, and thereby ensure the security of supply and strengthen the

resilience of the Union’s semiconductor ecosystem, public support may be

appropriate, provided that this does not lead to distortions in the internal market. In

that respect, it is necessary to harmonise certain conditions for operators to carry out

specific projects at Union level that contribute to achieving the objectives of this

Regulation and establish a framework for recognising European semiconductor

technology initiatives.

(41) European semiconductor technology initiatives should provide capabilities that are

‘first-of-a-kind’ in the Union and contribute to the indispensability, resilience,

prosperity, competitiveness and security of supply of the Union’s semiconductor

ecosystem. The qualifying factor for being a ‘first-of-a-kind’ initiative is to bring an

innovativeelement to the internal market regarding the manufacturing processes or the

final product, which could be based on new or existing technology nodes, including

mature and cutting-edge ones. An initiative providing an innovation with regard to the

manufacturing process or final product which is similar to an innovation which already

exists or is already planned in the Union may still be recognised as first-of-a-kind if it

can be demonstrated that the initiative is necessary to ensure the Union’s resilience

and security of supply by reducing excessive strategic dependencies on imports from

third countries. Any such initiative should be assessed based on its own merits, taking

into account, for instance, relevant market analysis, the degree of concentration of the

dependencies and the risk of creating a situation of overcapacity.

(42) Relevant innovation elements in first-of-a-kind initiatives could relate to the

technology node or substrate material, or approaches that lead to improvements in

computing power or other performance attributes, energy efficiency, level of security,

safety or reliability, as well as integration of new functionalities, such as AI, memory

capacity or other. Integration of different processes leading to efficiency gains or

packaging and assembly automation are also examples of innovation. With regard to

environmental gains, innovation elements would include the reduction in a

quantifiable way of the amount of energy, water or chemicals used, or improving

recyclability.

48 Communication from the Commission Framework for State aid for research and development and

innovation (C/2022/7388) (OJ C 414, 28.10.2022, p. 1). 49 Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid

compatible with the internal market in application of Articles 107 and 108 of the Treaty (OJ L 187,

26.6.2014, p. 1, ELI: http://data.europa.eu/eli/reg/2014/651/oj).

EN 34 EN

(43) In order to ensure public investments in European semiconductor technology

initiativesand strategic projects lead to an actual increase in security of supply and

resilience of the Union, undertakings applying for recognition or support under this

Regulation should demonstrate that they will articulate their supply chain in a way that

reduces supply chain dependence on non-domestic undertakings.Such information

should include, where applicable to the initiative’s activities, the origin of the essential

semiconductor manufacturing equipment and substrates and the extent to which

procurement from third country undertakings is necessary due to technical

performance considerations. In the case of front-end or back-end semiconductor

manufacturing, undertakings should also indicate the other relevant front-end or back-

end manufacturing processes beforehand or afterwardslinked to the investment taking

place within and outside the Union.

(44) In order to facilitate semiconductor manufacturing investments, public authorities

should take into account the necessary enabling conditions for the sustainable

operation of such facilities, including access to energy, water and other critical

infrastructure resources. To support the long-term resilience and sustainability of the

semiconductor ecosystem in the Union, appropriate consideration should be given to

the expected resource needs and environmental impacts associated with such

investments.

(45) Where a European semiconductor technology initiative offers production capacity to

undertakings not related to the operator of the facility, it should establish, implement

and maintain adequate and effective functional separation in order to prevent the

exchange of confidential information between internal and external production. This

should apply to any information obtained in the design and in the front-end or back-

end manufacturing processes.

(46) In order to qualify as a European semiconductor technology initiative, the

establishment of the initiative by a domestic undertaking should have a clear positive

impact with spill-over effects beyond the undertaking or the Member State concerned

on the Union’s semiconductor value chain in the medium to long term with a view to

strengthening resilience, competitiveness and innovation of the semiconductor

ecosystem, including the growth of start-ups and SMEs, and contributing to the

Union’s twin green and digital transitions. Moreover, following the same reasoning,

participation in the Business-to-Business Semiconductor Supply Chain Platform (‘the

Platform’) should be obligatory for production facilities – such as front-end and back-

end production facilities, but also other production facilities like for the production of

semiconductor manufacturing equipment, substrates or materials. This commitment

serves the strengthening of the resilience, competitiveness and innovation of the

semiconductor ecosystem’s supply chains. Various activities of domestic undertakings

aiming to create positive spill-over effects may be considered for the purpose of

qualifying as European semiconductor technology initiatives. Examples include giving

access to manufacturing facilities against a market fee; giving process design kits to

smaller design companies or to the virtual design platform; disseminating results from

their R&D activities; engaging in research collaboration with European universities

and research institutes; cooperating with national authorities or educational and

vocational institutions to contribute to skills development; contributing to Union-wide

research projects; or offering dedicated support opportunities for start-ups and SMEs.

The impact on several Member States, including with regard to cohesion objectives,

should be considered as one of the indicators of a clear positive impact of a European

semiconductor technology initiative on the semiconductor value chain in the Union.

EN 35 EN

(47) In order to ensure legal clarity and consistent application of this Regulation, it is

necessary to clarify the conditions under which an undertaking may be recognised as a

European semiconductor technology initiative. Experience with the implementation of

the framework for integrated production facilities and open EU foundries under

Regulation (EU) 2023/1781 has shown that uncertainties have arisen among

undertakings and Member States as to whether the status of a semiconductor

technology facility is conditional upon the receipt of public support. It should

therefore be explicitly clarified that, while an application for such status should relate

to a first-of-a-kind initiative, the granting of the status should not be dependent on the

receipt of support measures or administrative assistance. Consequently, first-of-a-kind

initiatives may obtain the status of a European semiconductor technology initiative

irrespective of whether they benefit from public funding, provided that they comply

with the relevant requirements set out in this Regulation.

(48) It is important that European semiconductor technology initiatives are not subject to

extraterritorial application of public service obligations imposed by third countries that

could undermine their ability to use or re-export the final product stemming from their

infrastructure, software, services, facilities, assets, resources, IP or know-how needed

to fulfil their obligations under this Regulation, in particular those related to security

of supply.

(49) In light of the fast development of semiconductor technologies and to strengthen the

future industrial competitiveness of the Union, European semiconductor technology

initiatives should invest in the Union in continued innovation with a view to achieving

concrete advances in semiconductor technology or preparing next-generation

technologies. Such initiatives should be able to test and experiment new developments

through preferential access to the pilot lines established under the Chips for Europe

Initiativein Regulation (EU) 2023/1781and the Chips for Europe Initiative 2.0

through fast-tracked applications. Any such preferential access should neither exclude

nor prevent effective access on fair terms to the pilot lines by other interested

undertakings, in particular start-ups and SMEs. Taking into account the importance of

a qualified and skilled workforce to achieve the objectives of this Regulation,

European semiconductor technology initiatives should support the Union talent

pipeline by developing and deploying educational and skills training and by increasing

the pool of qualified and skilled workforce.

(50) To allow for a uniform and transparent procedure to attain the status as a European

semiconductor technology initiative, the decision to grant this status should be adopted

by the Commission following the application by an individual undertaking or a

consortium of several undertakings. The status should be open for both the installation

of a new semiconductor manufacturing initiative and the significant scale-up or

innovative transformation of an existing semiconductor manufacturing initiative. To

account for the importance of a coordinated and cooperated implementation of the

planned facility, where relevant, the Commission should take into account in its

assessment the readiness of one or more Member States where the applicant intends to

establish its initiatives to support the establishment of such initiatives. Furthermore,

when assessing the viability of the business plan, the Commission could take into

account the overall record of the applicant as well as the existence of appropriate

measures to protect intellectual property and commercially sensitive information.

(51) In light of the rights attached to recognition as a European semiconductor technology

initiative, the Commission should monitor whether initiatives that have been granted

that status continue to comply with the requirements set out in this Regulation. If this

EN 36 EN

is no longer the case, the Commission should have the right to re-examine and, if

necessary, repeal the status and, accordingly, the rights attached to that status. Any

decision to repeal that status should be taken only after consulting the European

Semiconductor Board and should be properly reasoned. Correspondingly, the

undertaking operating a European semiconductor technology initiative should have the

possibility to proactively request a review of the duration of the status or

implementation plans where unforeseen external circumstances, such as serious

disturbances with a direct economic impact on the recognised initiative, could have an

impact on its ability to comply with the applicable criteria.

(52) In order to strengthen the Union’s technological sovereignty, resilience,

indispensability, competitiveness and prosperity in the semiconductor sector, it is

necessary to identify and support projects of strategic importance by domestic

undertakings across the semiconductor value chain. Strategic projects on

semiconductors should be granted support from Union programmes, funds and

financial instruments, in accordance with the objectives set out in the regulation

establishing those funds and programmes and without prejudice to the next (2028-

2034) multiannual financial framework. In particular, those strategic projects should

be granted the competitiveness seal where they fulfil the conditions set out in

Regulation (EU) 2026/XXX [on establishing the European Competitiveness Fund]

(ECF’) ([1]), as high-quality projects that contribute to the objective of the European

Competitiveness Fund. Strategic projects should contribute to objectives of common

Union interest and reinforce the Union’s capacity to design, manufacture and integrate

advanced semiconductor technologies and demonstrate clear Union added value and a

cross-border dimension, in particular through cooperation between Member States or

through coordinated public support. They should contribute to strengthening the

resilience and robustness of the Union’s semiconductor ecosystem, including by

addressing bottlenecks, reinforcing semiconductorsupply chains and enhancing

innovation and industrial deployment.The participation of innovative SMEs and

SMCs in strategic projects shall be encouraged.

(53) Both strategic projects and European semiconductor technology initiatives should be

able to focus not only on cutting-edge semiconductor nodes, but also on innovative

existing and mature technology nodes where this is necessary to preserve and

strengthen the Union’s competitiveness, resilience and security of supply across

strategically important semiconductor technologies and industrial applications. In

order to ensure that strategic projects effectively contribute to the Union’s long-term

competitiveness, such projects should support the development or deployment of

critical capacities, technologies or capabilities within the Union. This should include,

in particular, activities that reduce strategic dependencies and enhance the Union’s

technological leadership in key segments of the semiconductor value chain, including

by enabling, advancing or securing critical technologies and capabilities within the

Union.

(54) Where strategic projects are implemented across multiple sites, they should be carried

out by a single consortium and function as an integrated entity, in order to ensure

coherence, efficiency and effective coordination of activities.

(55) In light of the strategic nature of the semiconductor sector and its relevance for

security, participation in strategic projects should be subject to appropriate conditions.

In accordance with Article 136 of Regulation (EU, Euratom) 2024/2509 of the

EN 37 EN

European Parliament and of the Council50, it would be possible to restrict or exclude

the participation of certain entities where this would be contrary to the Union’s

strategic assets, interests, autonomy or security. As a general rule, participation in

strategic projects should be limited to legal entities established in the Union. However,

by way of derogation and where duly justified, participation may be extended to

entities established in third countries, provided that such participation complies with

the applicable conditions and safeguards and does not undermine the Union’s strategic

assets, interests, autonomy or security.

(56) To ensure flexibility and to reflect technological developments and evolving market

needs, this Regulation should set out a list of indicative technological areas for

strategic projects. The power to amend that list should be delegated to the Commission

in accordance with Article 290 TFEU in order to update those areas in light of

technological change and market developments relevant to the semiconductor sector.

In order to ensure a coherent and efficient identification and selection of strategic

projects, the Commission, taking into account the opinion of the European

Semiconductor Board, should identify priority areas and establish a list of topics of

potential projects. The implementation of actions supporting such projects should be

carried out, where appropriate, through the Chips Joint Undertaking, in accordance

with its governing Regulation and work programmes. To strengthen the Union’s

sovereignty and ensure security of supply in leading-edge semiconductors, it is

appropriate to prioritise the establishment of an open foundry for advanced

semiconductor manufacturing capabilities within the Union, which should operate,

where relevant, on the basis of open access for different users. That strategic project

could be complemented by other strategic projects on for instance memory, design,

and other semiconductor technologies.

(57) The Chips Joint Undertaking should implement actions supporting strategic projects

through its work programme, including through calls for proposals in accordance with

its applicable rules. Proposals should be evaluated in accordance with the procedures

and criteria set out in the governing framework of the Chips Joint Undertaking. In

order to ensure efficiency and avoid duplication of assessments, the Commission

should rely on the outcome of the evaluation carried out by the Chips Joint

Undertaking when designating strategic projects. Projects selected for funding by the

Chips Joint Undertaking and complying with the criteria laid down in this Regulation

should be eligible for designation as strategic projects.

(58) The designation of a project as a strategic project should be without prejudice to the

outcome of funding decisions taken under the Chips Joint Undertaking. Projects not

selected for Union funding should nevertheless be able to obtain the status of strategic

project, subject to the consent of the applicant, in order to benefit from the rights and

obligations attached to that status under this Regulation. Rights include strategic

projects’ inclusion in the demand forum, the possible receipt of public support and

administrative support and the receipt of status of overriding public interest and

possibly status of highest national significance relevant to permit-granting procedures,

and obligations also applicable to European semiconductor technology initiatives, such

as participation in the Business-to-Business Semiconductor Supply Chain Platform

and the obligation to accept priority-rated orders. Strategic projects should benefit

from the same rights and be subject to the same obligations as European

50 Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September

2024 on the financial rules applicable to the general budget of the Union (OJ L, 2024/2509, 26.09.2024, ELI:

http://data.europa.eu/eli/reg/2024/2509/oj).

EN 38 EN

semiconductor technology initiatives, where they comply with the relevant

requirements, in order to ensure a coherent regulatory framework and to maximise

their contribution to the Union’s objectives in the semiconductor sector. Where

relevant, such designation should also confirm their status as first-of-a-kind initiatives

and define the duration of that status based on the expected lifetime of the project.

(59) In order to ensure that strategic projects continue to fulfil the criteria laid down in this

Regulation, the Commission should be able to withdraw the designation of a project

where those criteria are no longer met or where the designation was based on incorrect

information. Before adopting such a decision, the Commission should ensure that the

undertakings concerned are given the opportunity to be heard, in accordance with the

principle of good administration, and should take into account the opinion of the

European Semiconductor Board. Where the designation of a strategic project is

withdrawn, that project should lose all rights and obligations associated with that

status under this Regulation. However, such projects should remain subject, for a

limited period, to specific obligations linked to security of supply, where provided for

in this Regulation.

(60) In order to guarantee simple and rapid permit-granting, Member States should ensure

that permit-granting procedures for European semiconductor technology initiatives

and strategic projects are organised through a single procedure based on a single

application. Additionally, Member States should designate a one-stop shop acting as a

single point of contact for the project, in order to facilitate and coordinate the

processing of applications in an efficient, transparent and timely manner.

(61) It is necessary that European semiconductor technology initiatives and strategic

projects are established as quickly as possible, while keeping the administrative

burden to a minimum. For that reason, Member States should process applications

related to the planning, construction and operation of such facilities in the most rapid

manner possible. In order to further accelerate the deployment of European

semiconductor technology initiatives and strategic projects, clear and binding time

limits should be established for permit-granting procedures. In particular, the overall

duration of such procedures should not exceed the defined period of 12 months from

the submission of a complete application, without prejudice to shorter time limits set

by Member States.

(62) Given the potential cross-border nature of European semiconductor technology

initiatives and strategic projects, Member States should make best efforts to effectively

cooperate and coordinate at the level of relevant authorities, including between

designated one-stop shops, in order to facilitate coherent and timely decision-making

processes.

(63) Digitalisation of permit-granting procedures is essential to enhance transparency,

efficiency and legal certainty. Member States should therefore establish single access

portals at national level enabling applicants to submit and manage their applications in

a fully digital environment. The use of interoperable digital solutions, including

European Business Wallets, should facilitate secure data exchange, re-use of existing

information and seamless interaction between applicants and competent authorities,

while ensuring a high level of cybersecurity and data integrity. To improve

transparency and predictability for applicants, the single access portal should provide

up-to-date information on the status of applications, applicable procedures and

deadlines, as well as notifications of decisions taken by the competent authorities.

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(64) Similarly, in order to support investment decisions and reduce information

asymmetries, Member States should make relevant information on permit-granting

procedures, financing opportunities, business support services and applicable

regulatory requirements available online in a centralised and easily accessible manner.

They should also ensure appropriate use of existing studies, permits and authorisations

related to the planning, construction and operation of European semiconductor

technology initiatives and strategic projects, where compatible with Union and

national law, in order to avoid duplication of administrative procedures and reduce

delays. Given the strategic importance and time sensitivity of European semiconductor

technology initiatives and strategic projects, Member States should ensure that

administrative and judicial proceedings related to permit-granting are treated as urgent,

where and to the extent provided for under national law, while fully respecting the

rights of defence and the rights of affected individuals and communities.

(65) Regulation (EU) [202X/XX] of […]51 establishes a common acceleration framework

for environmental assessments in order to boost the Union’s roll out of key

technologies, reduce dependencies and strengthen competitiveness. Procedures linked

to environmental assessments should be accelerated and streamlined for plans,

programmes and projects across all sectors of the economy while maintaining high

levels of protection of human health and of the environment. Some sectors may,

however, require yet faster environmental assessments. Therefore, and in order to

safeguard the coherence of the legal framework of environmental assessments, while

allowing for the additional needs for acceleration in certain strategic sectors,

Regulation (EU) [202X/XX] establishes a dedicated toolbox that should therefore be

used in the context of this Regulation. Given the essential role of semiconductor

technologies in ensuring the achievement of the Union’s climate objectives by the

introduction of novel, more sustainable technologies, production processes, the

integration of semiconductors in net-zero technologies, and their contribution to the

Union’s resilience and economic security, European semiconductor technology

initiatives and strategic projects in the meaning of this Regulation should also be

considered strategic projects within the meaning of Regulation (EU) [202X/XX] and

therefore benefit from the dedicated toolbox established under that Regulation.

(66) In the semiconductor sector, undertakings thrive in specialised local districts that can

attract investment, foster innovation, and build resilient industrial ecosystems. Regions

and regional industrial clusters are instrumental in developing and facilitating the

establishment of such ecosystems. A European Semiconductor Region of Excellence

label should be established with the objective of identifying, recognising and fostering

regions in the Union that demonstrate a long-term, coordinated strategy to host, attract

and expand semiconductor-related investments and semiconductor value chains.

International investors should be able to find in a European Semiconductor Region of

Excellence the ideal environment to develop semiconductor-related business. Such

label should be awarded by the Commission following applications by regional

authorities, on the basis of coherence and credibility of a Semiconductor Region

Investment Plan and the level of commitment by the relevant authorities, and the

application should be endorsed by the relevant Member State in order to ensure

political coordination between different levels of government.

(67) Applying regions should develop a Semiconductor Region Investment Plan. Measures

proposed in that plan should address in particular framework conditions to strengthen

51 Proposal for a Regulation of the European Parliament and of the Council on speeding-up environmental

assessments (COM/2025/984 final, 10.12.2025).

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semiconductor manufacturing, R&D collaboration, skills development, or sustainable

infrastructure and signal their readiness to host semiconductor investments.

(68) On receiving the label, a region should gain access to opportunities, including stronger

partnerships with industry and research institutions, and increased attractiveness to

international investors seeking reliable, high-potential locations. Recognised regions

should be able to join a Network of European Semiconductor Regions of Excellence,

enabling them to share knowledge, forge alliances, and amplify their impact across the

Union, while international recognition of their strategies would reinforce their

reputation as prime destinations for semiconductor innovation and investment.

(69) Semiconductors are essential components embedded in infrastructures, equipment and

systems used by critical entities, including those covered by Directive (EU) 2022/2555

of the European Parliament and of the Council52. The functioning, security and

continuity of such critical entities depend increasingly on the availability, integrity and

trustworthiness of semiconductor components and of their suppliers. In order to reduce

the Union’s exposure to supply chain shocks and dependencies on a limited number of

third-country suppliers, it is necessary to strengthen transparency and resilience in the

sourcing of semiconductors used in public procurement for critical infrastructures and

services. Public procurement governed by Directives 2014/23/EU53, 2014/24/EU54,

2014/25/EU55, of the European Parliament and of the Council represents a significant

share of Union demand and can play a strategic role in promoting reliable and resilient

semiconductor supply chains. Contracting authorities or contracting entities procuring

critical infrastructure should integrate security of supply considerations throughout the

procurement process, and should also consider how the semiconductors incorporated

into the procured equipment or systems add value to the Unionsemiconductor supply

chain resiliencewith their design and manufacturing steps. Such considerations are

without prejudice to the Union cybersecurity legislation.

(70) Encouraging contracting authorities and contracting entities to require economic

operators to provide a security of supply declaration concerning the sourcing of

semiconductors would enhance transparency across supply chains and enables

informed decision-making in procurement procedures, without imposing

disproportionate administrative burdens and leaving discretion to contracting

authorities and contracting entities as to whether to request such declaration in all

procurement procedures. Such declaration should, where required, contain key

elements enabling an assessment of supply chain robustness, including the

identification of undertakings involved, the diversityofsuppliers,added value to the

Union’s semiconductor supply chain resilience, strategies to increase resiliencesuch as

throughdual sourcingfrom domestic undertakings, and vulnerability assessments to

potential disruptions, as well as, where applicable, relevant risk assessments carried

52 Directive (EU) 2022/2555 of the European Parliament and of the Council of 14 December 2022 on

measures for a high common level of cybersecurity across the Union, amending Regulation (EU) No 910/2014

and Directive (EU) 2018/1972, and repealing Directive (EU) 2016/1148 (NIS 2 Directive) (OJ L 333,

27.12.2022, p. 80, ELI: http://data.europa.eu/eli/dir/2022/2555/oj). 53 Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award

of concession contracts (OJ L 94, 28.3.2014, p. 1, ELI: http://data.europa.eu/eli/dir/2014/23/oj). 54 Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public

procurement and repealing Directive 2004/18/EC (OJ L 94, 28.3.2014, p. 65, ELI:

http://data.europa.eu/eli/dir/2014/24/oj). 55 Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on

procurement by entities operating in the water, energy, transport and postal services sectors and repealing

Directive 2004/17/EC (OJ L 94, 28.3.2014, p. 243, ELI: http://data.europa.eu/eli/dir/2014/25/oj).

EN 41 EN

out pursuant to this Regulation. To ensure that considerations of resilience, security

and European supply chain added value are effectively integrated into procurement

decisions, contracting authorities and contracting entities may specify in the

procurement documents requirements relating to security of supply relating to the

sourcing of semiconductors incorporated into the infrastructures, equipment or

systems covered by the public procurement contract. To that end, they may include

technical specifications, selection criteria, award criteria or contract performance

clauses.

The public procurement framework established by Directives 2014/24/EU,

2014/25/EU and 2009/81/EC contains provisions enabling contracting authorities to

exclude economic operators that have been guilty of serious misrepresentation, have

withheld relevant information, or have supplied false or misleading information in the

context of participation in a procurement procedure. Those provisions remain

applicable to procurement procedures carried out by national contracting authorities

covered by this Regulation.

(71) In this context, given that free trade agreements, custom unions, the WTO Agreement

on Government Procurement56 contain commitments on access to public procurement,

undertakings from third countries which have concluded such international agreements

with the Union guaranteeing such access should be deemed to fall under the definition

of domestic undertakings. Furthermore, these international agreements, as well as

strategic partnerships on semiconductors, reflect a mutual commitment between the

Union and its partners to secure international semiconductor supply chains, which is

why undertakings from these Union partners are granted equivalence todomestic

undertakings.

(72) For the purposes of this Regulation, the assessment for whether an undertaking is

domestic or equivalent, or not, should look into the ownership structure and the

control of such undertaking. For assessing control, undertakings should be considered

to be controlled by a third country or by a third-country legal entity, where that third

country or legal entity is able to exercise decisive influence over its strategic decisions,

whether directly or indirectly, including in particular, by having the right or exercising

the power to appoint or remove a majority of the members of the administrative,

management or supervisory body of the undertaking being assessed; by having

appointed solely as a result of the exercise of one’s voting rights a majority of the

members of the administrative, management or supervisory bodies of the undertaking

being assessed who have held office during the present and previous financial year; by

controlling alone, pursuant to an agreement with other shareholders in or members of

the undertaking being assessed, a majority of shareholders’ or members’ voting rights

in that undertaking being assessed; by having the right to exercise a dominant

influence over the undertaking being assessed, pursuant to an agreement entered into

with that undertaking being assessed or to a provision in its Memorandum or Articles

of Association, where the law governing that undertaking being assessed permits its

being subject to such agreement or provision; by having the power to de facto exercise

the right to exercise a dominant influence over the undertaking being assessed, without

being the holder of that right; by having the right to use all or part of the assets of the

undertaking being assessed; by managing the business of the undertaking being

assessed on a unified basis, while publishing consolidated accounts; or by sharing

56 Protocol Amending the Agreement on Government Procurement (OJ L 68, 7.3.2014, p. 2, ELI:

http://data.europa.eu/eli/prot/2014/115/oj), which entered into force on 6 April 2014 (OJ L 89, 25.3.2014, p. 5).

EN 42 EN

jointly and severally the financial liabilities of the undertaking being assessed, or

guaranteeing them.

(73) Regulation (EU) No 654/2014 of the European Parliament and of the Council57

enables the Union to suspend or withdraw concessions or other obligations under

international trade agreements in order to respond to breaches by third countries of

international trade rules that affect the Union’s commercial interests. Any exercise of

the Union’s rights under Regulation (EU) 2021/167 should also be reflected in the

interpretation of the definition of domestic undertaking under this Regulation.

(74) In addition to challenges relating to the security of supply of semiconductors,

increasing attention has been drawn to cybersecurity risks associated with sourcing

from certain suppliers for critical infrastructures, equipment or systems. Such

cybersecurity risks should not fall within the scope of this declaration submitted by

economic operators in procurement procedures involving the provision or use of

semiconductors and are governed by the applicable Union cybersecurity legal

framework. Notwithstanding, economic operators are to ensure compliance with, and

act in accordance with, relevant Union cybersecurity legislation.

(75) Given the complexity and evolving nature of semiconductor supply chains, the

Commission, in consultation with the European Semiconductor Board and relevant

industrial stakeholders, should, where necessary, issue recommendations identifying

specific infrastructures, equipment or systems for which supply chain resilience is

particularly important seeing potential supply chain risks, and such recommendations

should be considered by contracting authorities and contracting entities in the

preparation and conduct of procurement procedures, thereby supporting consistent

implementation across the Union.

(76) In order to preserve flexibility and avoid undue constraints on procurement

procedures, contracting authorities and contracting entities should be allowed not to

apply the requirement, including those relating to dual sourcing involving domestic

undertakings in duly justified cases, including where there is a lack of competition,

absence of suitable tenderers, or where their application would lead to disproportionate

costs or technical incompatibilities. Such derogations should be interpreted narrowly

and applied in a transparent manner, ensuring that the objectives of strengthening

semiconductor supply chain resilience and safeguarding the functioning of critical

entities are not undermined.

(77) In order to ensure the effective and consistent application of measures aimed at

strengthening the resilience and security of semiconductor supply in public

procurement, the Commission may provide guidance and facilitate coordination

among relevant actors. Such guidance should support the use of recommendations

identifying infrastructures, equipment or systems for which semiconductor supply by

domestic undertakings is particularly relevant, as well as the preparation and

assessment of security of supply declarations, including elements related to supply

chain mapping, the proportion of domestic undertakings involved, resilience strategies

such as dual sourcing, and vulnerability and risk assessments. The guidance should

57 Regulation (EU) No 654/2014 of the European Parliament and of the Council of 15 May 2014

concerning the exercise of the Union's rights for the application and enforcement of international trade

rules and amending Council Regulation (EC) No 3286/94 laying down Community procedures in the

field of the common commercial policy in order to ensure the exercise of the Community's rights under

international trade rules, in particular those established under the auspices of the World Trade

Organization (OJ L 189, 27.6.2014, pp. 50-58, ELI: http://data.europa.eu/eli/reg/2014/654/oj).

EN 43 EN

also facilitate the application of common methodologies for assessing supply chain

risks, in particular in sectors exposed to heightened vulnerabilities, and promote the

exchange of best practices and relevant information, with a view to ensuring a

coherent approach across the Union and supporting the effective functioning of the

internal market.

(78) In order to increase the transparency and safeguard the security of supply of

semiconductors for critical sectors, it is necessary to provide for the possibility of

further Union action where the identified risks are not adequately addressed. Where,

following consultation with the European Semiconductor Board, the Commission

concludes that the measures recommended to contracting authorities or contracting

entities to address such risks are insufficient, it should be empowered to adopt

implementing decisions regarding which public authorities shall require economic

operators to submit a security of supply declaration and for which procedures and

products.

(79) The semiconductor supply chain experiences disruptions that may damage certain

downstream sectors economically. Critical sectors linked to public security, such as

energy, defence or public administration, and those sectors where semiconductors

represent a large percentage of the value of the final product, such as automotive,

datacentres or industrial automation, are particularly exposed to disruptions in

semiconductor supply chains. Therefore, the Commission should have the possibility

to identify them as risk-prone sectors.

(80) In order to clarify the necessary information to include, the Commission should, where

appropriate, issue methodological guidance on how to carry out risk assessments that

address the creation of a dual sourcing strategy, upstream and downstream supply

chain mapping, and vulnerability analysis and sensitivity to supply disruption. For that

purpose, the Commission may issue methodological recommendations on how to carry

out risk assessments for those sectors.

(81) In order to ensure a high level of resilience of the Union’s semiconductor supply

chain, it is necessary to provide for the possibility of further Union action where the

identifiedrisks are not adequately addressed. Where, following consultation with the

European Semiconductor Board, the Commission concludes that the measures

recommended to address such risks are insufficient, it should be empowered to adopt

implementing decisions specifying appropriate risk mitigation measures. Such

measures may include, where justified and proportionate, requirements for

diversification of supply sources, including dual sourcing, or the building-up of

strategic stocks. Those measures should be targeted, proportionate, and take into

account the specificities of the sectors and companies concerned, as well as the need to

preserve the functioning of the internal market and avoid undue administrative burden.

The assessment of risks to the semiconductor supply chain should be based on

objective and reliable evidence. For that purpose, the Commission should take into

account, inter alia, publicly available information, data collected through requests for

information, as well as indications of repeated or persistent supply chain disruptions.

The use of such evidence should ensure that any measures adopted are well-founded,

transparent, and proportionate to the identified risks, while safeguarding the

confidentiality of sensitive business information.

(82) With the interest of continuity of supply and reliability in mind, contracting authorities

and contracting entitiesare empowered to request risk assessments on the

EN 44 EN

semiconductor supply chains of economic operators participating in public

procurement or other public funding procedures that concern risk-prone sectors.

(83) The objective of a strategic mapping of the semiconductor sector should be to provide

an analysis of the Union’s strengths and weaknesses in the global semiconductor

sectors with a view to providing a basis for measures to ensure security of supply and

resilience of the Union’s semiconductor ecosystem. To that end, the strategic mapping

should identify factors such as key products and critical infrastructures in the internal

market that depend on the supply of semiconductors, main user industries and their

current and expected needs, key segments of the Union’s semiconductor supply chain,

technological characteristics, dependencies on third-country technology and providers,

and bottlenecks of the Union’s semiconductor sector, current and expected needs for

skills and access to qualified workforce building on the work of the European Skills

Observatory established under the Union of Skills and, where appropriate, the

potential impact of the measures of the emergency toolbox. The strategic mapping

should be based on publicly and commercially available data.

(84) In order to prepare for future disruptions of the different stages of the semiconductor

value chain in the Union and of trade within the Union, the Commission, assisted by

the European Semiconductor Board should and on the basis of the outcome of the

strategic mapping, identify and develop a list of early warning indicators. Such

indicators could include atypical increases in lead time, the availability of raw

materials, intermediate products and human capital needed for semiconductor

manufacturing, or appropriate manufacturing equipment, the forecasted demand for

semiconductors on the Union and global markets, price surges exceeding normal price

fluctuation, the effect of accidents, attacks, natural disasters or other serious events,

the effect of trade policies, tariffs, export restrictions, trade barriers and other trade-

related measures, and the effect of business closures, offshoring or acquisitions of key

market actors. Monitoring activities of the Commission should focus on those early

warning indicators.

(85) Due to the complex, quickly evolving and interlinked semiconductor value chains with

various actors, a coordinated approach to monitoring is necessary to increase the

ability to mitigate risks that may negatively affect the supply of semiconductors and to

enhance the understanding of the dynamics of the semiconductor value chain. The

Commission, in consultation with the European Semiconductor Board, should monitor

the semiconductor value chain focusing on early warning indicators and identifying

best practices for risk mitigation and increased transparency in the semiconductor

value chain, in such a way that it would not represent an excessive administrative

burden for undertakings, in particular SMEs and SMCs. Relevant findings, including

information provided by relevant stakeholders and industry associations, should be

provided to the European Semiconductor Board to allow for a regular exchange of

information with the Board and for integration of the information into a monitoring

overview of the semiconductor value chains.

(86) The Business-to-Business Semiconductor Supply Chain Platform (‘the Platform’)

should be a digital twin of the semiconductor supply chain with the objective of

increasing supply chain transparency and better informing undertakings to increase

their resilience. It should be an industry-led action that benefits participating

undertakings by enhancing their resilience to semiconductor supply chain disruptions

and reducing their market-intelligence costs. The incentive for undertakings to join the

Platform and provide high quality input data should be the added value that they will

obtain from the Platform’s output. Such output may include guidance by an

EN 45 EN

independent third party based on market analysis, aggregated insights on

semiconductor supply chain risks, results of stress tests of the semiconductor supply

chain, early warnings and guidance on proactive measures with the sole purpose of

enhancing the de-risking of the semiconductor supply chain. Participation in the

Platform should encourage undertakings to take proactive actions to enhance their

supply chain resilience without public sector intervention. For the Commission, a

proactive and resilient private sector would ensure a lower risk of activation of the

crisis stage and deployment of the emergency toolbox.

(87) The Commission should provide through a call for proposal the initial funding for the

Platform, supporting its establishment and covering set-up costs. The call should only

lay down a minimum set of requirements without prescribing specific technical

solutions or exact data collection requirements. It should be up to the beneficiary of

the call for proposaland the participating undertakings to implement a financing

model based on a business case that allows the Platform to become self-sustaining in

the medium term. The merit and usefulness of this type of platform can be measured

by the success of similar initiatives that already exist either regionally, internationally

or in other sectors.

(88) The Platform should be designed in such a way that it ensures the utmost

confidentiality of commercially sensitive information and compliance [of the

Platform] with Union competition law. In particular, the Platform should put in place

adequate safeguards to ensure that the exchange of information amongst participating

undertakings is strictly limited to what is objectively necessary and proportionate to

achieve the objectives set out in this Regulation and to avoid anticompetitive exchange

of commercially sensitive information amongst competitors. To that extent,

participating undertakings should only have access to their own data and anonymised

aggregated reports.

(89) Meetings, discussions or information exchanges between participating undertakings

within the framework of the Platform should be limited to what is indispensable to

achieve the Platform’s objectives and should be appropriately documented. The

exchange of commercially sensitive information between participants – including

information relating to individual undertakings’ current or future prices, costs,

margins, sales volumes, production levels, capacities, or market shares – should be

excluded58. The Platform should operate in a manner that preserves the independence

of participating undertakings in their commercial decision-making. Participating

undertakings should remain responsible for ensuring compliance with Union and

national competition rules, including Article 101 TFEU.

(90) The Platform should strongly encourage the participation of the main end-user sectors

of semiconductors based on the significant added value that participation will bring

them. The benefits for participating end-user sector undertakings could include

becoming increasingly knowledgeable of their own semiconductor supply chain risks

and therefore, being empowered to take proactive semiconductor supply chain

management measures. The list of main end-user sectors of semiconductors should

reflect the current sectors that are purchasing semiconductors in order to produce their

products either directly or indirectly via their components. Electronic manufacturing

58 For more information, see Chapter 6 of the Guidelines on the applicability of Article 101 of the Treaty

on the Functioning of the European Union to horizontal cooperation agreements (Horizontal

Guidelines).

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service providers and distributors should be included the list because of the important

role they play in the Union’s semiconductor ecosystem.

(91) From the public sector perspective and in order to ensure the swift flow of information

in case of disruptions to the supply chain, the national competent authorities of

Member States should keep an updated contact list of relevant undertakings operating

along the semiconductor supply chain established in their national territory. That list

should allow for the identification of appropriate respondents to voluntary requests for

information. The list should not be required to be exhaustive, and it should be handled

in a manner that fully respects the applicable confidentiality rules.

(92) A number of undertakings providing semiconductor services or goods are assumed to

be essential for an effective semiconductor supply chain in the Union’s semiconductor

ecosystem, due to the number of Union undertakings relying on their products, their

Union or global market share, their importance to ensure a sufficient level of supply or

the possible impact of the disruption of supply of their products or services. The

Member States, in cooperation with the Commission, should identify and keep an

updated list of those key market actors in their territories. As part of the monitoring,

Member States should specifically consider the integrity of the activities carried out by

key market actors. Such issues could be brought to the attention of the European

Semiconductor Board by the Member State concerned.

(93) To enable anticipation of potential shortages, national competent authorities should

alert the Commission if they become aware of a risk of serious disruption in the supply

of semiconductors or have concrete and reliable information of any other relevant risk

factor or event materialising. In order to ensure a coordinated approach, the

Commission should, where it learns of a risk of serious disruption in the supply of

semiconductors or has concrete or reliable information of any other relevant risk factor

or event materialising, upon alert or from international partners, convene an

extraordinary meeting of the European Semiconductor Board to discuss the severity of

the disruptions and possible initiating of the procedure for activating the crisis stage,

and whether it may be appropriate, necessary and proportionate for Member States to

carry out coordinated joint procurement as a preventive measure, as well as to enter

into dialogue with stakeholders, with a view to identifying, preparing and possibly

coordinating such preventive measures. The European Semiconductor Board and the

Commission should, within that dialogue, take into account the views of stakeholders

of the semiconductor value chain. The European Semiconductor Board should advise

the Commission on whether to issue a preventive request for information to the

Platform. The Commission should consult and cooperate with relevant third countries

with a view to jointly addressing semiconductor supply chain disruptions, in

compliance with international obligations.

(94) After receiving advice from the European Semiconductor Board, the Commission

should be able to issue requests for information to undertakings and to the Platform.

As experience with several supply chain disruptions in the past and with the

difficulties in obtaining the necessary information to deal with those disruptions has

shown, the purpose of preventive requests for information at the stage of alert is to

adequately deal with supply chain disruptions before the crisis stage is activated and to

provide input for precise assessments of a possible semiconductor crisis.

(95) Undertakings actively participating in the Platform should be considered to have

fulfilled their obligation to share information with the Commission in cases of supply

chain disruptions, and therefore should be exempted from receiving directly a request

EN 47 EN

for information before the crisis stage. By actively participating in the Platform, those

undertakings are demonstrating a strong commitment to proactively de-risking their

supply chain. Undertakings actively participating in the Platform should therefore be

shielded from the potential added administrative burden of having to respond to the

Commission’s requests for information. The Commission should report the key

findings of responses to requests for information before the crisis stage to the

European Semiconductor Board without undue delay. To protect participating

undertakings in the Platform from undue foreign influence and safeguard trade secrets,

the Platform should be prohibited from answering any requests for information, other

than those issued by the Commission, without prejudice to its obligations under Union

or national law.

(96) The semiconductor crisis stage should be activated in the presence of concrete, serious

and reliable evidence of such a crisis. A semiconductor crisis occurs where there are

serious disruptions to the supply of semiconductors or serious obstacles to trade in

semiconductors within the Union causing significant shortages of semiconductors,

intermediate products or raw or processed materials, and such significant shortages

prevent the supply, repair and maintenance of essential products used by critical

sectors, for instance medical and diagnostic equipment, to the extent that such a crisis

would have serious detrimental effects on the functioning of the critical sectors due to

their impact on society, economy and security of the Union.

(97) In order to ensure an agile and effective response to such a semiconductor crisis,

where the Commission becomes aware of a potential semiconductor crisis, it should

assess whether the conditions for activating the crisis stage are met. If this assessment

produces concrete, serious and reliable evidence of a semiconductor crisis, the

Commission should be able to present to the Council a proposal to activate the crisis

stage for a predetermined duration period of maximum 12 months, taking into account

the opinion of the European Semiconductor Board. The Commission should assess the

need for prolongation or early termination of the crisis stage and initiate such

procedure, should such a necessity be ascertained, taking into account the opinion of

the European Semiconductor Board.

(98) The synergies between the security of supply mechanisms established under Chapter

VII of Regulation (EU) 2025/2643 and this Regulation should provide the Union’s

defence sector with the necessary flexibility and breadth of action to react and ensure

security of supply. In particular, the possibility for the Commission under this

Regulation and under Chapter VII of Regulation (EU) 2025/2643 to prioritise defence

production under the priority-rated orders provisions of both regulations, should

minimise supply chain disruptions in the defence sector in time of crisis.

(99) Due to the sensitive nature of the crisis stage activation and of the potential measures

that may be taken in response thereof, including the significant impact which such

measures might have on private undertakings in the Union, the power to adopt an

implementing act as regards activating, prolonging and terminating the crisis stage in a

semiconductor crisis should be conferred on the Council.

(100) Close cooperation between the Commission and the Member States and coordination

of any national measures taken with regard to the semiconductor supply chain is

indispensable during the crisis stage with a view to addressing disruptions with the

necessary coherence, resiliency and effectiveness. To that end, the European

Semiconductor Board should hold extraordinary meetings as necessary. Any measures

taken should be strictly limited to the duration period of the crisis stage.

EN 48 EN

(101) For a rapid, efficient and coordinated Union response to a semiconductor crisis, it is

necessary to provide timely and up-to-date information to the Commission and to the

Member States through the European Semiconductor Board on the unfolding

operational situation as well as to ensure that effective measures to secure the supply

of semiconductors to affected critical sectors can be taken. Appropriate, effective and

proportionate measures should be identified and implemented when the crisis stage is

activated, without prejudice to possible continued international engagement with

relevant partners with a view to mitigating the evolving crisis situation. Where

appropriate, the Commission should request information from undertakings along the

semiconductor supply chain. Furthermore, the Commission should be able to, where

necessary and proportionate, require European semiconductor technology initiatives to

accept and prioritise an order of the production of crisis-relevant products, and to act

as a central purchasing body when mandated by Member States. The Commission

should limit those measures to certain critical sectors. The European Semiconductor

Board may also assess and advise on appropriate and effective measures. In addition,

the European Semiconductor Board may advise on the necessity of introducing

protective measures pursuant to Regulation (EU) 2015/479 of the European Parliament

and of the Council59. The use of all emergency measures should be proportionate and

restricted to what is necessary to address the semiconductor crisis in the best interest

of the Union. The Commission should regularly inform the European Parliament and

the Council of the measures taken and the underlying reasons. The Commission may,

after consulting the European Semiconductor Board, issue further guidance on the

implementation and use of the emergency measures.

(102) A number of sectors are critical for the proper functioning of the internal market. For

the purposes of this Regulation, those critical sectors should be listed in an Annex to

this Regulation. That list should be limited to the sectors and subsectors listed in the

Annex to Directive (EU) 2022/2557 of the European Parliament and of the Council60,

with the addition of the sectors of defence and security, on the basis of their important

role in ensuring vital societal functions. Certain measures should be taken only for the

purpose of securing supply to critical sectors. The Commission may limit the

emergency measures to certain of those sectors or to certain parts of them when the

semiconductor crisis has disturbed or is threatening to disturb their operation.

(103) The purpose of requests for information from undertakings along the semiconductor

supply chain established in the Union in the crisis stage is to enable precise

assessments of the semiconductor crisis or to identify and prepare potential mitigation

or emergency measures at Union or national level. Such information may include

production capability, production capacity and current primary disruptions and

bottlenecks. Those aspects could include the typical and current actual stock of crisis-

relevant products in production facilities located in the Union as well as production

facilities which are located in third countries where those undertakings operate, with

which they contract or from which they purchase supplies, the typical and current

actual average lead time for the most common products produced, the expected

production output for the following three months for each Union production facility,

or reasons that prevent the filling of production capacity. Such information should be

59 Regulation (EU) 2015/479 of the European Parliament and of the Council of 11 March 2015 on

common rules for exports (codification) (OJ L 83, 27.3.2015, p. 34, ELI:

http://data.europa.eu/eli/reg/2015/479/oj). 60 Directive (EU) 2022/2557 of the European Parliament and of the Council of 14 December 2022 on the

resilience of critical entities and repealing Council Directive 2008/114/EC (OJ L 333, 27.12.2022, p.

164, ELI: http://data.europa.eu/eli/dir/2022/2557/oj).

EN 49 EN

limited to what is necessary to assess the nature of the semiconductor crisis or

potential mitigation or emergency measures at Union or national level. Requests for

information should not entail the supply of information the disclosure of which is

contrary to Member States’ national security interests. The concrete information to be

asked may be developed on the basis of prior responses to requests for information

before the crisis stage, or advice from a representative number of relevant

undertakings through voluntary consultation, in cooperation with the European

Semiconductor Board. Any request should be proportionate, have regard for the

legitimate aims of the undertaking and the cost and effort required to make the data

available, as well as set out appropriate time limits for providing the requested

information. Undertakings should be required to comply with the request and may be

subject to penalties if they fail to comply or provide incorrect information. Any

information acquired should be used only for the purposes of this Regulation and be

subject to confidentiality rules. To ensure full involvement of the Member State where

the undertaking has its production site, the Commission should forward, without delay,

a copy of the request for information to the national competent authority and, where

the national competent authority so requests, share the acquired information with that

national competent authority through secure means. If an undertaking receives a

request for information related to its semiconductor activities from a third country, it

should inform the Commission so as to enable the Commission to assess whether a

request for information by the Commission is warranted.

(104) As an instrument of last resort to ensure that critical sectors can continue to operate in

a time of crisis and only when necessary and proportionate for that purpose, European

semiconductor technology initiatives may be required by the Commission to accept

and prioritise orders of crisis-relevant products. Potential beneficiaries of priority-rated

orders should be entities from critical sectors or undertakings supplying to critical

sectors whose activities are disrupted or at risk of disruption on account of the

shortage. To ensure that priority-rated orders are used only when necessary, they

should be restricted to beneficiaries who, having implemented risk mitigation

measures, were unable to avoid, for instance through their procurement practices, and

to mitigate the impact of the shortage through other means, such as using existing

stockpiles. The obligation of accepting and prioritising orders of crisis-relevant

products may also be extended to strategic projects and semiconductor manufacturing

facilities which have accepted such possibility in the context of receiving public

support, if such public support aims to foster the ability to increase production

capacity. The decision on a priority-rated order should be taken in accordance with all

applicable Union legal obligations, having regard to the circumstances of the case. The

priority rating obligation should take precedence over any performance obligation

under private or public law while it should have regard for the legitimate aims of the

undertakings and the cost and effort required for any change in production sequence.

Each priority-rated order should be placed at a fair and reasonable price. The

calculation of such price may be carried out on the basis of average market prices over

recent years, subject to reasons being given for any increase, for example taking into

account inflation or rise in energy costs. Undertakings may be subject to penalties if

they fail to comply with the obligation for priority-rated orders.

(105) For facilities carrying out a priority-rated order, it may be beneficial for the

Commission, assisted by the European Semiconductor Board, and the Member States

to exchange best practices concerning the execution of those orders, including best

administrative practices.

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(106) The undertaking concerned should be required to accept and prioritise a priority-rated

order. With a view to ensuring that priority-rated orders align with the capacities and

the production portfolio of a facility, the Commission should provide the facility

concerned with the opportunity to be heard on the feasibility and details of the

priority-rated order. The Commission should not issue the priority-rated order where

the facility is unable to fulfil the order even if prioritised, be it due to insufficient

production capability or production capacity or on technical grounds, or where the

product is not supplied or the service is not performed by the facility or because that

would place an unreasonable economic burden and entail particular hardship on the

undertaking, including substantial risk relating to business continuity.

(107) To ensure a transparent and clear framework for the implementation of priority-rated

orders, the Commission should be empowered to adopt an implementing act laying

down the practical and operational arrangements for the implementation of priority-

rated orders. That implementing act should contain safeguards to ensure that priority-

rated orders are implemented in compliance with the principles of necessity and

proportionality, such as a mechanism that takes into account existing orders and a

mechanism to ensure that volumes of priority-rated orders do not exceed what is

necessary.

(108) Under the exceptional circumstance that an undertaking operating along the

semiconductor supply chain in the Union receives a priority-rated order request from a

third country, it should inform the Commission of such a request, so as to inform an

assessment of whether, where there is a significant impact on the security of supply to

critical sectors, and the other requirements of necessity, proportionality and legality

are satisfied in the circumstances of the case, the Commission should likewise impose

a priority-rated order obligation.

(109) In light of the importance to ensure the security of supply to critical sectors that

perform vital societal functions, compliance with the obligation to perform a priority-

rated order should not entail liability for damages towards third parties for any breach

of contractual obligations that may result from the necessary temporary changes of the

operational processes of the concerned manufacturer, limited to the extent to which the

violation of contractual obligations was necessary for compliance with the mandated

prioritisation. Undertakings potentially within scope of a priority-rated order should

anticipate that possibility in the conditions of their commercial contracts. Without

prejudice to the applicability of other provisions, the liability for defective products,

provided for by Council Directive 85/374/EEC61, should not be affected by this

liability exemption. In accordance with Article 52(1) of the Charter of Fundamental

Rights of the European Union (the ‘Charter’), the obligation to prioritise the

production of certain products respects the essence of and does not disproportionately

affect the freedom to conduct a business and the freedom of contract laid down in

Article 16 and the right to property laid down in Article 17 of the Charter.

(110) When the crisis stage is activated and to ensure the security of supply to critical

sectors that perform vital societal functions, two or more Member States may mandate

the Commission to aggregate demand and act on their behalf for their public

procurement in the public interest, in accordance with existing Union rules and

procedures, leveraging its purchasing power. Common purchasing should be used only

61 Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and

administrative provisions of the Member States concerning liability for defective products (OJ L 210,

7.8.1985, p. 29, ELI: http://data.europa.eu/eli/dir/1985/374/oj).

EN 51 EN

to address supply-chain disruptions of semiconductors during a crisis. The mandate

may authorise the Commission to enter into agreements concerning the purchase of

crisis-relevant products for certain critical sectors. The Commission should assess for

each request the utility, necessity and proportionality in consultation with the

European Semiconductor Board. Where the Commission intends to not follow the

request, it should inform the Member States concerned and the European

Semiconductor Board and give its reasons. The procedural details should be set out in

an agreement between the Commission and the participating Member States, including

reasons for the use of the common purchasing mechanism and liabilities to be

assumed. Such an agreement may include the number of contracts to be concluded and

the conditions of the common purchasing, such as prices, delivery timeframes,

quantities and opt-in or opt-out clauses. The common purchasing may result in the

signature of one contract covering the needs of all Member States or several contracts

each covering the needs of one or more Member States. Furthermore, the participating

Member States should be entitled to appoint representatives to provide guidance and

advice during the procurement procedures and in the negotiation of the purchasing

agreements. The deployment, use or resale of purchased products should remain

within the remit of the participating Member States.

(111) During a semiconductor shortage crisis, it might become necessary that the Union

considers protective measures. The European Semiconductor Board should be able to

express its views to inform the Commission’s assessment of whether the market

situation amounts to a significant shortage of essential products pursuant to Regulation

(EU)2015/479.

(112) The institutional framework for expert groups, including the rules on transparency for

the entity and its sub-groups, should apply to the European Semiconductor Board,

without prejudice to this Regulation. The European Semiconductor Board should

provide advice to and assist the Commission on developing a comprehensive

semiconductor policy and on specific technical questions. Those questions may

include providing advice on the Chips for Europe Initiative 2.0 to the Public

Authorities Board of the Chips Joint Undertaking, exchanging information on the

functioning of European semiconductor technology initiatives and strategic projects,

discussing and preparing the identification of specific sectors and technologies with

potential high social impact and security significance in need of certification for

trusted products and addressing coordinated monitoring and crisis response.

Furthermore, the European Semiconductor Board should ensure the consistent

application of this Regulation, facilitate cooperation between Member States as well as

exchange of information on issues relating to this Regulation. The European

Semiconductor Board should also exchange views with the Commission on the best

ways to ensure effective protection and enforcement of IP rights, confidential

information and trade secrets with due involvement of stakeholders in relation to the

semiconductor sector. The European Semiconductor Board should support the

Commission in international cooperation in accordance with international obligations.

It should serve as a forum for coordinating national semiconductor policies and

relevant investments, international engagement, how to enhance cooperation along the

global semiconductor value chain, in particular with a focus on research, development

and innovation (R&D&I) and skills exchange programmes, without prejudice to the

prerogatives of the European Parliament and of the Council in accordance with the

Treaties. For that purpose, the European Semiconductor Board should take into

account the views of the Industrial Alliance for Semiconductors and of other

stakeholders. In addition, the European Semiconductor Board should coordinate,

EN 52 EN

cooperate and exchange information with other Union crisis response and crisis

preparedness structures with a view to ensuring a coherent and coordinated Union

approach as regards crisis response and crisis preparedness measures for

semiconductor crises.

(113) A representative of the Commission should chair the European Semiconductor Board.

Each Member State should appoint one high-level representative and one alternate to

the European Semiconductor Board. They could also appoint up to three technical

representatives in relation to different tasks of the European Semiconductor Board, for

example, depending on which part of this Regulation is discussed in the meetings of

the European Semiconductor Board. Member States should endeavour to ensure

effective and efficient cooperation in the European Semiconductor Board. Member

States should indicate a single contact point to ensure the reliable and timely exchange

of information on the operation of the European Semiconductor Board. To receive

important advice on the activities of the European Semiconductor Board and allow

appropriate participation of stakeholders, the Chair should be able to establish sub-

groups and should be entitled to establish working arrangements by inviting experts

and observers to take part in the meetings on an ad hoc basis or to invite stakeholders,

in particular organisations representing the interests of the Union semiconductors

industry, such as the Industrial Alliance for Semiconductors, to its sub-groups as

observers.

(114) The Chair should be able to facilitate exchanges between the European Semiconductor

Board and other Union bodies, offices, agencies and expert and advisory groups. In

light of the importance of the supply of semiconductors for other sectors and the

resulting need for coordination, the Chair should ensure participation by other Union

institutions and bodies as observers in meetings of the European Semiconductor Board

where relevant and appropriate in relation to the monitoring and crisis response

mechanism established in this Regulation.

(115) Member States should hold a key role in the application and enforcement of this

Regulation. In that respect, each Member State should designate one or more national

competent authorities responsible for the effective implementation of this Regulation

and ensure that those authorities are adequately empowered and resourced. Member

States may designate an existing authority or authorities. In order to increase

organisation efficiency in the Member States and to set an official point of contact vis-

a-vis the public and other counterparts at Union and Member State level, including the

Commission and the European Semiconductor Board, each Member State should

designate, within one of the authorities it designates as competent authority under this

Regulation, one national single point of contact responsible for coordinating issues

related to this Regulation and cross-border cooperation with competent authorities of

other Member States.

(116) The Union should strive to conclude strategic partnerships on semiconductors with

established or emerging international partners in order to improve the Union’s security

of supply and cooperation along the semiconductor value chain. Those partnerships

should also strive to address the semiconductor-related knowledge and skills shortage

existing in the Union by attracting, mobilising and retaining new talent to the Union.

For partners with which the Union has cooperation on semiconductors established

through a Digital Partnership, Trade and Technology Council or Digital Dialogue, the

strategic partnership on semiconductors should reflect the political steer and priorities

agreed at those fora.

EN 53 EN

(117) To develop and ensure a coherent framework for the conclusion of future strategic

partnerships on semiconductors, the Member States and the Commission should, as

part of their interaction on the European Semiconductor Board, discuss, among other

things, whether existing partnerships achieve their intended aims, the prioritisation of

partners for new partnerships, the content of such partnerships and their consistency

and potential synergies with other Commission international cooperation frameworks

and with Member States’ bilateral cooperation with relevant international strategic

partners. This should be done without prejudice to the prerogatives of the Council in

accordance with the Treaties. The Union should seek mutually beneficial partnerships

with emerging markets and developing economies, in coherence with its Global

Gateway strategy62 and its International Digital Strategy63, which contribute to the

diversification of its semiconductor supply chain as well as add value to those

international strategic partners.

(118) To strengthen the Union’s strategic autonomy and leadership in semiconductor

technologies, the Industrial Alliance on Processors and Semiconductor Technologies

should cease to exist and its operations should be taken over by the Industrial Alliance

for Semiconductors (the ‘Alliance’), established by this Regulation, under the

Commission’s oversight. All members and participants of the existing Industrial

Alliance on Processors and Semiconductor Technologies should automatically become

members and participants of the Alliance. The terms of reference under which the

functioning, tasks and composition of the Alliance are detailed, should be published in

a Commission website for clarification64. The Alliance should bring together

stakeholders from across the value chain, including industry, SMEs, research

organisations, and key user sectors, to identify critical gaps in the Union’s capabilities

and drive the technological and industrial advancements needed to enhance

competitiveness. By fostering collaboration and innovation, the Alliance should help

reduce dependencies, reinforce supply chain resilience and support the scaling of

smaller Union actors. To ensure coherence with the Union’s semiconductor strategy

and priorities, and to facilitate a smooth and effective implementation of this

Regulation, the Alliance’s Steering Committee should maintain a regular dialogue

with the European Semiconductor Board, while its working groups may present

updates upon request. This structured engagement should enable the Board to integrate

industry insights into policy decisions, ensuring that public and private efforts remain

aligned in advancing the Union’s technological sovereignty.

(119) In order to ensure trustful and constructive cooperation of competent authorities at

Union and national level, all parties involved in the application of this Regulation

should respect the confidentiality of information and data obtained in carrying out

their tasks to protect in particular IP rights, sensitive business information and trade

secrets. Any information acquired in the application for recognition as a European

semiconductor technology initiative, in the context of requests for information or

notification obligations under this Regulation, should be used only for the purposes of

this Regulation and should be covered by the obligation of professional secrecy in

62 European Commission: Directorate-General for International Partnerships, The Global Gateway

strategy, Publications Office of the European Union, 2025, https://data.europa.eu/doi/10.2841/5607451 63 European Commission: Directorate-General for Communications Networks, Content and

Technology, An international digital strategy for the European Union, European Commission,

2025, https://data.europa.eu/doi/10.2759/4019528 64 European Commission: Directorate-General for Communications Networks, Content and Technology,

Alliance on Processors and Semiconductors Technologies, https://digital-

strategy.ec.europa.eu/en/policies/alliance-processors-and-semiconductor-technologies

EN 54 EN

accordance with Article 339 TFEU, as well as internal Commission rules on the secure

handling of data, in particular Commission Decision (EU, Euratom) 2015/44365. The

Commission and the national competent authorities, their officials, servants and other

persons working under the supervision of those authorities as well as officials and civil

servants of other authorities of the Member States should ensure the confidentiality of

information obtained in carrying out their tasks and activities. This should also apply

to the European Semiconductor Board and the Semiconductor Committee. Where

appropriate, the Commission should be able to adopt implementing acts to specify the

practical arrangements for the treatment of confidential information in the context of

information gathering.

(120) Compliance with the obligations imposed under this Regulation should be enforceable

by means of fines and periodic penalty payments. To that end, appropriate levels of

fines for non-compliance with requests for information and notification obligations

under this Regulation should be laid down, taking into account the different levels of

gravity of the non-compliance between both obligations and with different ceilings for

SMEs. Furthermore, periodic penalty payments should be laid down for non-

compliance with the obligation to accept and perform priority-rated orders, which

should be proportionate and reflect the price levels on the market during the last 90

days, with different ceilings for SMEs. Limitation periods should apply for the

impositions of fines and periodic penalty payments, in addition to limitation periods

for the enforcement of penalties. In addition, the Commission should give the

concerned undertaking or representative organisations of undertakings the right to be

heard.

(121) In order to reflect technological change and market developments relevant to the

semiconductor sector, to ensure effective implementation and evaluation of the Chips

for Europe Initiative 2.0, the power to adopt acts in accordance with Article 290 TFEU

should be delegated to the Commission with a view to amending this Regulation with

regard to the actions supported by the Chips for Europe Initiative 2.0 in a manner

consistent with its objectives and with regard to the measurable indicators for

monitoring the implementation of the Chips for Europe Initiative 2.0 and for reporting

on its progress towards the achievement of its objectives, and with a view to

supplementing this Regulation by establishing the procedure for applications and the

requirements and conditions for the granting, monitoring and withdrawal of the label

of design centres of excellence. It is of particular importance that the Commission

carry out appropriate consultations during its preparatory work, including at expert

level, and that those consultations be conducted in accordance with the principles laid

down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making66. In

particular, to ensure equal participation in the preparation of delegated acts, the

European Parliament and the Council receive all documents at the same time as

Member States’ experts, and their experts systematically have access to meetings of

Commission expert groups dealing with the preparation of delegated acts.

(122) Without prejudice to the budgetary procedure and to its administrative autonomy, the

Commission should make optimal use of resources to ensure that it can effectively

perform its duties and exercise its powers under this Regulation.

65 Commission Decision (EU, Euratom) 2015/443 of 13 March 2015 on Security in the Commission (OJ L

72, 17.3.2015, p. 41, ELI: http://data.europa.eu/eli/dec/2015/443/oj). 66 OJ L 123, 12.5.2016, p. 1, ELI: http://data.europa.eu/eli/agree_interinstit/2016/512/oj.

EN 55 EN

(123) Since the objective of this Regulation, namely to establish a framework for

strengthening the semiconductor ecosystem at Union level, cannot be sufficiently

achieved by the Member States but can rather, by reason of the scale or effects of the

action, be better achieved at Union level, the Union may adopt measures in accordance

with the principle of subsidiarity as set out in Article 5 of the Treaty on European

Union. In accordance with the principle of proportionality as set out in that Article,

this Regulation does not go beyond what is necessary in order to achieve that

objective.

(124) Regulation (EU) 2023/1781 should therefore be repealed,

HAVE ADOPTED THIS REGULATION:

Chapter I

General provisions

Article 1

Subject matter

1. This Regulation establishes a framework for strengthening the semiconductor

ecosystem, and addressing and preventing dependencies that can threaten the security

of supply of semiconductors at Union level, in particular through the following

measures:

(a) the continuation and further development of the Chips for Europe Initiative,

originally established under Regulation (EU) 2023/1781 and referred to in this

Regulation as ‘Chips for Europe Initiative 2.0;

(b) setting the criteria to recognise and support European semiconductor

technology initiatives that are first-of-a-kind initiatives and strategic projects

that foster the indispensability, resilience, and prosperity of the Union’s

semiconductor ecosystem;

(c) enhancing the coordination mechanism between the Member States and the

Commission originally established under Regulation (EU) 2023/1781 which

concerns the mapping and monitoring the Union’s semiconductor sector, crisis

prevention and response to semiconductor shortages and, where relevant,

requests for information and consultation with stakeholders from the

semiconductor supply chain.

1. The first general objective of this Regulation is to ensure the conditions necessary for

the competitiveness and innovation capacity of the Union in semiconductor

technologies and to ensure the adjustment of the industry to structural changes.

2. The second general objective, separate from and complementary to the first general

objective set out in paragraph 2, is to enhance crisis preparedness to ensure the EU’s

security of supply thereby improving the functioning of the internal market by laying

down a uniform Union legal framework for increasing the Union’s indispensability,

resilience and prosperity in the field of semiconductor technologies.

3. This regulation shall apply without prejudice to the specific procurement procedures

and qualification standards applicable in the defence sector referred to in Regulation

(EU) 2025/2643.

EN 56 EN

Article 2

Definitions

For the purposes of this Regulation, the following definitions apply:

(1) ‘semiconductor’ means one of the following:

(a) a material, including advancedmaterials, either elemental or compound, whose

electrical conductivity can be modified;

(b) component consisting of a series of layers of semiconducting, insulating and

conducting materials defined according to a predetermined pattern, and

intended to perform well-defined electronic or photonic functions or both;

(2) ‘chip’ means an electronic device comprising various functional elements on a single

piece of semiconductor material, typically taking the form of memory, logic,

processor, optoelectronics and analogue devices;

(3) ‘quantum chip’ means a device that processes information at the level of individual

quantum systems, with a varying level of component integration on-chip depending

on the quantum platform used, including platforms for quantum computing,

communication, sensing or metrology;

(4) ‘technology node’ means a specific semiconductor manufacturing process and its

design rules;

(5) ‘semiconductor supply chain’ means the system of activities, organisations, actors,

technology, information, resources and services involved in the production of

semiconductors, including raw and processed materials, such as gases,

semiconductor manufacturing equipment, design, including related software

development, fabrication, assembly, testing and packaging;

(6) ‘semiconductor value chain’ means the set of activities in relation to a semiconductor

product from its conception to its end use, including raw and processed materials,

such as gases, semiconductor manufacturing equipment, research, development and

innovation, design, including related software development, fabrication, testing,

assembly and packaging to embedding and integration in end products, as well as

end-of-life processes, such as reuse, disassembly and recycling;

(7) ‘pilot line’ means a testing and experimentation facility addressing higher technology

readiness levels up to industrial uptake to test, demonstrate, validate and calibrate

products, equipment, processes or systems;

(8) ‘small and medium-sized enterprises’ or ‘SMEs’ means small or medium-sized

enterprises as defined in the Annex to Commission Recommendation 2003/361/EC67;

(9) ‘small mid-cap’ means small mid-cap as defined in the Annex of Recommendation

2025/1099/EC;

(10) ‘first-of-a-kind initiative’ means any of the following initiatives, which provides

innovation in the Union with regard to the manufacturing process or final product to

the extent that this innovation is not yet sufficiently present or committed to be built

within the Union to ensure the Union’s resilience and security of supply, including

innovation that concerns improvements in computing power or in the level of

67 Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-

sized enterprises (notified under document number C(2003) 1422) (OJ L 124, 20.5.2003, p. 36, ELI:

http://data.europa.eu/eli/reco/2003/361/oj).

EN 57 EN

security, safety or reliability, energy and environmental performance, the technology

node or substrate materials, or in the implementation of production processes that

lead to efficiency gains, or improves recyclability, or reduces production inputs:

(a) a new or substantially upgraded semiconductor manufacturing facility;

(b) a new or substantially upgraded facility or process for the production of

equipment;

(c) a new or substantially upgraded facility or process for the production of key

components for such equipment or other production of inputs predominantly

used in semiconductor manufacturing, such as materials;

(d) a new or substantially upgraded facility for electronics manufacturing or

integration;

(e) new manufacturing-centred chip design activities;

(11) ‘manufacturing-centred chip design activities’ means the preparation of designs for

fabrication, design–process co-optimisation, and the execution of final tape-out,

being the stage at which a chip design is committed to fabrication in the form of a

physical prototype for validation prior to volume production;

(12) ‘next-generation semiconductor technologies’ means semiconductor technologies

that go beyond the state of the art in offering significant improvements in functional

performance, computing power or energy efficiency as well as other significant

energy and environmental gains;

(13) ‘cutting-edge semiconductor technologies’ means state-of-the-art innovation in chips

and semiconductor technologies when the projects are carried out;

(14) ‘semiconductor manufacturing’ means any of the stages of production and

processing of semiconductor wafers, including design, substrate materials, front-end

and back-end, necessary to deliver a finished semiconductor product;

(15) ‘front-end’ means the entire processing of a semiconductor wafer;

(16) ‘back-end’ means the packaging, assembly and test of a semiconductor product;

(17) ‘electronics manufacturing and integration’ means the manufacturing or integration

of printed circuit boards, advanced packaging substrates and electronic

manufacturing concerning the assembly, testing or system integration of

semiconductors or semiconductor-based products;

(18) ‘user of semiconductors’ means an undertaking that produces products in which

semiconductors are incorporated;

(19) ‘key market actors’ means undertakings in the Union’s semiconductor supply chain,

the reliable functioning of which is essential for the supply of semiconductors;

(20) ‘critical sector’ means any sector referred to in Annex V;

(21) ‘crisis-relevant product’ means any of the following products that are affected by a

semiconductor crisis and relevant to ensure crucial functions of a critical sector:

(a) semiconductors or chips which are either deployed directly by critical sectors

or used in order to produce devices used by critical sectors;

(b) intermediate products required to produce semiconductors or chips;

EN 58 EN

(c) raw and processed materials required to produce semiconductors or chips or

intermediate products.

(22) ‘production capability’ means the ability of a facility to produce certain types of

products;

(23) ‘production capacity’ means the maximum potential output of a facility;

(24) ‘trade secret’ means a trade secret as defined in Article 2, point (1), of Directive (EU)

2016/943;

(25) ‘permit-granting procedure’ means a process that covers all relevant permits to build,

expand, convert and operate industrial semiconductor manufacturing projects,

including building, chemical and grid connection permits as defined in Article 1 of

[the Proposal for a Directive amending Directives (EU) 2018/2001, (EU) 2019/944,

(EU) 2024/1788 as regards acceleration of permit-granting procedures], and

environmental assessments and authorisations where required, and encompassing all

applications and procedures from the acknowledgement that the application is

complete to the notification of the comprehensive decision on the outcome of the

procedure;

(26) ‘contract’ means public contracts as defined in Article 2(1), point (5), of Directive

2014/24/EU, supply, works and service contracts as defined in Article 2, point (1), of

Directive 2014/25/EU of the European Parliament and of the Council [insert

footnote], and concession contracts as defined in Article 5, point (1), of Directive

2014/23/EU of the European Parliament and of the Council;

(27) ‘contracting authority’ means, a contracting authority as defined in Article 6 of

Directive 2014/23/EU, Article 2(1), point (1), of Directive 2014/24/EU and Article 3

of Directive 2014/25/EU;

(28) ‘contracting entity’ means a contracting entity as defined in Article 7 of Directive

2014/23/EU and Article 4 of Directive 2014/25/EU;

(29) ‘secure processing environment’ means the physical or virtual environment and

organisational means to ensure compliance with Union law, including Regulation

(EU) 2016/679 of the European Parliament and of the Council68, in particular with

regard to data subjects’ rights, antitrust rules, IP rights and commercial and statistical

confidentiality, integrity and accessibility, as well as with applicable national law,

and to allow the entity providing the secure processing environment to determine and

supervise all data processing actions, including the display, storage, download and

export of data and the calculation of derivative data through computational

algorithms;

(30) ‘legal representative’ means a natural or legal person domiciled or established in the

Union and designated to act on behalf of the Platform established in accordance with

Article 34 of this Regulation;

(31) ‘domestic undertaking’ means:

(a) any undertaking in the semiconductor value chain that has its seat in the Union

and is under the ownership and control of a Union undertaking;

68 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the

protection of natural persons with regard to the processing of personal data and on the free movement of

such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016,

p. 1, ELI: http://data.europa.eu/eli/reg/2016/679/oj).

EN 59 EN

(b) any undertaking in the semiconductor value chain which fulfils one of the

following criteria, regardless of whether its seat is in the Union:

(c) it is owned and controlled by a Union undertaking, and has its seat outside the

Union;

(d) it is owned and controlled by an undertaking established in a third country or

territory with which the Union has concluded an agreement establishing a free

trade area, a customs union, or a strategic partnership on semiconductors

concluded in accordance with Article 49;

(e) it is owned and controlled by an undertaking established in a signatory of the

WTO Agreement on Government Procurement.

(32) ‘ownership’ means being in possession of 50% or more of the proprietary rights of a

legal person, entity or body, or having a majority interest therein;

(33) ‘control’ means control as defined in Article 2(6) of Regulation (EU) 2021/697;

(34) ‘Union undertaking’ means an undertaking established under the laws of a Member

State;

(35) ‘strategic partnership on semiconductors’ means a commitment between the Union

and a third country or territory to increase cooperation related to the semiconductor

value chain that is established through a non-binding instrument setting out concrete

actions of mutual interest;

(36) ‘strategic project’ means a project that provides significant added value to the Union

by substantially contributing to objectives of common Union interest, have a clear

cross-border dimension, in particular through technical cooperation or public support

involving more than one Member States, and contributes to strengthening the

indispensability, resilience and prosperity of the Union’s semiconductor value chain

and the Union’s technological sovereignty and technological leadership by enabling,

advancing or securing critical capacities, technologies or capabilities within the

Union, including by reducing strategic dependencies.

(37) ‘Chips Joint Undertaking’ means the joint undertaking established by Council

Regulation (EU) 2021/2085 and, where applicable, any successor entity or initiative

established under Union law pursuant to a subsequent Multiannual Financial

Framework.

Chapter II

Chips for Europe Initiative 2.0

Article 3

Chips for Europe Initiative 2.0

1. The Chips for Europe Initiative 2.0 shall be supported for the duration of the

Multiannual Financial Framework 2021-2027, established by Council Regulation

(EU, Euratom) 2020/209369.

69 Council Regulation (EU, Euratom) 2020/2093 of 17 December 2020 laying down the multiannual

financial framework for the years 2021 to 2027 (OJ L 433I, 22.12.2020, p. 11, ELI:

http://data.europa.eu/eli/reg/2020/2093/oj).

EN 60 EN

2. The Chips for Europe Initiative 2.0 shall be supported by funding from Horizon

Europe and the Digital Europe Programme in accordance with Regulations (EU)

2021/694 and (EU) 2021/695, as well as by national and private funding.

Article 4

Objective of the Chips for Europe Initiative 2.0

3. The general objective of the Chips for Europe Initiative 2.0 shall be to achieve large-

scale technological capacity building and support related research and innovation

activities throughout the Union’s semiconductor value chain, in order to:

(a) strengthen the Union’s technological sovereignty, economic security,

resilience, prosperity, indispensability and industrial competitiveness, by

providing for the transfer and industrial uptake of technologies developed

under the Chips for Europe Initiative 2.0;

(b) stimulate the Union’s demand for semiconductors, including through

procurement procedures that promote, in accordance with Union law and

international obligations of the Union, the uptake and integration of

semiconductor technologies, components and systems designed, developed or

manufactured within the Union;

(c) enable the innovation, development and deployment of cutting-edge

semiconductor technologies, including photonics as a transversal and enabling

technology, in particular those critical for artificial intelligence (AI), including

edge AI, and for key application sectors such as health, energy, industrial

automation, robotics, transport, defence, automotive and aeronautical systems,

and data centres and cloud infrastructure;

(d) contribute to the achievement of the green and digital transitions, in particular

by reducing the energy, environmental and climate impact of electronic

systems, improving the sustainability of next-generation chips and

strengthening the circular economy processes, contribute to quality jobs within

the semiconductor ecosystem, and address security-by-design principles which

provide protection against cybersecurity threats.

4. The Chips for Europe Initiative 2.0 shall have the following six operational

objectives:

(a) operational objective 1: supporting advanced design capacities for

semiconductor technologies;

(b) operational objective 2: enhancing existing and developing new advanced pilot

lines across the Union to enable development and industrial deployment of

cutting-edge and next-generation semiconductor technologies, and pilot

testbeds to validate and demonstrate the integration and use of those

technologies in key applications and user industries;

(c) operational objective 3: building advanced technology and engineering

capacities for accelerating the innovative development of cutting-edge quantum

chips and associated semiconductor technologies;

(d) operational objective 4: supporting a network of competence centres across the

Union by enhancing existing or creating new facilities;

EN 61 EN

(e) operational objective 5: building and strengthening advanced design,

prototyping, and industrial deployment capacities for photonic integrated

circuit technologies and other photonic technologies across the Union;

(f) operational objective 6: undertaking activities, to be described collectively as

‘Chips Fund’ activities, to facilitate access to finance, including by providing

clear guidance, in particular for start-ups, scale-ups, SMEs and small mid-caps

in the semiconductor value chain, throughfinancial instruments and investment

support mechanisms supporting equity, debt or blended finance under the

European Innovation Council Accelerator, InvestEU Fund and, where

applicable, other Union instruments and, if applicable, their successors under

the Multiannual Financial Framework 2028-2034.

5. The Chips for Europe Initiative 2.0 shall support large-scale, cross-sectoral initiatives

addressing major technological and industrial challenges of strategic relevance for

the Union (‘grand challenges’).

6. The Chips for Europe Initiative 2.0’s operational objectives may include capacity

building activities and related research and innovation activities. Under the 2021-

2027 Multiannual Financial Framework, all capacity building activities shall be

financed through the Digital Europe Programme and the related research and

innovation activities shall be funded through Horizon Europe.

Article 5

Operational objectives of the Chips for Europe Initiative 2.0

The Chips for Europe Initiative 2.0 shall:

(a) under its operational objective 1:

(i) maintain and extend a virtual design platform, available across the

Union, integrating a wide range of new and existing design assets, tools

and services, facilitating access, in particular, for academia, start-ups,

scale-ups and SMEs, with a view to strengthening the growth and scale-

up of fabless undertakings in the Union;

(ii) extend the Union’s design capabilities, including in photonics and

quantum technologies, by fostering innovative developments in advanced

chip design and architectures, and, to that end, support ambitious

strategic design projects of high relevance to the Union’s strategic

autonomy and competitiveness;

(b) under its operational objective 2:

(i) strengthen capabilities in next-generation chip production technologies

and semiconductor manufacturing equipment, by integrating research and

innovation activities and preparing the development of future technology

nodes and semiconductor manufacturing processes;

(ii) support innovation at a large scale through access to new or existing pilot

lines for experimentation, test, process control, final device

characterisation, testing and validation of new technologies anddesign

concepts integrating key functionalities;

(iii) support innovation through access to new or expanded pilot testbeds

where different innovative technologies or products are combined and

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integrated for the development and validation of new devices in key

applications and user industries before full industrial-scale deployment,

in order to identify risks, validate performance, and ensure feasibility in

real-world conditions;

(iv) provide support to European semiconductor technology initiatives

through preferential access to new or existing pilot lines, as well as

ensure access on fair terms to new pilot lines and pilot testbeds for a wide

range of users of the Union’s semiconductor ecosystem;

(v) prepare for the transfer and industrial uptake of technologies developed

under this operational objective;

(c) under its operational objective 3:

(i) support the development of new or existing pilot lines, clean rooms and

foundries for prototyping and producing quantum chips for the

integration of quantum circuits and control electronics;

(ii) develop facilities for testing and validating advanced quantum chips

produced by the pilot lines, with a view to closing the innovation

feedback loop between designers, producers and users of quantum

components;

(iii) develop innovative design libraries for quantum chips in close relation

with operational objective 1;

(d) under its operational objective 4:

(i) strengthen capacities and offer a wide range of expertise to stakeholders,

including end-user start-ups, scale-ups and SMEs, and facilitating access

to and the effective use of the capacities and facilities referred to in this

Article;

(ii) address the knowledge and skills shortage and mismatch by attracting,

mobilising, and retaining new talent on research, design, and production

including reskilling and upskilling of workers;

(e) under its operational objective 5:

(i) strengthen capabilities in production technologies, semiconductor

manufacturing equipment and materials platforms for photonic integrated

circuits by integrating research and innovation activities;

(ii) strengthen existing and develop new pilot lines and open-access

semiconductor manufacturing facilities for the prototyping and

production of photonic integrated circuits and associated photonic

technologies;

(iii) develop and maintain design libraries and design automation tools for

photonic integrated circuits, associated photonic technologies, and

methods for their integration into modules available on open and non-

discriminatory terms across the Union;

(iv) prepare for the transfer and industrial uptake of technologies developed

under this operational objective;

(f) under its operational objective 6:

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(i) provide support to start-ups and scale-ups across the semiconductor value

chain in accessing finance at all stages of growth, with a particular focus

on bridging the financing gap that prevents them from achieving the scale

necessary to compete globally;

(ii) accelerate and improve accessibility to investment in the semiconductor

value chain,in particular by mobilising venture capital and growth

equity, and leverage funding from both the public and the private sectors,

while increasing the indispensability, resilience and prosperity of the

semiconductor ecosystem in the Union.

Those objectives shall be implemented, where appropriate, in accordance with the technical

description set out in Annex I.

Article 6

European network of competence centres in semiconductors

1. For the purposes of the Chips for Europe Initiative 2.0’s operational objective 4, the

European network of competence centres in semiconductors, system integration and

design (the ‘network’) established under the Regulation (EU) 2023/1781 shall be

supported. The network shall be composed of the competence centres selected by the

Chips Joint Undertaking in accordance with paragraph 3.

2. Competence centres shall perform all or some of the following activities to the

benefit of and in close cooperation with the Union industry, in particular SMEs and

mid-caps, as well as research and technology organisations, universities, and the

public sector and other relevant stakeholders across the semiconductor value chain:

(a) ensuring alignment between the activities of the competence centre and, where

applicable, the semiconductor strategy of the Member State in which the

competence centre is established;

(b) raising awareness and providing the necessary know-how, expertise and skills

to the stakeholders for helping them accelerate the development of new

semiconductor technologies, semiconductor manufacturing, equipment, design

options and system concepts as well as the integration of new semiconductor

technologies, by using effectively the infrastructure and other available

resources of the network;

(c) providing access to design services and design tools under the Chips for

Europe Initiative 2.0’s operational objective 1, as well as to the pilot lines

supported under the Chips for Europe Initiative 2.0’s operational objective 2;

(d) raising awareness and providing or ensuring access to expertise, know-how and

services, including system design readiness, new and existing pilot lines and

supporting actions necessary to build skills and competences supported by the

Chips for Europe Initiative 2.0;

(e) facilitating the transfer of expertise and know-how between Member States and

regions encouraging exchanges of skills, knowledge and good practices and

encouraging joint programmes;

(f) developing and managing specific training, skilling and reskilling actions on

semiconductor technologies and their applications to support the development

of the talent pool, as well as to increase the number of students and the quality

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of education in relevant fields of studies, at schools and universities located in

the Union, up to doctoral level;

(g) facilitating connections between students and semiconductor undertakings

across the Union, while paying particular attention to women’s participation

and underrepresented groups and building on existing initiatives which support

education or training, or both, and mobility of students and workers within and

from outside the Union.

3. Member States shall designate candidate competence centres in accordance with

their national procedures, administrative and institutional structures through an open

and competitive process.

The work programme of the Chips Joint Undertaking shall set the procedure for

supporting the competence centres forming the network, including the selection

criteria as well as further details on the implementation of the tasks and functions

referred to in this Article

The Chips Joint Undertaking shall select the competence centres forming the

network.

Member States and the Commission shall maximise synergies with existing

competence centres established under other Union initiatives such as the European

Digital Innovation Hubs referred to in Regulation (EU) 2021/694.

4. The competence centres shall have substantial overall autonomy to lay down their

organisation, composition and working methods. The organisation, composition and

working methods of the competence centres shall comply with and contribute to the

objectives of this Regulation and the Chips for Europe Initiative 2.0.

Article 7

Grand challenges

1. Grand challenges shall develop, integrate, and ensure industrial deployment of

promising and critical semiconductor and related technologies of key importance for

the Union, and be implemented, where appropriate, in accordance with the technical

description set out in Annex I.

2. The Chips for Europe Initiative 2.0 shall support grand challenges by:

(a) promoting advanced R&D that will allow to lead the next generation of AI

chips, to sustain cloud, data centres and edge AI infrastructures through

unprecedented energy efficiency levels, to secure Union capacities in leading-

edge technologies, and to increase the Union’s semiconductor manufacturing

strengths;

(b) addressing major roadblocks in the further development of semiconductor

technologies, such as miniaturisation, energy efficiency, sustainability,

heterogeneous integration, security and reliability, and manufacturability.

(c) enlarging the semiconductor ecosystem by closely collaborating with vertical

market sectors;

(d) achieving a competitive edge in specific applications critical to the Union’s

technological sovereignty and industrial competitiveness by structuring

collaboration between semiconductor developers and user industries;

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(e) integrating the efforts of multiple pilot lines and gearing them towards

industrial usage through increased energy efficiency and advanced

semiconductor capabilities;

(f) ensuring the transfer and industrial uptake of technologies developed under the

Chips for Europe Initiative 2.0, including activities aimed at technology

maturation, qualification, prototyping, demonstration, first industrial

deployment, and transfer into production environments.

3. Grand challenges shall be implemented in coordination with grand challenges as

established under Regulation (EU) XXXX/XXXX [the Cloud and AI Development

Act (CADA)], as well as with initiatives undertaken by the European High-

Performance Computing Joint Undertaking established by Council Regulation (EU)

2021/117370.

Article 8

Demand accelerators

1. The Commission and Member States shall stimulate the uptake of semiconductors

designed or manufactured within the Union, in particular in key markets such as

cloud, automotive, aeronautical, telecom, defence, and, where appropriate, in others.

2. The demand accelerators shall be implemented by the Industrial Alliance for

Semiconductors.

3. The Commission may, in cooperation with Member States and relevant industrial

stakeholders, and in accordance with competition rules:

(a) facilitate potential users, in particular off-takers of semiconductor technologies,

to discuss requirements and technological specifications of the semiconductor-

related products that their industry is likely to require.

(b) enable the development of common technical roadmaps, and support and

stimulate co-design activities between semiconductor manufacturers

established in the Union and downstream industrial users, including system

integrators and equipment manufacturers, with the aim of developing

semiconductor components tailored to Union industrial applications;

(c) facilitate collaborative platforms, pilot projects or design partnerships enabling

early involvement of industrial users in the design of innovative semiconductor

technologies developed in the Union.

Article 9

Demand forum

1. The Commission shall set up a demand forum to facilitate the showcase of

semiconductor technologies, in particular by European semiconductor technology

initiatives and strategic projects, as well as integrated production facilities and open

EU foundries recognised under Regulation (EU) 2023/1781 in accordance with

competition rules.

70 Council Regulation (EU) 2021/1173 of 13 July 2021 on establishing the European High Performance

Computing Joint Undertaking and repealing Regulation (EU) 2018/1488 (OJ L 256, 19.7.2021, p. 3,

ELI: http://data.europa.eu/eli/reg/2021/1173/oj).

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2. The demand forum shall be implemented by the Industrial Alliance for

Semiconductors.

Article 10

Chip innovation procurement

1. For the purposes of supporting contracting authorities or contracting entities and

economic operators acting as purchasing entities in the procurement, integration,

qualification and first deployment of systems integrating semiconductors the Chips

Joint Undertaking and shall undertake the following actions:

(a) support the formation, where relevant, of cross-border joint procurement

arrangements between contracting authorities or contracting entities;

(b) support the integration and deployment of innovative semiconductor

technologies.

Article 11

Synergies with other programmes

1. The Chips for Europe Initiative 2.0 shall be implemented in synergy with Union

programmes in accordance with Annex IV. The Commission shall ensure that the

achievement of the objectives of the Chips for Europe Initiative 2.0 referred to in

Article 4 is not hampered when leveraging the complementary character of the Chips

for Europe Initiative 2.0 with Union programmes.

Article 12

Implementation

1. The Chips for Europe Initiative 2.0’s operational objectives 1 to 5 and grand

challenges shall be entrusted to the Chips Joint Undertaking and implemented by

actions set out in its work programme.

2. In order to reflect technological change and market developments relevant to the

semiconductor sector, the Commission is empowered to adopt delegated acts in

accordance with Article 55 to amend Annex I with regard to the actions set out

therein in a manner consistent with the objectives of the Chips for Europe Initiative

2.0 as set out in Article 4.

3. In order to ensure effective implementation and evaluation of the Chips for Europe

Initiative 2.0 and to reflect technological change and market developments, the

Commission is empowered to adopt delegated acts in accordance with Article 55 to

amend Annex III with regard to the measurable indicators to monitor the

implementation and to report on the progress of the Chips for Europe Initiative 2.0

towards the achievement of its objectives as set out in Article 4.

4. In order to ensure effective implementation, monitoring and evaluation of the Chips

for Europe Initiative 2.0, the annual activity report of the Chips Joint Undertaking

shall include information on matters related to the Chips for Europe Initiative 2.0’s

operational objectives 1 to 5 and grand challenges, on the basis of the measurable

indicators set out in Annex III.

5. The Commission shall inform the European Semiconductor Board on progress in the

implementation of the Chips for Europe Initiative 2.0’s operational objective 6 on a

regular basis.

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Chapter III

Security of supply and demand

SECTION 1

SEMICONDUCTOR MANUFACTURING CAPABILITIES

Article 13

Public interest and public support

1. European semiconductor technology initiatives and strategic projects shall be

considered to contribute to the security of supply of semiconductors and the

resilience of the Union’s semiconductor ecosystem and therefore to be in the public

interest.

2. In order to reach security of supply and the resilience of the Union’s semiconductor

ecosystem, Member States may, without prejudice to Articles 107 and 108 TFEU,

apply support measures and provide for administrative support to strategic projects in

accordance with Regulation (EU) XXXX/XXXX [European Competitiveness Fund]

and other relevant Union legislation and European semiconductor technology

initiatives .

3. Furthermore, the Commission may apply support measures, including but not limited

to grants, to strategic projects in accordance with Regulation (EU) XXXX/XXXX

[European Competitiveness Fund] and other relevant Union legislation.

Article 14

European semiconductor technology initiatives

1. European semiconductor technology initiatives shall be carried out by domestic

undertakings.

2. European semiconductor technology initiatives shall demonstrate that they will

articulate their supply chain in a way that reduces supply chain dependence on non-

domestic undertakings and strengthen the Union’s security of supply.

3. European semiconductor technology initiatives shall be first-of-a-kind initiatives that

contribute to the indispensability, resilience and prosperity and security of supply of

the Union’s semiconductor ecosystem.

4. At the time of submitting an application in accordance with Article 15(1) a European

semiconductor technology initiative shall be required to qualify as first-of-a-kind

initiative.

5. First-of-a-kind initiatives do not have to be a recipient of support measures or

administrative support as referred to in Article 13 to apply for the status of European

semiconductor technology initiative.

6. A European semiconductor technology initiative shall comply with the following

requirements:

(a) its establishment has a clear positive impact with spill-over effects beyond

itself or the Member State or Member States concerned, on the Union’s

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semiconductor value chain and the Union’s end markets in the medium to long

term, with a view to ensuring indispensability, resilience and prosperity of the

semiconductor ecosystem, including the growth of start-ups and SMEs, and

contributing to the Union’s green and digital transitions, and where relevant to

the business model of the facility, taking into account the extent to which it

offers front-end or back-end production capacity, or both, to undertakings

which are not related to the facility, if there is sufficient demand;

(b) it provides an assurance that it is not subject to the extraterritorial application

of public service obligations of third countries in a way that may undermine the

undertaking’s ability to comply with the obligations set out in Article 43(1) and

commits to informing the Commission when such obligation arises;

(c) it invests in the Union in continued innovation with a view to achieving

concrete advances in semiconductor technology or preparing next-generation

semiconductortechnologies;

(d) it supports the Union’s talent pipeline by developing and deploying educational

and skills training and by increasing the pool of qualified and skilled

workforce;

(e) if it is a production facility, it participates in the Business-to-Business

Semiconductor Supply Chain Platform as referred to in Article 34.

7. For the purposes of investing in continued innovation in accordance with paragraph

6, point (c) of this Article, European semiconductor technology initiatives shall have

preferential access to the pilot lines established in accordance with Article 5, point

(b). Any such preferential access shall neither exclude nor prevent effective access

on fair terms to the pilot lines by other interested undertakings, in particular start-ups

and SMEs.

8. Where a European semiconductor technology initiative offers production capacity to

undertakings not related to the initiative,the initiative shall establish and maintain

adequate and effective functional separation of the design and semiconductor

manufacturing processes in order to ensure the protection of information obtained at

each stage.

Article 15

Application for status as European semiconductor technology initiative

1. Any undertaking or any consortium of undertakings may submit an application to the

Commission to grant a project the status of European semiconductor technology

initiative.

2. The Commission shall, taking into account the opinion of the European

Semiconductor Board, assess the application through a fair and transparent process

on the basis of all following elements:

(a) compliance with the criteria set out in Article 14(2) and commitment to comply

with the requirements set out in Article 14(6);

(b) a business plan evaluating the financial and technical viability of the project,

taking into account its entire lifetime, including information on any planned

public support;

(c) proven experience of the applicant in operating similar initiatives;

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(d) provision of an appropriate supporting document proving the readiness of the

Member State or Member States where the applicant intends to establish its

facility to support the establishment of such an initiative;

(e) the existence of appropriate policies and appropriate licensing agreements,

including technical protection and implementing measures, aiming to ensure

the protection of undisclosed information and IP rights, in particular with a

view to preventing the unauthorised disclosure of trade secrets or the leakage

of sensitive emerging technologies.

The Commission shall provide guidance on the information required under the first

subparagraph and its relevant format.

3. The Commission shall process applications, adopt its decisions and notify the

applicants within three months of receipt of a complete application. Where the

Commission considers that the information provided in the application is incomplete,

it shall provide the applicant with the opportunity to submit the additional

information required to complete the application without undue delay. The

Commission’s decision shall determine the duration of the status on the basis of the

predicted lifetime of the project.

4. The Commission shall monitor the progress achieved in the establishment and

operation of European semiconductor technology initiatives and shall inform the

European Semiconductor Board on a regular basis.

5. The operator of the initiative may request the Commission to review the duration of

the status or to modify its implementation plans with regard to compliance with the

requirements set out in Article 14(6) where it considers such a review to be duly

justified on account of unforeseen external circumstances. On the basis of such a

review, the Commission may revise the duration of the status granted in accordance

with paragraph 3 of this Article or accept the modification of the implementation

plans.

6. Where the Commission finds that an initiative no longer fulfils the requirements set

out in Article 14(6), it shall give the operator of the European semiconductor

technology initiative the opportunity to comment and to propose appropriate

measures.

7. The Commission may repeal a decision recognising the status of a European

semiconductor technology initiative if the recognition was based on an application

containing incorrect information or where, despite completing the procedure in

paragraph 5 of this Article, the European semiconductor technology initiative does

not fulfil the requirements set out in Article 14(6). Before taking such a decision, the

Commission shall consult the European Semiconductor Board after providing it with

the reasons for the proposed repeal. Any decision repealing the status of a European

semiconductor technology initiative shall be properly reasoned and subject to a right

of appeal by the operator.

8. Initiativeswhose status as European semiconductor technology initiative have been

repealed pursuant to paragraph 7 of this Article shall lose all rights linked to the

recognition of this status arising from this Regulation. However, such initiatives shall

remain subject to the obligation set out in Article 42(1) for a period equivalent to that

which was initially laid down when the status was granted in accordance with

paragraph 3 of this Article, or, where the status was reviewed, the applicable duration

in accordance with paragraph 5 of this Article.

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Article 16

Strategic projects

1. The Commission shall recognise as Strategic Projects semiconductor projects that

meet all of the following requirements:

(a) it provides significant added value to the Union by substantially contributing to

objectives of common Union interest;

(b) the strategic project is carried out by domestic undertakings;

(c) strategic projects shall demonstrate that they will articulate their supply chain

in a way that reduces supply chain dependence on non-domestic undertakings

and strengthen the Union’s security of supply;

(d) it has a clear cross-border dimension, in particular through technical

cooperation or public support involving more than one Member State;

(e) it contributes to the resilience and robustness of the Union’s semiconductor

value chain;

(f) it contributes to strengthening the Union’s technological sovereignty and

technological leadership by enabling, advancing or securing critical capacities,

technologies or capabilities within the Union, including by reducing strategic

dependencies.

2. Multi-site strategic projects shall be operated by a single consortium and shall

function as an integrated legal and technical entity.

3. Participation in strategic projects shall be limited to Union entities.

4. By way of derogation from paragraph 3, participation of legal entities established in

third countries is allowed, provided that such participation is consistent with the

conditions referred to in paragraph 1 and such participation shall be subject to the

relevant security-related conditions of the applicable Union programmes.

Article 17

Identification of priority areas for strategic projects

1. A technical description of priority areas for potential strategic projects in certain

indicative technological areas is set out in Annex II. In order to update the

technological descriptions and indicative technological areas listed in Annex II to

reflect technological change and market developments relevant to the semiconductor

sectorthe Commission is empowered to adopt delegated acts in accordance with

Article 55 to amend Annex II.

2. The Commission shall decide, taking into account the opinion of the European

Semiconductor Board, on the basis of the criteria set out in Article 16(1) and the

indicative technological areas referred to in Annex II, on the priority areas for

potential strategic projects.

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Article 18

Designation of strategic projects

1. The implementation of actions supporting potential strategic projects shall be

entrusted to the Chips Joint Undertaking and carried out through actions set out in its

work programme.

2. The Commission, taking into account the opinion of the European Semiconductor

Board shall, by means of a decision, designate as strategic projects those proposals

selected for funding by the Chips Joint Undertaking that comply with the criteria set

out in Article 16(1) and that request to be designated as such.

3. Subject to the consent of the applicant or applicants, proposals not selected for

funding by the Chips Joint Undertaking may also be designated as strategic projects

when they meet the applicable evaluation requirements laid down in the call for

proposals andcomply with the criteria set out in Article 16(1). The possibility to

obtain such designation shall be clearly indicated in the calls for proposals and

related application procedures and should be requested by the project.

4. The Commission’s decision shall indicate whether a strategic project qualifies as a

first-of-a-kind initiative in accordance with this Regulation, and shall determine the

duration of the status of first-of-a-kind on the basis of the predicted lifetime of the

project.

5. Projects designated as strategic projects shall benefit from the rights and be subject to

the obligations applicable to European semiconductor technology initiatives under

this Regulation when they comply with the requirements laid down in Article 14(6).

6. The strategic project may request the Commission to review the duration of the status

of strategic project or to modify the operator’s implementation plans with regard to

compliance with the requirements laid down in Article 16(1), where the operator

considers such a review to be duly justified on account of unforeseen external

circumstances. On the basis of such a review, the Commission may revise the

duration of the status of strategic project granted or accept the modification of the

implementation plans.

7. Without prejudice to any suspension or termination of funding agreements between

the operator implementing the strategic project and the Chips Joint Undertaking,

where the Commission finds that a project designated as a strategic project no longer

fulfils the criteria laid down in Article 16, or where its designation was based on an

application containing incorrect information affecting compliance with those criteria,

it may, taking into account the opinion of the European Semiconductor Board,

withdraw the designation of that project by means of a decision.

8. Before adopting a decision pursuant to paragraph 6 of this Article the Commission

shall provide the operator implementing in the strategic project with the reasons for

the envisaged withdrawal and shall give them the opportunity to submit observations

within an appropriate time limit. The Commission shall take due account of those

observations. Any decision withdrawing the status of strategic project shall be

properly reasoned and subject to a right of appeal.

9. Projects for which the designation as a strategic project has been withdrawn shall

lose all rights and obligations connected to the status of strategic project under this

Regulation. However, such projects shall remain subject to the obligation set out in

Article 43(1) for a period equivalent to that which was initially foreseen when the

status was granted.

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Article 19

Advanced semiconductor manufacturing

1. In order to strengthen Union sovereignty and ensure security of supply in

semiconductors, the Commission, in accordance with Article 17(1), shall treat a

strategic project for a Union-based open foundry for advanced semiconductor

manufacturing with the highest priority.

2. The open foundry for advanced semiconductor manufacturing referred to in

paragraph 1shall constitute a facility or coordinated network of multi-site facilities

located within the territory of the Union, capable of manufacturing and packaging

advanced semiconductor technologies in accordance with state-of-the-art industrial

capabilities.

3. The open foundry for advanced semiconductor manufacturing shall take into account

the requirements and objectives set out by potential offtakers as set out in Article 8.

Article 20

Coordination of financing

1. The Commission may carry out activities, where appropriate in cooperation with

Member States, to crowd-in investments for European semiconductor technology

initiativesand strategic projects. Such activities may, without prejudice to Articles

107 and 108 TFEU, include providing and coordinating support to European

semiconductor technology initiatives and strategic projects that face difficulties in

accessing financing,in synergy with Union programmes.

2. TheEuropean Semiconductor Board shall, at the request of a European

semiconductor technology initiativeor a strategic project, provide advice on the

financing of the initiative or project, taking into account the funding already secured

and considering at least the following elements:

(a) additional public and private sources of financing, includingequity;

(b) support through resources from the European Investment Bank or other

financial institutions;

(c) existing Member State instruments and programmes, including from export

credit agencies, national promotional banks and institutions;

(d) relevant Union funding and financing programmes.

SECTION 2

PERMIT-GRANTING PROCEDURES

Article 21

Fast-tracking of permit-granting procedures

1. Member States shall ensure that administrative applications related to the planning,

construction and operation of European semiconductor technology initiatives and

strategic projects are processed in an efficient, transparent and timely manner.

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2. The permit-granting procedure for European semiconductor technology initiatives or

strategic projects shall not exceed 12 months, from the moment a complete

application has been submitted to the one stop shop.

3. The time limit set in paragraph 2 shall be without prejudice to any shorter time limits

set by Member States.

4. Where such a status exists in national law, European semiconductor technology

initiatives and strategic projects shall be allocated the status of highest national

significance possible and be treated as such in permit-granting processes. This

paragraph shall apply only where such status exists in national law and shall not

create an obligation for Member States to introduce such status.

Article 22

One stop shop for permit-granting procedures

1. Member States shall designate a one stop shop responsible for centralising and

coordinating the application of European semiconductor technology initiatives and

strategic projects under this Article.

2. Member States shall establish a single permit-granting procedure based on a single

application to the one stop shop designated pursuant to Article 22(1), covering all

permits required for European semiconductor technology initiatives and strategic

projects.

3. The one stop shop shall serve as a single point of contact for the European

semiconductor technology initiative or strategic project.

4. No later than 45 days from the receipt of the single application, the designated one-

stop-shop shall acknowledge that the application is complete or request any missing

information needed to process the application.

5. Where, after the submission of any missing information, the application is still

deemed to be incomplete, the one stop shop may, within 30 days of the submission of

the requested missing information, make a second request for any information still

missing. The one- stop- shop shall not request information in areas not covered in the

first request for additional information and shall request further information only as

necessary to cover the missing information.

6. If the establishment of a European semiconductor technology initiative requires

decisions to be taken in two or more Member States, the relevant one stop shops

shall take all necessary steps for efficient and effective cooperation and coordination

among themselves.

Article 23

Facilitating administrative and permit-granting process

1. European semiconductor technology initiatives and strategic projects within the

meaning of this Regulation shall be considered strategic projects contributing to

resilience and decarbonisation or resource efficiency for the purposes of Article

14(1) of [Proposal for a Regulation on speeding-up environmental assessment].

Points 1, 2 and 3 of the Annex in that Regulation shall apply.

2. Without prejudice to [the Proposal for a Regulation on speeding-up environmental

assessment], Member States shall ensure that any studies carried out, or permits or

authorisations issued, related to the planning, construction and operation of European

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semiconductor technology initiatives and strategic projects are taken into account

and that no duplicate studies, permits or authorisations are required, unless otherwise

required under Union or national law.

Article 24

Use of European Business Wallets by the Single access portal

1. Member States shall set up a single access portal at national level for the submission

of the single permit application for European semiconductor technology initiatives

and strategic projects referred to in Article 22(2).

The single access portal shall automatically attribute the permit applications to the

relevant authority, inform the applicant about all steps of the permit-granting

procedure, the status of the procedure and of the decisions of authorities, and enable

the applicant to check compliance with applicable deadlines.

2. The single access portal shall use the European Business Wallets established

pursuant to [Proposal for a Regulation on the establishment of European Business

Wallets].

3. Through the use of European Business Wallets, the single access portalshall enable:

(a) interoperability and automated data exchange between relevant authorities;

(b) re-use of data and documents already held by relevant authorities;

(c) a high level of cybersecurity, and integrity of information;

(d) transparency and accountability of the permit-granting procedure.

4. When setting up single access portals, Member States shall, where appropriate, make

use of existing Union digital infrastructure, catalogues and building blocks

established by Union law.

5. The designated one stop shop as referred to in Article 22 of this Regulation shall

have access to all relevant data and information available in the single access portal,

in order to perform its duties.

Article 25

Online accessibility of information

1. Member States shall provide access to the following information on processes

relevant to the development of potential European semiconductor technology

initiatives and strategic projects, online and in a centralised and easily accessible

manner:

(a) the European Business Wallets referred to in Article 24;

(b) the permit-granting procedure, including information on dispute settlement;

(c) financing and investment services;

(d) funding possibilities at Union or Member State level;

(e) business support services, including corporate tax declaration, local tax laws or

labour law.

2. The Commission shall, in a centralised and easily accessible manner, refer to the

information provided by the Member States on its website to ensure a comprehensive

and clear overview of all relevant information per Member State.

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SECTION 3

EUROPEAN SEMICONDUCTOR REGIONS OF EXCELLENCE

Article 26

European Semiconductor Regions of Excellence label

1. The Commission may decide to award the European Semiconductor Region of

Excellence label by means of implementing act. The label may be awarded following

an application by a regional authority and shall be explicitly endorsed by the relevant

Member State.

2. The application shall include a Semiconductor Region Investment Plan,

demonstrating a shared strategic vision by all relevant authorities.

3. Without prejudice to the applicable rules governing Union programmes and

instruments, the European Semiconductor Regions of Excellence label may be taken

into account when assessing and selecting operationsproposed under Union funding

programmes.

Article 27

European Semiconductor Region Investment Plan

1. The European Semiconductor Region Investment Plan as referred to in Article 26(2)

shall include a description of the region, including its geographic scope and, at least,

the following elements:

(a) strategic vision and scope:

(i) assessment of the existing industrial and semiconductor ecosystem in the

region, including existing semiconductor manufacturing facilities;

relevant end user sectors; its position in semiconductor value chains, with

particular regard to its unique features and its potential contribution to the

resilience and growth in the European semiconductor value chain;

(ii) a strategic vision for the semiconductor-related development of the

region over the next ten years, including, where relevant, the

transformation or linkage of existing industrial activities towards

semiconductor-related activities;

(b) availability and further development of enabling conditions and infrastructure

in the region concerned:

(i) a description of measures to ensure access to sufficient, reliable and clean

energy, including grid capacity and decarbonisation pathways in line

with the European Climate’s Law climate neutrality objective;

(ii) a description of availability of suitable land and facilities for

semiconductor value chain related activities, including zoning, land-use

planning and industrial sites;

(iii) a description of transport, communication networks and water

infrastructure relevant to the semiconductor value chain related activities

in the region;

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(iv) a description of measures to simplify and accelerate permit-granting,

licensing and administrative procedures, including the link with the one

stop shop as referred to in Article 22;

(c) support to innovation and research activities in the region concerned:

(i) a description of the research and innovation activities and their further

support related to the semiconductor value chain in the region, including

synergies with national and Union research and innovation programmes;

(ii) a description of cooperation with universities, research and technology

organisations, including, where relevant links to the activities of pilot

lines as referred to in Article 5, point (b) and competence centres as

referred to in Article 6;

(d) support to education, skills and workforce and its further development in the

region concerned:

(i) a description of measures to ensure the availability of a skilled

semiconductor-industry related workforce at all levels, with synergies of

benefits provided under the Pact for Skills71;

(ii) a description of partnerships between industry, education providers and

public authorities in the area of semiconductors;

(iii) a description of actions to attract, retain and upskill semiconductor

industry-related talent, including international talent where appropriate;

(e) support of industrial and investment attractiveness and its further development

in the region concerned:

(i) a description of measures to attract and retain private investments

relevant to the semiconductor value chain;

(ii) a description of measures to integrate small and medium-sized

enterprises and small mid-caps into the regional ecosystem.

Article 28

Assessment of applications for the European Semiconductor Region of Excellence label

1. The Commission shall assess applications for the European Semiconductor Region

of Excellence label on the basis of coherence and credibility of the Semiconductor

Region Investment Plan and the level of commitment by the relevant authorities.

2. The Commission shall process applications, adopt its decision referred to in Article

26(1) and notify the region, the Member State concerned and the European

Semiconductor Board within three months of receipt of a complete application.

3. Where the Commission considers that the information provided in the application is

incomplete, it shall inform the regional authority and Member State concerned

without undue delay and provide the opportunity to submit the additional information

required to complete the application.

71 Communication from the Commission to the European Parliament, the Council, the European

Parliament, the European Economic and Social Committee and the Committee of the Regions, European Skills

Agenda for sustainable competitiveness, social fairness and resilience, COM(2020) 274 final.

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4. The Commission’s decision referred to in Article 26(1) shall determine the duration

of the European Semiconductor Region of Excellence label, which shall be based on

the assessment of the submitted Semiconductor Region Investment Plan.

5. The regional authority and the Member State concerned shall monitor the progress of

implementation of the Semiconductor Region Investment Plan and shall inform the

Commission and the European Semiconductor Board at least yearly.

6. A summary of the Semiconductor Region Investment Plan, excluding commercially

sensitive information and designed to attract investment, shall be made publicly

available via both the following means:

(a) a website of the Commission;

(b) a website of the Member State, the region and/or relevant authorities

concerned.

Article 29

Network of European Semiconductor Regions of Excellence

1. A Network of European Semiconductor Regions of Excellence (‘the Network’) shall

be established.

2. The Network shall organise its work autonomously. It may establish its own working

methods, including the organisation of meetings, the designation of a Chair on a

rotating basis among participating regions, and the adoption of informal

arrangements to facilitate cooperation and exchange of information.

3. The Network shall bring together regions that have been awarded the European

Semiconductor Regions of Excellence label pursuant to Article 26.

4. The objectives of the Network shall include the following:

(a) to facilitate cooperation and exchange of best practices among European

Semiconductor Regions of Excellence;

(b) to promote the Network and its activities among member and non-member

regions through outreach, communication and dissemination activities to

increase visibility and participation.

(c) to promote synergies and complementarities between regional semiconductor

ecosystems across the Union, including across different segments of the

semiconductor value chain;

(d) to enhance the visibility and attractiveness of European Semiconductor

Regions of Excellence for private investment and international partnerships.

5. The Commission may facilitate the functioning of the Network and may organise

meetings, workshops or other activities to support the exchange of information and

cooperation among participating regions.

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SECTION 4

RESILIENCE IN SUPPLY CHAINS

Article 30

Public procurement

1. For procurement procedures falling within the scope of Directives 2024/23/EU,

2014/24/EU or 2014/25/EU and launched on or after [OJ: insert date one year after

entry into force] concerning infrastructures, equipment or systems in sectors of high

criticality, as listed in Annex I of Directive (EU) 2022/2555, and in other critical

sectors, as listed in Annex II of that Directive, contracting authorities and contracting

entities may require economic operators to submit, together with their tender

documents, a security of supply declaration relating to the sourcing of

semiconductors incorporated into the infrastructures, equipment or systems covered

by the contract.

2. The declaration referred to in paragraph 1 shall include the following elements:

(a) an overview of undertakings involved in the supply of the semiconductors

incorporated in the product, including theproportion of domestic undertakings;

(b) the Union added value, demonstrated by the contribution of the tender to

reinforcing the European semiconductor supply chain, such as the inclusion of

first-of-a-kind initiatives and strategic projects as suppliers;

(c) the semiconductor supply chain resilience and diversification strategy of the

tenderer, such as the tenderer’s dual sourcing strategy, including, where

feasible and appropriate, the inclusion of at least one domestic undertaking;

(d) where applicable, any recommendations or obligations referred to in Article

31;

(e) where applicable, the security of supply risk assessment performed in

accordance withArticle 32.

3. Where a security of supply declaration is required from economic operators,

contracting authorities and contracting entities may specify, in the procurement

documents, requirements relating to security of supply relating to the sourcing of

semiconductors incorporated into the infrastructures, equipment or systems covered

by the public procurement contract. To that end, contracting authorities and

contracting entities may include technical specifications, selection criteria, award

criteria or contract performance clauses.

4. Requirements taken under paragraph 3 shall be:

(a) linked to the subject matter of the contract;

(b) not conferring unrestricted freedom of choice on the contracting authority or

contracting entity;

(c) expressly set out in the procurement documents or in the contract notice;

(d) ancillary and non-decisive in the award of the contract;

(e) designed in line with the Union’s international commitments.

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5. Contracting authorities and contracting entities shall notify their national competent

authority pursuant to Article 48 of this Regulation with the list of domestic

undertakings identified in the security of supply declarations issued by the economic

operators.

6. The national competent authority pursuant to Article 48 of this Regulation shall

compile a verified list of all the domestic undertakings identified in public

procurement procedures within the Member State. The lists may be exchanged

partially or in full between Member States following the necessary confidentiality

requirements, pursuant to Article 50.

Article 31

Further actions on public procurement

1. Where the Commission identifies a potential supply chain risk in the context of the

monitoring carried out pursuant to Article 35, it may, after consulting the European

Semiconductor Board, issue recommendations to contracting authorities and

contracting entities regarding the supply of semiconductors by domestic undertakings

for procurement procedures referred to in Article 30(1).

2. Where the Commission establishes that the supply chain risks as identified in

paragraph 1 persist, it may, after consulting the European Semiconductor Board and

with regard to the principles of necessity and proportionality, adopt an implementing

decision specifying for which specific infrastructures, equipment or systems as

referred to in Article 30 contracting authorities and entities shall require a security of

supply declaration from economic operators.

3. Contracting authorities and contracting entities may decide not to apply the

requirements foreseen by the implementing decision referred to in paragraph 2 of this

Article where one of the following conditions is fulfilled:

(a) the required products or services can be supplied only by specific economic

operators, and no reasonable alternative or substitute exists, and the absence of

competition is not the result of an artificial narrowing down of the parameters

of the procurement procedure;

(b) no suitable tenders or no suitable requests to participate were submitted,

including in response to a similar former procurement procedure launched by

the same contracting authority or contracting entity in the two years preceding

the start of the planned new procurement procedure;

(c) taking the elements declared in accordance with Article 31, paragraph 2, point

(d) into account would require a contracting authority or contracting entity to

acquire goods, services or works having disproportionate costs or would result

in technical incompatibility in their operation and maintenance.

(d) For the purposes of point (c), estimated cost differences exceeding 25% of the

value of the tender, based on objective and transparent data, may be presumed

by contracting authorities and contracting entities to be disproportionate;

Article 32

Risk-prone sectors

1. After consultation of the European Semiconductor Board, and based on evidence of

supply chain risks, the Commission may identify one or more sectors listed in Annex

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Vor Annex VI, or their subsectors, as risk-prone by means of an implementing

decision.

2. The Commission may issue methodological guidance on how to carry out security of

supply risk assessments and recommend possible mitigation measures for those

sectors identified as risk-prone. This guidance shall address the following elements:

(a) dual sourcing strategy, including from at least one domestic undertaking;

(b) upstream and downstream supply chain mapping;

(c) vulnerability analysis and sensitivity to supply disruption.

3. The security of supply risk assessments referred to in paragraph 2 of this Article may

be requested by contracting authorities or contracting entities in procurement

procedures as referred to in Article 30(1).

4. If, after consultation with the European Semiconductor Board, the Commission

concludes that the recommended mitigation measures as referred to in paragraph 2

and which are necessary to ensure security of supply of semiconductors or products

integrating semiconductors are not adequately taken over by the sector identified as

risk-prone, it may adopt an implementing acton specific risk mitigation measures

that sectors or subsectors shall take for specified semiconductor products, namely

mitigation measures related to:

(a) performance of a risk assessment;

(b) procurement of semiconductors;

(c) dual sourcing;

(d) stockpiling;

(e) diversification of supply of semiconductors or related components.

5. After adoption of an implementing act in accordance with paragraph 4, the

Commission, based on evidence of the identified supply chain risks having been

addressed and after consultation of the European Semiconductor Board, may revoke

the risk-prone designation.

6. The Commission shall base its assessments carried out in accordance with this

Article on evidence, including publicly available information, information gathered

through requests for information pursuant to Article 38, orthe existence of repeated

supply chain disruptions.

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CHAPTER IV

Monitoring and crisis response

SECTION 1

MONITORING

Article 33

Strategic mapping of the Union’s semiconductor sector

1. The Commission shall carry out a strategic mapping of the Union’s semiconductor

sector in cooperation with the European Semiconductor Board. The strategic

mapping shall provide an analysis of the Union’s strengths and weaknesses in the

global semiconductor sector and identify factors such as:

(a) key products and critical infrastructures in the internal markets that depend on

the supply of semiconductors;

(b) main user industries in the Union and their current and expected needs and

dependencies, including an analysis of the possible risks to security of supply

also linked to insufficient investment;

(c) key segments of the Union’s semiconductor supply chain, including design,

software for design, materials, manufacturing equipment, semiconductor

manufacturing and outsourced back-end manufacturing;

(d) the technological characteristics, the dependencies on third-country technology

and providers, and bottlenecks of the Union’s semiconductor sector including

access to inputs;

(e) current and expected needs for skills and effective access to qualified

workforce in the semiconductor sector;

(f) where appropriate, the potential impact of crisis measures referred to in

Articles 41, 42, and 43 on the semiconductor sector.

2. The Commission shall inform the European Semiconductor Board of the aggregate

results of the strategic mapping on a regular basis.

3. The Commission shall, on the basis of the outcome of the strategic mapping carried

out pursuant to paragraph 1 and after consulting the European Semiconductor Board,

develop a list of early warning indicators. The Commission, after consulting the

European Semiconductor Board, shall review the list of early warning indicators on a

regular basis.

4. The Commission shall, after consulting the European Semiconductor Board, develop

a framework and methodology for a strategic mapping of the semiconductor sector.

The Commission shall update the framework and the methodology where necessary.

5. The strategic mapping shall be based, in particular, on publicly and commercially

available data and relevant non-confidential information from undertakings, the

result of similar analysis performed, as well as the evaluations carried out pursuant to

Article 57(1). Where this is not enough to develop the strategic mapping pursuant to

paragraph 1 of this Article, the Commission may issue voluntary requests for

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information to actors on the semiconductor value chain in the Union, after consulting

the European Semiconductor Board. The Commission shall use the standardised and

secure means for the collection and processing of information, referred to in Article

50, for the purposes of such requests for information.

6. Any information obtained pursuant to this Article shall be treated in compliance with

the confidentiality obligations set out in Article 50.

7. The Commission shall, after consulting the European Semiconductor Board, adopt

guidance for the provision of information pursuant to paragraph 5. The Commission

shall update that guidance when necessary.

Article 34

Business-to-Business Semiconductor Supply Chain Platform

1. The Commission shall ensure the setting up of the Business-to-Business

Semiconductor Supply Chain Platform (‘the Platform’), which shall act as a digital

twin of the semiconductor supply chain with the objective of enhancing its

transparency and resilience. The Platform shall at least:

(a) collect market information and aggregated data to serve as a semiconductor

market observatory;

(b) gather data from participating undertakings in an interoperable format;

(c) provide the participating undertakings with aggregated insights on

semiconductor supply chain risks and vulnerabilities across the semiconductor

value chain, without those insights being attributable to individual companies;

(d) include participation by undertakings operating along the semiconductor

supply chain and users of semiconductors, in particular in the sectors referred

to in Annex VI;

(e) be capable of conducting stress tests of the semiconductor supply chain;

(f) issue early warnings and guidance for proactive measures to the participating

undertakings to de-risk their semiconductor supply chain;

(g) develop indicators to assess the resilience of the European semiconductor

supply chain and present them as a dashboard;

(h) offer a secure processing environment.

2. Participation in the Platform shall be open to domestic undertakings only.

3. The legal representative of the Platform shall inform the Commission of current or

anticipated disruptions of the semiconductor supply chain without undue delay.

Article 35

Monitoring and anticipation

1. The Commission, in consultation with the European Semiconductor Board shall

carry out regular monitoring of the semiconductor value chain with a view to

identifying factors that may disrupt, compromise or negatively affect the supply of

semiconductors or trade in semiconductors. For the purposes of this Regulation, the

monitoring shall consist of the following activities:

(a) monitoring of early warning indicators identified pursuant to Article 33;

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(b) monitoring by Member States of the integrity of activities carried out by the

key market actors identified pursuant to Article 36 and reporting by Member

States on major events that may hinder the regular operations of such activities;

(c) identifying best practices for preventive risk mitigation and increased

transparency in the semiconductor sector.

The Commission, after consulting the European Semiconductor Board, shall define

the frequency of the monitoring on the basis of the needs of the semiconductor

sector.

The Commission shall coordinate the activities related to the monitoring of the

semiconductor sector, on the basis of information collected pursuant to Article 33,

Article 34(3) or from other sources, such as international partners.

2. The Commission shall invite key market actors, a representative set of users of

semiconductors from the critical sectors, representative organisations of the

semiconductor value chain and other relevant stakeholders to provide information, on

a voluntary basis, for the purpose of carrying out monitoring activities in accordance

with paragraph 1, point (a).

The Commission shall pay particular attention to SMEs and SMCsto minimise

administrative burden resulting from the information collection.

3. For the purposes of paragraph 1, first subparagraph, point (b), Member States may

request information, on a voluntary basis, from key market actors where necessary

and proportionate.

4. For the purposes of paragraph 3 of this Article national competent authorities

designated in accordance with Article 48, shall establish and maintain a list of

contacts of all relevant undertakings operating along the semiconductor supply chain

established in their territory. That list shall be transmitted to the Commission. The

Commission shall provide for a standardised format for the list of contacts with a

view to ensuring interoperability.

5. Any acquired information pursuant to this Article shall be handled in accordance

with Article 50.

6. On the basis of the information collected through the activities under paragraph 1,

the Commission shall provide a report of the aggregated findings to the European

Semiconductor Board in the form of regular updates. The European Semiconductor

Board shall meet to assess the results of the monitoring. The Commission shall invite

representative organisations of the semiconductor sector to such meetings. Where

relevant, the Commission may invite key market actors, users of semiconductors

from the critical sectors, authorities or representative organisations of partner third

countries, and experts from academia and civil society to such meetings.

Article 36

Key market actors

Member States shall, in cooperation with the Commission in accordance with Article

35, identify key market actors along the semiconductor supply chain established in

their territory, taking into account the following elements:

(a) the number of Union undertakings relying on the service or good provided by a

market actor;

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(b) the Union or global market share of a market actor in the market for such

services or goods;

(c) the importance of a market actor in maintaining a sufficient level of supply of a

service or good in the Union, taking into account the availability of alternative

means for the provision of that service or good;

(d) the impact a disruption of supply of the service or good provided by the market

actor may have on the Union’s semiconductor supply chain and dependent

markets.

SECTION 2

ALERTS AND THE ACTIVATION OF THE CRISIS STAGE

Article 37

Alerts and preventive action

1. Where a national competent authority designated in accordance with Article 48

becomes aware of a risk of serious disruption in the supply of semiconductors or has

concrete and reliable information of any other relevant risk factor or event

materialising, it shall alert the Commission without undue delay.

2. Where the Commission becomes aware of a risk of serious disruption in the supply

of semiconductors or has concrete and reliable information of any other relevant risk

factor or event materialising, including on the basis of early warning indicators, upon

an alert pursuant to paragraph 1 or from international partners, it shall, without undue

delay, carry out the following preventive actions:

(a) convening an extraordinary meeting of the European Semiconductor Board to

coordinate the following actions:

(i) discussing the severity of the disruption to the supply of semiconductors;

(ii) discussing whether initiating the procedure referred to in Article 39 may

be necessary and proportionate;

(iii) discussing whether it is appropriate, necessary and proportionate for

Member States to jointly purchase semiconductors, intermediate products

of raw materials as a preventive measure (joint procurement);

(iv) entering into dialogue with stakeholders of the semiconductor value

chain with a view to identifying, preparing and possibly coordinating

preventive measures;

(v) advising the Commission on whether to issue a request for information to

the Platform pursuant to Article 38.

(b) on behalf of the Union, entering into consultations or cooperation with relevant

third countries with a view to seeking cooperative solutions to address supply

chain disruptions, in compliance with international obligations, which may

involve, where appropriate, carrying out coordination in relevant international

forums;

(c) asking national competent authorities designated in accordance with Article 48,

to assess the state of preparedness of the key market actors.

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3. Any joint procurement carried out following the discussions referred to in paragraph

2, point (a)(iii), shall be carried out by Member States in accordance with the rules

set out in Articles 38 and 39 of Directive 2014/24/EU and in Articles 56 and 57 of

Directive 2014/25/EU.

Article 38

Preventive information gathering

1. The Commission may issue requests for information, in order to assess the risk of

serious disruption in the supply of semiconductors, to the Platform or to individual

undertakings operating along the semiconductor value chain that provide services in

the Union or offer products on the Union market, if they do not participate in the

Platform, after consulting the European Semiconductor Board at the extraordinary

meeting referred to in Article 37(2), point (a).

2. Before launching a request for information, the Commission may carry out a

voluntary consultation of a representative number of relevant undertakings with a

view to identifying the appropriate and proportionate content of that request.

3. A request for information to an individual undertaking shall state the legal basis and

purpose of the request, be limited to what is necessary and be proportionate in terms

of the volume of the data and frequency of access to the data requested. It shall set

out the time limit within which the information is to be provided and the possible

penalties for providing incorrect, incomplete or misleading information pursuant to

Article 51. Data shall be anonymised and aggregated as appropriate. Where a Union

undertaking is the subject of a request for information under paragraph 5 of this

Article, the Commission shall inform the Member State in which the individual

undertaking is established of that request.

4. A request for information to the Platform’s legal representative shall state its legal

basis and its purpose, be limited to what is necessary and be proportionate in terms of

the volume of the data and frequency of access to the data requested, taking into

account the legitimate aims of the Platform. It shall set out the time limit within

which the information is to be provided, and include information about possible

penalties pursuant to Article 51.

5. The owners of the undertakings or their representatives and, in the case of legal

persons or associations having no legal personality, the persons authorised to

represent them by law or by their constitution shall supply the information requested

on behalf of the undertaking or the association of undertakings concerned.

6. The Commission shall present aggregated information from the responses to requests

for information to the European Semiconductor Board.

7. The legal representative of the Platform shall not answer any requests for

information that are not issued by the Commission, unless they are under a legal

obligation to do so in accordance with Union or national law.

8. Any information acquired pursuant to this Article shall be handled in accordance

with Article 50.

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Article 39

Activation of the crisis stage

1. A semiconductor crisis shall be considered to occur where both the following

conditions are fulfilled:

(a) there are serious disruptions in the semiconductor supply chain or serious

obstacles to trade in semiconductors within the Union causing significant

shortages of semiconductors, intermediate products or raw or processed

materials;

(b) such significant shortages prevent the supply, repair or maintenance of

essential products used by critical sectors to the extent that it would have

serious detrimental effect on the functioning of the critical sectors due to their

impact on society, economy and security of the Union.

2. Where the Commission becomes aware of a potential semiconductor crisis pursuant

to Article 37(2), it shall assess whether the conditions of paragraph 1 of this Article

are met. That assessment shall take into account the potential positive and negative

impacts and consequences of the crisis stage on the Union’s semiconductor industry

and critical sectors. Where that assessment provides concrete and reliable evidence,

the Commission may, after consulting the European Semiconductor Board, propose

to the Council to activate the crisis stage.

3. The Council, acting by qualified majority, may activate the crisis stage by means of

an implementing act. The duration of the crisis stage shall be specified in the

implementing act and shall not exceed 12 months.

The Commission shall report on a regular basis and in any event at least every three

months to the European Semiconductor Board and to the European Parliament on the

state of the crisis.

4. Before the expiry of the duration for which the crisis stage was activated, the

Commission shall assess whether it is appropriate to prolong the crisis stage. Where

such assessment provides concrete and reliable evidence that the conditions for the

activation of the crisis are still met, and after consulting the European Semiconductor

Board, the Commission may propose to the Council to prolong the crisis stage.

The Council, acting by qualified majority, may prolong the crisis stage by means of

an implementing act. The duration of the prolongation shall be limited and specified

in that implementing act.

The Commission may propose prolonging the crisis stage once or more frequently

where duly justified.

5. During the crisis stage, the Commission shall, after consulting the European

Semiconductor Board, assess the appropriateness of an early termination of the crisis

stage. If the assessment indicates so, the Commission may propose to the Council to

terminate the crisis stage.

The Council may terminate the crisis stage by means of an implementing act.

6. During the crisis stage, the Commission shall, upon request from a Member State or

on its own initiative, convene extraordinary meetings of the European Semiconductor

Board where necessary.

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Member States shall work closely with the Commission, inform in a timely manner

about and coordinate any national measures taken with regard to the semiconductor

supply chain within the European Semiconductor Board.

7. Upon expiry of the period for which the crisis stage is activated or in the event of its

early termination pursuant to paragraph 5 of this Article, the measures taken in

accordance with Articles 41, 42, and 43 shall cease to apply immediately.

8. The Commission shall update the mapping and the monitoring of the semiconductor

value chains pursuant to Articles 33 and 35 taking into account the experience from

the crisis no later than six months after the expiry of the duration of the crisis stage.

SECTION 3

SHORTAGE RESPONSE

Article 40

Emergency toolbox

1. Where the crisis stage is activated pursuant to Article 39 and where necessary in

order to address the semiconductor crisis in the Union, the Commission may take the

measure provided for in Articles 41, 42 and 43, under the conditions laid down

therein.

2. The Commission shall, after consulting the European Semiconductor Board, restrict

the application of the measures provided for in Articles 42 and 43 to the critical

sectors the operation of which is disturbed or under threat of disturbance on account

of the semiconductor crisis. The use of the measures referred to in paragraph 1 of this

Article shall be proportionate and restricted to what is necessary for addressing

serious disruptions affecting critical sectors in the Union and must be in the best

interest of the Union. The use of those measures shall avoid placing disproportionate

administrative burden in particular on SMEs and SMCs.

3. Where the crisis stage is activated pursuant to Article 39 and where appropriate in

order to address the semiconductor crisis in the Union, the European Semiconductor

Board may:

(a) assess and advise on appropriate and effective emergency measures;

(b) assess the expected impact of the possible imposition of protective measures on

the Union’s semiconductor sector, considering whether the market situation

corresponds to a significant shortage of an essential product pursuant to

Regulation (EU) 2015/479 and provide an opinion to the Commission.

4. The Commission shall regularly inform the European Parliament and the Council of

any measures taken in accordance with paragraph 1 and explain the reasons for its

decision.

5. The Commission may, after consulting the European Semiconductor Board, issue

guidance on the implementation and the use of the emergency measures.

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Article 41

Information gathering in the crisis stage

1. Where the crisis stage is activated pursuant to Article 39, the Commission may

request all undertakings operating along the semiconductor supply chain to provide

information about their production capabilities, production capacities and current

primary disruptions. The requested information shall be limited to what is necessary

to assess the nature of the semiconductor crisis or to identify and assess potential

mitigation or emergency measures at Union or national level. The requests for

information shall not entail the supply of information the disclosure of which would

be contrary to the Member States’ national security interests.

2. Before launching a request for information, the Commission may carry out a

voluntary consultation of a representative number of relevant undertakings with a

view to identifying the appropriate and proportionate content of such a request. The

Commission shall develop the request for information in cooperation with the

European Semiconductor Board.

3. The Commission shall use the secure means and handle any acquired information in

accordance with Article 50 to launch the request for information. For that purpose,

national competent authorities designated in accordance with Article 48, shall

transmit to the Commission the list of contacts established under Article 35(4).

The Commission shall without delay forward a copy of the request for information to

the national competent authority designated in accordance with Article 48 of the

Member State in whose territory the production site of the addressed undertaking is

situated. If the national competent authority so requires, the Commission shall

transmit the information acquired from the relevant undertaking in accordance with

Union law.

4. The request for information shall state its legal basis, be limited to the minimum

necessary and be proportionate in terms of the granularity and volume of the data and

frequency of access to the data requested, have regard for the legitimate aims of the

undertaking and the cost and effort required to make the data available, and set out

the time limit within which the information is to be provided. It shall also state the

penalties provided for in Article 51.

5. The owners of the undertakings or their representatives and, in the case of legal

persons or associations having no legal personality, the persons authorised to

represent them by law or by their constitution shall supply the information requested

on behalf of the undertaking or the association of undertakings concerned.

6. If an undertaking supplies incorrect, incomplete or misleading information in

response to a request made pursuant to this Article, or does not supply the

information within the prescribed time limit, it shall be subject to fines set in

accordance with Article 51, except where the undertaking has sufficient reasons for

not supplying the requested information.

7. If a Union undertaking or a subsidiary owned and controlled by that undertaking is

subject to a request for information from a third country, related to its semiconductor

activities, it shall share the information requested by and provided to the third

country with the Commission without delay. The Commission shall inform the

European Semiconductor Board of the existence of such request from a third country

and of the information shared by the undertaking.

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Article 42

Priority-rated orders

1. Where the crisis stage is activated pursuant to Article 39, the Commission may

require European semiconductor technology initiatives and strategic projects to

accept and prioritise an order of crisis-relevant products (priority-rated order). Such

an obligation shall take precedence over any performance obligations under private

or public law.

2. Where applicable, the obligation under paragraph 1 may be imposed to other

semiconductor undertakings which have accepted such possibility in the context of

receiving public support.

3. Where a semiconductor undertaking established in the Union is subject to a third

country priority-rated order measure, it shall inform the Commission. If that

obligation has a significant impact on the operation of certain critical sectors, the

Commission may require that undertaking, where necessary and proportionate, to

accept and prioritise orders of crisis relevant products in accordance with paragraphs

5, 6, and 7.

4. Priority-rated orders shall be restricted to beneficiaries who are users of

semiconductors from critical sectors or undertakings supplying critical sectors whose

activities are disrupted or at risk of disruption and who, having implemented

appropriate risk mitigation measures, were unable to avoid and to mitigate the impact

of the shortage. The Commission may request a beneficiary to submit appropriate

evidence thereof.

5. The obligations under paragraphs 1, 2 and 3 of this Article shall be enacted as a last

resort measure by the Commission by means of a decision. The Commission shall

adopt that decision after consulting the European Semiconductor Board and in

accordance with all applicable Union legal obligations, having regard to the

circumstance of the case, including the principles of necessity and proportionality.

The decision shall, in particular, have regard for the legitimate aims of the

undertaking concerned and the cost, effort and technical adjustments required for any

change in production sequence. In its decision, the Commission shall state the legal

basis of the priority rated order, fix the time limit within which the order is to be

performed, and, where applicable, specify the product and quantity, and, where

applicable, state the penalties provided for in Article 51 for non-compliance with

such an obligation. The priority-rated order shall be placed at fair and reasonable

price.

6. Before issuing priority-rated orders in accordance with paragraph 1, the Commission

shall give the envisaged recipient of a priority-rated order the opportunity to be heard

on the feasibility and details of the order. The Commission shall not issue the

priority-rated order when:

(a) the undertaking is unable to perform the priority-rated order on account of

insufficient production capability or production capacity, or on technical

grounds, even under preferential treatment of the order;

(b) acceptance of the order would place an unreasonable economic burden and

entail particular hardship for the undertaking, including substantial risks

relating to business continuity.

7. Where an undertaking is required to accept and prioritise a priority-rated order, it

shall not be liable for any breach of contractual obligations that is required to comply

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with the priority-rated orders. Contractual liability shall be excluded only to the

extent the violation of contractual obligations was necessary for compliance with the

mandated prioritisation.

8. The Commission shall adopt an implementing act laying down the practical and

operational arrangements for the functioning of priority-rated orders. That

implementing act shall be adopted in accordance with the examination procedure

referred to in Article 55(6).

Article 43

Common purchasing

1. Where the crisis stage is activated pursuant to Article 39, the Commission may, upon

the request of two or more Member States, act as a central purchasing body on behalf

of all Member States willing to participate (participating Member State) for their

public procurement of crisis-relevant products for critical sectors (common

purchasing). Participation in the common purchasing shall be without prejudice to

other procurement procedures. The request for common purchasing shall set out

reasons on which it is based and shall be used exclusively to address supply-chain

disruptions of semiconductors leading to the crisis.

2. The Commission shall assess the utility, necessity and proportionality of the request,

taking into account the views of the European Semiconductor Board. Where the

Commission intends not to follow the request, it shall inform the Member States

concerned and the European Semiconductor Board and give reasons for its refusal.

3. The Commission shall draw up a proposal for an agreement to be signed by the

participating Member States. Such an agreement shall organise in detail the common

purchasing referred to in paragraph 1, including reasons for the use of the common

purchasing mechanism and liabilities to be assumed, and establish the mandate for

the Commission to act on behalf of the participating Member States.

4. Procurement under this Regulation shall be carried out by the Commission in

accordance with the rules set out in Regulation (EU, Euratom) 2024/2509 for its own

procurement. The Commission may have the ability and responsibility, on behalf of

all participating Member States, to enter into contracts with economic operators,

including individual producers of crisis-relevant products, concerning the purchase

of such products or concerning the financing of the production or the development of

such products in exchange for a priority right to the result.

5. Where the procurement of crisis-relevant products includes financing from the Union

budget, specific conditions may be set out in specific agreements with economic

operators.

6. The Commission shall carry out the procurement procedures and conclude the

contracts with economic operators on behalf of the participating Member States. The

Commission shall invite the participating Member States to appoint representatives

to take part in the preparation of the procurement procedures. The deployment, use or

resale of the purchased products shall remain the responsibility of the participating

Member States, in accordance with the agreement referred to in paragraph 3.

7. The deployment of common purchasing pursuant to this Article shall be without

prejudice to other instruments provided for in Regulation (EU, Euratom) 2024/2509.

EN 91 EN

CHAPTER V

Governance

SECTION 1

EUROPEAN SEMICONDUCTOR BOARD

Article 44

Tasks of the European Semiconductor Board

1. The European Semiconductor Board shall assist the Commission on issues of Union

semiconductor policy, in particular by:

(a) providing advice on the Chips for Europe Initiative 2.0 to the Public

Authorities Board of the Chips Joint Undertaking;

(b) providing advice to the Commission on strategic technological areas within the

semiconductor value chain;

(c) providing advice to the Commission in the assessment of the applications for

European semiconductor technology initiatives and strategic projects;

(d) engaging in a structured dialogue with the Steering Committee of the Industrial

Alliance for Semiconductors with a view to defining a common strategy on

semiconductors;

(e) exchanging views with the Commission on the progress of implementation of

the Investment Plans of Semiconductor Regions of Excellence;

(f) exchanging views with the Commission on the best ways to ensure, in

accordance with Union and national law, effective protection and enforcement

of IP rights, confidential information and trade secrets, with due involvement

of stakeholders, in relation to the semiconductor sector;

(g) discussing and preparing the identification of specific sectors and technologies

with potential high social or environmental impact, or security significance,

and therefore in need of certification as green, trusted and secure products;

(h) addressing issues relating to strategic mapping, monitoring, alerting and

preventive action and crisis response;

(i) advising on the crisis stage tools provided for in Articles 40 to 43;

(j) providing advice and recommendations regarding the consistent

implementation of this Regulation, facilitating cooperation among Member

States and exchange of information on issues relating to this Regulation;

(k) advising the Commission on matters concerning international cooperation

related to semiconductors.

2. The Board shall advise and inform the Commission about the priorities of the

Member States in the semiconductor sector, in particular, by regularly providing

updates on:

(a) their national semiconductor policies;

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(b) relevant public and private investments in the territory of the Member State

they represent;

(c) international commitments, including R&D, innovation and skills exchange

programmes with third countries.

3. The European Semiconductor Board shall ensure coordination, cooperation and

information exchange, where appropriate, with the relevant crisis response and crisis

preparedness structures established under Union law.

Article 45

Structure of the European Semiconductor Board

1. The European Semiconductor Board shall be composed of representatives from all

the Member States. A representative of the Commission shall be the Chair of the

European Semiconductor Board.

2. Each Member State shall appoint a high-level representative to the European

Semiconductor Board. Where relevant as regards the function and expertise, a

Member State may have more than one representative in relation to different tasks of

the European Semiconductor Board. Each member of the European Semiconductor

Board shall have an alternate. Only Member States shall have voting rights. Each

Member State shall have only one vote regardless of the number of representatives

that it has.

3. The Chair may establish standing or temporary sub-groups for the purpose of

examining specific questions.

Where appropriate, the Chair shall invite representative organisations of the

semiconductor value chain, the Steering Committee of the Industrial Alliance for

Semiconductors and its relevant working groups, trade unions and users of

semiconductors at Union level to provide input to such sub-groups in the capacity of

observers.

Article 46

Operation of the European Semiconductor Board

1. The European Semiconductor Board shall hold ordinary meetings at least once a

year. It may hold extraordinary meetings at the request of the Commission or a

Member State and as referred to in Articles 37 and 39.

2. The European Semiconductor Board shall hold separate meetings for its tasks

referred to in Article 44(1).

3. The Chair shall convene the meetings and prepare the agenda, in accordance with the

tasks of the European Semiconductor Board pursuant to this Regulation and with its

rules of procedure.

The Commission shall provide administrative and analytical support for the activities

of the European Semiconductor Board pursuant to Article 44.

4. Where appropriate, the Chair shall involve representative organisations of the

semiconductor sector and shall invite experts with specific expertise in the subject

matter, including from stakeholder organisations such as the Network of European

Semiconductor Regions of Excellence, and appoint observers to take part in the

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meetings, including upon suggestion from members. The Chair may facilitate

exchanges between the European Semiconductor Board and other Union bodies,

offices, agencies and expert and advisory groups including the Industrial Alliance for

Semiconductors. The Chair shall ensure that the Steering Committee of the Industrial

Alliance for Semiconductors, is invited to present updates and discuss relevant

aspects of the European semiconductor strategic approach at least yearly.

5. The Chair shall invite a representative from the European Parliament as permanent

observer to the European Semiconductor Board, in particular to meetings concerning

Chapter IV on monitoring and crisis response. The Chair shall ensure the

participation of relevant other Union institutions and bodies as observers to the

European Semiconductor Board with respect to meetings concerning Chapter IV on

monitoring and crisis response.

Observers and experts shall not have voting rights and shall not participate in the

formulation of opinions, recommendations or advice of the European Semiconductor

Board and its sub-groups. Where appropriate, the European Semiconductor Board

may invite those observers and experts to contribute with information and insights.

6. The European Semiconductor Board shall take the necessary measures to ensure the

safe handling and processing of confidential information, in accordance with Article

50.

Article 47

International cooperation and strategic partnerships on semiconductors

1. The European Semiconductor Board shall advise the Commission on matters

concerning international cooperation related to semiconductors. To that end, the

European Semiconductor Board shall periodically discuss the following:

(a) the extent to which the Union’s international cooperation on semiconductors

including strategic partnerships on semiconductors contribute towards:

– improving the Union’s indispensability, resilience and prosperity;

– improving cooperation along the semiconductor value chain between the

Union and international partners, including in the field of research and

innovation;

– addressing the knowledge and skills shortage and mismatch by attracting,

mobilising and retaining new talent to the Union;

(b) the consistency and potential synergies between Member States’ bilateral

cooperation with relevant international partners, and the actions in the context

of its international cooperation on semiconductors including strategic

partnerships on semiconductors;

(c) which international partners should be prioritised for the conclusion of strategic

partnerships on semiconductors, taking into account the following criteria:

– the potential contribution to security of supply, indispensability,

resilience and prosperity, considering a partner’s potential capacities

related to semiconductors, diversification and dependencies;

– whether a partner’s regulatory framework ensures the monitoring and

minimisation of environmental impacts, the use of socially responsible

practices, the use of transparent business practices and the prevention of

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adverse impacts on the proper functioning of public administration and

the rule of law;

– whether there are existing cooperation agreements between a third

country or territory and the Union and, for emerging markets and

developing economies, the potential for the deployment of Global

Gateway72 investment projects;

– whether the partner’s regulatory framework, or the relevant applicable

framework, provides for the application of controls on the export of

technology that could limit the access to goods and technology necessary

for the design, development, production or use of goods in the EU or the

export of goods and technology designed, developed or produced in the

EU.

2. The Commission shall enable and support the European Semiconductor Board’s

cooperation with other relevant coordination forum, including those established as

part of the Global Gateway73 framework.

3. Member States shall ensure consistency between in their bilateral cooperation with

international partners, and in the Union’s international cooperation on

semiconductors including non-binding strategic partnerships. They shall also support

the Commission in implementing the cooperation measures set out in the Union’s

international cooperation on semiconductors including strategic partnerships on

semiconductors.

SECTION 2

NATIONAL COMPETENT AUTHORITIES

Article 48

Designation of national competent authorities and national single points of contact

1. Each Member State shall designate one or more national competent authorities for

the purpose of ensuring the application and implementation of this Regulation at

national level.

2. Where a Member State designates more than one national competent authority, it

shall clearly set out the respective responsibilities of the authorities concerned and

shall ensure that they cooperate effectively and efficiently to fulfil their tasks under

this Regulation, including with regard to the designation and activities of the national

single point of contact referred to in paragraph 3.

3. Each Member State shall designate one national single point of contact to exercise a

liaison function to ensure cross-border cooperation with national competent

authorities of other Member States, with the Commission and with the European

Semiconductor Board. Where a Member State designates only one national

72 European Commission: Directorate-General for International Partnerships, The Global Gateway

strategy, Publications Office of the European Union, 2025, https://data.europa.eu/doi/10.2841/5607451.

73 European Commission: Directorate-General for International Partnerships, The Global Gateway

strategy, Publications Office of the European Union, 2025, https://data.europa.eu/doi/10.2841/5607451.

EN 95 EN

competent authority, that national competent authority shall also be the national

single point of contact.

4. Each Member State shall notify the Commission of the designation of the national

competent authority or more than one national competent authority, and the national

single point of contact, including their precise tasks and responsibilities under this

Regulation, their contact information and any subsequent changes thereto. The

national single point of contact shall provide the Commission with a functional

mailbox.

5. Member States shall ensure that national competent authorities, including the

national single point of contact designated, exercise their powers impartially,

transparently and in a timely manner and that they are provided with the powers and

the adequate technical, financial and human resources to fulfil their tasks under this

Regulation.

6. Member States shall ensure that national competent authorities, whenever

appropriate and in accordance with Union and national law, consult and cooperate

with other relevant national authorities, as well as with relevant interested parties.

The Commission shall facilitate the exchange of experience between national

competent authorities.

SECTION 3

INDUSTRIAL ALLIANCE

Article 49

Industrial Alliance for Semiconductors

1. An Industrial Alliance for Semiconductors (‘the Alliance’) is hereby established.

2. The Alliance shall bring together relevant stakeholders to assist the Commission and

Member States on issues relevant to the Union’s semiconductor industry, including:

(f) current market and industry trends;

(g) the Union’s semiconductor design and manufacturing capacity;

(h) emerging semiconductor technologies and their impact;

(i) identification and recommendations for addressing the Union’s industrial

strengths and weaknesses;

(j) strategies to accelerate industrialisation of innovation;

(k) geopolitical developments affecting industry;

(l) enhancing the Union’s global competitiveness;

(m) contribute to the functioning of the demand accelerators;

(n) contribute to the functioning of the demand forum.

3. Members in the Alliance shall be representatives of the Union semiconductor value

chain, including enterprises, startups, research and technology organisations and user

sectors, which fulfil the following criteria

(a) have demonstrated semiconductor experience, knowledge and capabilities;

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(b) contribute or are committed to contribute to the semiconductor security of

supply of the Union;

(c) have a relevant presence in the European market or are committed to build

such a presence within the Union.

4. The Commission shall appoint the members of the Alliance, in accordance with the

criteria set out in paragraph 4.

5. A representative of the Commission shall be the Chair of the Alliance.

6. The Alliance shall hold a General Assembly at least once per year. It may hold

extraordinary meetings at the request of the Chair of the Alliance or any member of

the Steering Committee, subject to the approval of the Chair.

7. The Chair shall convene the meetings and prepare the agenda, in accordance with its

rules of procedures and with the tasks of the Alliance pursuant to this Regulation.

8. The Commission shall set up a Steering Committee within the Alliance. The Steering

Committee shall engage in a strategic dialogue with the European Semiconductor

Board at least once per year, as specified in Article 44.

9. The Chair of the Alliance or the Steering Committee, subject to the approval of the

Chair, may establish standing or temporary Working Groups for the purpose of

examining specific questions.

Chapter VI

Confidentiality and penalties

Article 50

Treatment of confidential information

1. Information acquired in the course of implementing this Regulation shall be used

only for the purposes of this Regulation and shall be protected by the relevant Union

and national law.

2. Non-confidential information collected pursuant to this Regulation shall be

transmitted to national statistical authorities and to Eurostat for the purposes of

compiling statistics in accordance with Regulation (EU) 2024/3018 of the European

Parliament and Council.

3. Information acquired pursuant to Articles 14, 33, 35, 38, 41, and Article 46 shall be

subject to professional secrecy and shall enjoy the protection afforded by the rules

applicable to the Union institutions and the relevant national law, including the

triggering of the provisions applicable to the violation of those rules.

4. The Commission and the national competent authorities, their officials, servants and

other persons working under the supervision of those authorities shall ensure the

confidentiality of information and data obtained in carrying out their tasks and in

such a manner as to protect in particular IP rights and commercially sensitive

information or trade secrets. This obligation shall apply to all representatives of

Member States, observers, experts and other participants attending meetings of the

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European Semiconductor Board pursuant to Article 44 and the members of the

Semiconductor Committee pursuant to Article 56(1).

5. The Commission shall provide for standardised and secure means for the collection,

processing and storage of the information acquired pursuant to this Regulation.

6. The Commission and Member States may exchange, where necessary, information

acquired pursuant to Articles 35, 38 and 39 solely in an aggregated form preventing

disclosure of any conclusions on the specific situation of a company in a Member

State with competent authorities of third countries with which they have agreed on

bilateral or multilateral confidentiality arrangements to provide an adequate level of

confidentiality. Before the Commission or Member States engage in any exchange of

information, they shall notify the European Semiconductor Board of the information

to be shared and the relevant confidentiality arrangement.

When exchanging information with the competent authorities of third countries, the

Commission shall designate and use a single point of contact in the Union to

facilitate the transfer of such information or data in a confidential manner pursuant to

relevant Commission procedures.

7. The Commission may adopt implementing acts, as necessary on the basis of the

experience acquired in information gathering, to specify the practical arrangements

for the treatment of confidential information in the context of exchange of

information pursuant to this Regulation. Those implementing acts shall be adopted in

accordance with the examination procedure referred to in Article 56(2).

Article 51

Penalties

1. The Commission may, where it deems it to be necessary and proportionate, adopt a

decision to:

(a) impose fines, where an undertaking, intentionally or through gross negligence,

supplies incorrect, incomplete or misleading information in response to a

request made pursuant to Articles 38 or 41, or does not supply the information

within the prescribed time limit;

(b) impose fines, where an undertaking, intentionally or through gross negligence,

does not comply with the obligation to inform the Commission of a third

country obligation pursuant to Articles 38(8), 41(7) and Article 42(3);

(c) impose periodic penalty payments, where an undertaking, intentionally or

through gross negligence, does not comply with an obligation to prioritise the

production of crisis-relevant products pursuant to Article 42.

2. Before taking a decision pursuant to paragraph 1 of this Article, the Commission

shall provide an opportunity for undertakings to be heard in accordance with Article

54. It shall take into account any duly reasoned justification presented by such

undertakings for the purpose of determining whether fines or periodic penalty

payments are deemed necessary and proportionate.

3. Fines imposed in the cases referred to in paragraph 1, point (a), shall not exceed EUR

300 000.

Fines imposed in the cases referred to in paragraph 1, point (b), shall not exceed

EUR 150 000.

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Where the undertaking concerned is an SME, the fines imposed shall not exceed

EUR 50 000.

4. Periodic penalty payments imposed in the case referred to in paragraph 1, point (c),

shall not exceed 1,5% of the current daily turnover for each working day of non-

compliance with the obligation pursuant to Article 43 calculated from the date

established in the decision in which the priority-rated order was issued.

Where the undertaking concerned is an SME, the periodic penalty payments imposed

shall not exceed 0,5% of the current daily turnover.

5. In fixing the amount of the fine or periodic penalty payment, the Commission shall

take into consideration the nature, gravity and duration of the infringement, including

in cases of non-compliance with the obligation to accept and prioritise a priority-

rated order set out in Article 43, and whether the undertaking has partially complied

with the priority-rated order, taking due account of the principles of proportionality

and appropriateness.

6. Where the undertaking has fulfilled the requirements which the periodic penalty

payment was intended to enforce, the Commission may fix the definitive amount of

period penalty payment at a figure lower than that which would arise under the

original decision.

7. The Court of Justice shall have unlimited jurisdiction to review decisions whereby

the Commission has fixed a fine or a periodic penalty payment. It may cancel, reduce

or increase the fine or periodic payment imposed.

Article 52

Limitation period for the imposition of penalties

1. The powers conferred on the Commission by Article 51 shall be subject to the

following limitation periods:

(a) two years in the case of infringements of provisions concerning requests of

information pursuant to Articles 38 or 41;

(b) two years in the case of infringements of provisions concerning information

obligation pursuant to Article 38(8), Article 41(7) and Article 42(3);

(c) three years in the case infringements of provisions concerning the obligation to

prioritise the production of crisis-relevant products pursuant to Article 42.

2. The limitation periods referred to in paragraph 1 shall begin to run on the day on

which the infringement is committed. Where there are continuous or repeated

infringements, the limitation periods shall begin to run on the day on which the last

infringement was committed.

3. Any action taken by the Commission or the national competent authorities of the

Member States for the purpose of ensuring compliance with this Regulation shall

interrupt the limitation period.

4. The interruption of the limitation period shall apply for all the parties which are held

responsible for the participation in the infringement.

5. Each interruption shall start the time running afresh. However, the limitation period

shall expire at the latest on the day on which a period equal to or twice the limitation

period has elapsed without the Commission having imposed a fine or a periodic

penalty payment. That period shall be extended by the time during which the

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limitation period is suspended because the decision of the Commission is subject of

proceedings pending before the Court of Justice.

Article 53

Limitation period for the enforcement of penalties

1. The power of the Commission to enforce decisions taken pursuant to Article 51 shall

be subject to a limitation period of three years.

2. Time shall begin to run on the day on which the decision becomes final.

3. The limitation period for the enforcement of fines and periodic penalty payments

shall be interrupted:

(a) by notification of a decision varying the original amount of the fine or periodic

penalty payment or refusing an application for variation

(b) by any action of the Commission or of a Member State, acting at the request of

the Commission, designed to enforce payment of the fine or periodic penalty

payment.

4. Each interruption shall start time running afresh.

5. The limitation period for the enforcement of fines and periodic penalty payments

shall be suspended for as long as:

(a) time to pay is allowed;

(b) enforcement of payment is suspended pursuant to a decision of the Court of

Justice.

Article 54

Right to be heard before the imposition of penalties

1. Before adopting a decision pursuant to Article 51, the Commission shall give the

undertaking concerned the opportunity of being heard on:

(a) preliminary findings of the Commission, including any matter to which the

Commission has taken objections;

(b) measures that the Commission may intend to take in view of the preliminary

findings referred to in point (a).

2. Undertakings concerned may submit their observations on the Commission’s

preliminary findings pursuant to paragraph 1, point (a), within a time limit which

shall be fixed by the Commission in its preliminary findings and which may not be

less than 14 days.

3. The Commission shall base its decisions only on objections on which undertakings

concerned have been able to comment.

4. The rights of defence of the undertaking concerned shall be fully respected in any

proceedings. The undertaking concerned shall be entitled to have access to the

Commission’s file under the terms of a negotiated disclosure, subject to the

legitimate interest of undertakings in the protection of their business secrets. The

right of access to the file shall not extend to confidential information and internal

documents of the Commission or the authorities of the Member States. In particular,

the right of access shall not extend to correspondence between the Commission and

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the authorities of the Member States. Nothing in this paragraph shall prevent the

Commission from disclosing and using information necessary to prove an

infringement.

CHAPTER VII

Delegation of power and committee procedure

Article 55

Exercise of the delegation

1. The power to adopt delegated acts is conferred on the Commission subject to the

conditions laid down in this Article.

2. The power to adopt delegated acts referred to in Article 12 and Article 17 shall be

conferred on the Commission for an indeterminate period of time from [OP: insert

date of entry into force].

3. The delegation of power referred to Article 12 and Article 17 may be revoked at any

time by the European Parliament or by the Council. A decision to revoke shall put an

end to the delegation of the power specified in that decision. It shall take effect the

day following the publication of the decision in the Official Journal of the European

Union or at a later date specified therein. It shall not affect the validity of any

delegated acts already in force.

4. Before adopting a delegated act, the Commission shall consult experts designated by

each Member State in accordance with the principles laid down in the

Interinstitutional Agreement of 13 April 2016 on Better Law-Making.

5. As soon as it adopts a delegated act, the Commission shall notify it simultaneously to

the European Parliament and to the Council.

6. A delegated act adopted pursuant to Article 12 or Article 17 shall enter into force

only if no objection has been expressed either by the European Parliament or by the

Council within a period of two months of the notification of that act to the European

Parliament and the Council or if, before the expiry of that period, the European

Parliament and the Council have both informed the Commission that they will not

object. That period shall be extended by two months at the initiative of the European

Parliament or of the Council.

Article 56

Committee procedure

1. The Commission shall be assisted by the committee (the ‘Semiconductor

Committee’). That committee shall be a committee within the meaning of Regulation

(EU) No 182/2011.

2. Where reference is made to this paragraph, Article 5 of Regulation (EU) No

182/2011 shall apply.

3. Where reference is made to this paragraph, Article 8 of Regulation (EU) No

182/2011, in conjunction with Article 5 thereof, shall apply.

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CHAPTER VIII

Final provisions

Article 57

Evaluation and review

1. By [OP: insert date for four years after date of entry into force] and every four years

thereafter, the Commission shall submit a report on the evaluation and review of this

Regulation to the European Parliament and to the Council. The reports shall be made

public.

2. For the purposes of the evaluation and review of this Regulation, the European

Semiconductor Board, the Member States and national competent authorities shall

provide the Commission with information on its request.

3. In carrying out the evaluation and review of this Regulation the Commission shall

take into account the positions and findings of the European Semiconductor Board,

of the European Parliament, of the Council, and of other relevant bodies or sources.

Article 58

Repeal

1. Regulation (EU) 2023/1781 is repealed. 2. References to Regulation (EU)

2023/1781, shall be construed as references to this Regulation and shall be read in

accordance with the correlation table set out in Annex VII.

Article 59

Transitional provisions

1. Regulation (EU) 2023/1781 shall continue to apply to integrated production facilities

and open EU foundries referred to in Articles 13 and 14 of that Regulation

respectively who were granted such status in accordance with Article 15(3) of that

Regulation, for the period of duration of the status or the time period applicable

pursuant to Article 15(8), second sentence, of that Regulation.

Article 60

Entry into force

This Regulation shall enter into force on the day following that of its publication in the

Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

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Done at Brussels,

For the European Parliament For the Council

The President The President

EN 1 EN

LEGISLATIVE FINANCIAL AND DIGITAL STATEMENT

1. FRAMEWORK OF THE PROPOSAL/INITIATIVE ................................................. 3

1.1. Title of the proposal/initiative ...................................................................................... 3

1.2. Policy area(s) concerned .............................................................................................. 3

1.3. Objective(s) .................................................................................................................. 3

1.3.1. General objective(s) ..................................................................................................... 3

1.3.2. Specific objective(s) ..................................................................................................... 3

1.3.3. Expected result(s) and impact ...................................................................................... 3

1.3.4. Indicators of performance ............................................................................................ 3

1.4. The proposal/initiative relates to: ................................................................................. 4

1.5. Grounds for the proposal/initiative .............................................................................. 4

1.5.1. Requirement(s) to be met in the short or long term including a detailed timeline for

roll-out of the implementation of the initiative ............................................................ 4

1.5.2. Added value of EU involvement (it may result from different factors, e.g.

coordination gains, legal certainty, greater effectiveness or complementarities). For

the purposes of this section 'added value of EU involvement' is the value resulting

from EU action, that is additional to the value that would have been otherwise

created by Member States alone. ................................................................................. 4

1.5.3. Lessons learned from similar experiences in the past .................................................. 4

1.5.4. Compatibility with the multiannual financial framework and possible synergies with

other appropriate instruments ....................................................................................... 5

1.5.5. Assessment of the different available financing options, including scope for

redeployment ................................................................................................................ 5

1.6. Duration of the proposal/initiative and of its financial impact .................................... 6

1.7. Method(s) of budget implementation planned ............................................................. 6

2. MANAGEMENT MEASURES................................................................................... 8

2.1. Monitoring and reporting rules .................................................................................... 8

2.2. Management and control system(s) ............................................................................. 8

2.2.1. Justification of the budget implementation method(s), the funding implementation

mechanism(s), the payment modalities and the control strategy proposed .................. 8

2.2.2. Information concerning the risks identified and the internal control system(s) set up

to mitigate them............................................................................................................ 8

2.2.3. Estimation and justification of the cost-effectiveness of the controls (ratio between

the control costs and the value of the related funds managed), and assessment of the

expected levels of risk of error (at payment & at closure) ........................................... 8

2.3. Measures to prevent fraud and irregularities ................................................................ 9

3. ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE ............ 10

3.1. Heading(s) of the multiannual financial framework and expenditure budget line(s)

affected ....................................................................................................................... 10

EN 2 EN

3.2. Estimated financial impact of the proposal on appropriations ................................... 12

3.2.1. Summary of estimated impact on operational appropriations.................................... 12

3.2.1.1. Appropriations from voted budget ............................................................................. 12

3.2.1.2. Appropriations from external assigned revenues ....................................................... 17

3.2.2. Estimated output funded from operational appropriations......................................... 22

3.2.3. Summary of estimated impact on administrative appropriations ............................... 24

3.2.3.1. Appropriations from voted budget .............................................................................. 24

3.2.3.2. Appropriations from external assigned revenues ....................................................... 24

3.2.3.3. Total appropriations ................................................................................................... 24

3.2.4. Estimated requirements of human resources.............................................................. 25

3.2.4.1. Financed from voted budget....................................................................................... 25

3.2.4.2. Financed from external assigned revenues ................................................................ 26

3.2.4.3. Total requirements of human resources ..................................................................... 26

3.2.5. Overview of estimated impact on digital technology-related investments ................ 28

3.2.6. Compatibility with the current multiannual financial framework.............................. 28

3.2.7. Third-party contributions ........................................................................................... 28

3.3. Estimated impact on revenue ..................................................................................... 29

4. DIGITAL DIMENSIONS .......................................................................................... 29

4.1. Requirements of digital relevance .............................................................................. 30

4.2. Data ............................................................................................................................ 30

4.3. Digital solutions ......................................................................................................... 31

4.4. Interoperability assessment ........................................................................................ 31

4.5. Measures to support digital implementation .............................................................. 32

EN 3 EN

1. FRAMEWORK OF THE PROPOSAL/INITIATIVE

1.1. Title of the proposal/initiative

Regulation of the European Parliament and of the Council on a framework of

measures for strengthening Europe’s semiconductor ecosystem, repealing Regulation

(EU) 2023/1781 (Chips Act 2)

1.2. Policy area(s) concerned

A new plan for Europe’s sustainable prosperity and competitiveness

1.3. Objective(s)

1.3.1. General objective(s)

The Chips Act 2.0 has two general objectives, as specified in the Explanatory

Memorandum:

1. Increase the competitiveness of the European semiconductor value chain to

improve its technological sovereignty and resilience by accelerating the industrial

deployment of research and innovation, ensuring security of supply and reducing

strategic dependencies in cutting-edge and mature semiconductor technologies.

2. Enhance crisis preparedness to ensure EU’s security of supply by increasing the

resilience of the European semiconductors supply chain and protecting EU’s

economic security.

1.3.2. Specific objective(s)

Specific objective No 1

Enhance the capacity, security of supply and competitiveness of the EU

semiconductor industry across the value chain, including leading-edge AI chips

Specific objective No 2

Develop a strong user market across key industry sectors

Specific objective No 3

Increase intelligence capabilities for crisis preparedness and response

1.3.3. Expected result(s) and impact

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted.

The Union’s semiconductor industry should benefit from support to large-scale

technological capacity building in cutting-edge and next-generation semiconductor

technologies that will reinforce the EU’s advanced design, systems integration, and

chips production capabilities. Industry should benefit as well from strategic projects

in design and manufacturing. Semiconductor facilities will benefit from more

effective permit-granting processes.

The Union’s semiconductor users in all sectors should benefit from increased

security of supply of semiconductors without disruptions and from efforts to promote

closer relations with the semiconductor industry. In addition, critical sectors should

benefit from enhanced security of supply of semiconductors.

EN 4 EN

End-users of products with semiconductors should benefit from increased security of

supply, against more attractive market prices.

The competitiveness of the European semiconductor ecosystem will improve.

1.3.4. Indicators of performance

Specify the indicators for monitoring progress and achievements.

Performance indicators are mostly relevant for the Chips for Europe Initiative 2.0.

Annex III gives first versions of measurable indicators to monitor the implementation

and to report on the progress of the Chips for EuropeInitiative 2.0 towards the

achievement of its general objectives:

1. Total semiconductor-related FDI inflows into the EU.

2. Skilled workforce in semiconductor and photonics, including workforce

trained/reskilled through the national chips competence centres’ initiatives.

3. Public support to start-ups and scale-ups.

4. Scale-up funding via private equity and Venture Capital.

1.4. The proposal/initiative relates to:

a new action

a new action following a pilot project / preparatory action74

the extension of an existing action

a merger or redirection of one or more actions towards another/a new action

1.5. Grounds for the proposal/initiative

1.5.1. Requirement(s) to be met in the short or long term including a detailed timeline for

roll-out of the implementation of the initiative

The Regulation should be fully applicable shortly after its adoption, i.e. the day

following that of its publication in the Official Journal of the European Union.

The Regulation builds on the provisions currently in place under EU Regulation

2023/1781 (Chips Act).

1.5.2. Added value of EU involvement (it may result from different factors, e.g.

coordination gains, legal certainty, greater effectiveness or complementarities). For

the purposes of this section 'added value of EU involvement' is the value resulting

from EU action, that is additional to the value that would have been otherwise

created by Member States alone.

The objectives of strengthening the EU’s semiconductor design and manufacturing

capacity and improving crisis preparedness can be achieved more effectively at

Union level because the scale and systemic nature of the challenges exceed the

capacity of individual Member States acting alone. Significant economies of scale

74 As referred to in Article 58(2), point (a) or (b) of the Financial Regulation.

EN 5 EN

arise when coordinating investment in large-scale manufacturing facilities, shared

R&D infrastructure, and cross-border early-warning and monitoring systems,

meaning that EU-level action can pool resources, reduce duplication, and deliver

outcomes more efficiently than fragmented national efforts. Measures such as the

ramping up of production capacities, the speeding up of permitting, priority-rated

orders and common purchasing aim to ensure a coherent response to future crises.

A common framework also brings clear benefits, as it replaces divergent national

incentives, crisis-response protocols, and reporting with common approaches that

ensure coherence, reduce administrative burdens, and avoid subsidy races or

inconsistent regulatory requirements. The functioning of the internal market is

improved as coordinated EU action minimises distortions, ensures fair competition

for attracting semiconductor projects, facilitates the smooth circulation of critical

inputs and chips, and strengthens the resilience of cross-border supply chains that

depend on seamless integration across Member States.

1.5.3. Lessons learned from similar experiences in the past

Several lessons emerge from the evaluation of the current Chips Act75. First, turning

innovation into industrial capacity requires policy mechanisms that explicitly bridge

pilot line infrastructures and manufacturing investments. While the Chips Act

successfully created world-class research and validation facilities, experience shows

that market-scale production does not emerge automatically from technological

capability alone. Future initiatives would benefit from embedding transition

mechanisms that facilitate movement from pilot lines into industrial deployment

more systematically.

Second, demand orientation should be built into industrial policy instruments. The

evaluation highlights that supply-side investment alone does not necessarily generate

scale or competitiveness in the absence of reliable market uptake. Instruments that

support deployment should therefore be accompanied by measures that increase

demand, such as procurement coordination or consumption incentives.

Third, access to finance must remain central to industrial policy. The evaluation

shows that the first-of-a-kind framework improved legal certainty for major

investments, but stakeholders still face delays from State aid rules, lengthy

notifications, and project-level uncertainty. Late-stage venture capital and

institutional investment constraints similarly limit scale-up funding. These factors

weaken Europe’s competitiveness and slow the growth of globally competitive firms.

Finally, crisis preparedness depends on high-quality system intelligence. The

evaluation shows that effective monitoring requires up-to-date visibility across the

entire value chain, covering not only fabrication, but also materials, packaging,

design tools and downstream users. Future frameworks could prioritise improved

data collection, shared data infrastructures, and integrated reporting in order to

enable timely risk detection and coordinated responses.

1.5.4. Compatibility with the multiannual financial framework and possible synergies with

other appropriate instruments

In order to maximise its positive impacts, the Chips for Europe Initiative 2.0 (pillar I)

will continue to build upon the strong knowledge base and enhance synergies with

75 Staff Working Document

EN 6 EN

actions currently supported by the Union and Member States through programmes

and actions in research and innovation in semiconductors and in developments of

part of the supply chain. These include, in particular, the Horizon Europe Framework

Programme and the Digital Europe Programme, with the aim to reinforce Europe as

global player in semiconductor technology and its applications, with a growing

global share in manufacturing by 2030. Complementing those activities, the Chips

for Europe Initiative 2.0 will more closely collaborate with the Industrial Alliance for

Semiconductors.

1.5.5. Assessment of the different available financing options, including scope for

redeployment

Without prejudice to the outcome of negotiations on the next MFF, the

appropriations foreseen from 2028 onwards are strictly indicative.

EN 7 EN

1.6. Duration of the proposal/initiative and of its financial impact

limited duration

–  in effect from the date of adoption of the proposal for a Regulation of the

European Parliament and of the Council establishing a framework of measures for

strengthening Europe’s semiconductor ecosystem (Chips Act 2)

–  financial impact from 2028 to 2034 for commitment appropriations and from

2028 to 2038 for payment appropriations.

unlimited duration

–  Implementation with a start-up period from YYYY to YYYY,

–  followed by full-scale operation.

1.7. Method(s) of budget implementation planned

Direct management by the Commission

–  by its departments, including by its staff in the Union delegations;

–  by the executive agencies

Shared management with the Member States

Indirect management by entrusting budget implementation tasks to:

–  third countries or the bodies they have designated

–  international organisations and their agencies (to be specified)

–  the European Investment Bank and the European Investment Fund

–  bodies referred to in Articles 70 and 71 of the Financial Regulation

–  public law bodies

–  bodies governed by private law with a public service mission to the extent that

they are provided with adequate financial guarantees

–  bodies governed by the private law of a Member State that are entrusted with

the implementation of a public-private partnership and that are provided with adequate

financial guarantees

–  bodies or persons entrusted with the implementation of specific actions in the

common foreign and security policy pursuant to Title V of the Treaty on European Union, and

identified in the relevant basic act

–  bodies established in a Member State, governed by the private law of a

Member State or Union law and eligible to be entrusted, in accordance with sector-specific

rules, with the implementation of Union funds or budgetary guarantees, to the extent that such

bodies are controlled by public law bodies or by bodies governed by private law with a public

service mission, and are provided with adequate financial guarantees in the form of joint and

several liability by the controlling bodies or equivalent financial guarantees and which may

be, for each action, limited to the maximum amount of the Union support.

Comments

With the exception of a) activities and budgets related to the Chips Fund and b) activities and

budgets earmarked under the European Innovation Council, the Chips for Europe Initiative

EN 8 EN

2.0 will continue to be implemented under indirect management by entrusting the

implementation of tasks to the Chips Joint Undertaking and, where applicable, to the joint

undertaking or any other similar entity or initiative succeeding it established by Union law

under a subsequent Multiannual Financial Framework. Member States and other Participating

States are co-funding indirect actions.

Other parts, such as the activities under pillar 2 and 3, are under direct management. These

concern tasks entrusted to the Commission to supervise the Chips JU, to review and decide on

applications for Semiconductor Technology Facilities, to support the European

Semiconductor Board, to support a Business-to-Business Semiconductor Supply Chain

Platform, and – together with Member States – to monitor semiconductor supply chains and

decide on actions, where appropriate.

EN 9 EN

2. MANAGEMENT MEASURES

2.1. Monitoring and reporting rules

This Statement includes expenditures for Commission staff. Standard rules for this

type of expenditure apply. The Commission will evaluate the output, results and

impact of this proposal every 4 years after the date on which it becomes applicable.

Additionally, as a Union body, the Chips Joint Undertaking functions under strict

monitoring rules. Monitoring is performed through:

- its own internal audit capacity and the audit service of the Commission;

- the supervision of the Governing Board. The Executive Director will supervise

the Joint Undertaking’s operations internally;

- a set of quantitative and qualitative performance indicators which are

established to monitor the implementation of the programme and to measure its

impact;

- mid-term and final evaluations of the programme by external experts, under

the supervision of the Commission;

- the Joint Undertaking’s Work Programme and its Annual Activity Report.

2.2. Management and control system(s)

2.2.1. Justification of the budget implementation method(s), the funding implementation

mechanism(s), the payment modalities and the control strategy proposed

The Regulation introduces a revised policy framework with regard to attracting

investment in and enhancing advanced semiconductor manufacturing in the Union as

well as to stimulate demand, and introduces revised rules for a coordinated approach

to monitoring and preparedness for semiconductor shortages. The instruments of

Grand Challenges, strategic projects, Demand Forum, Demand Accelerators, and the

Business-to-Business Semiconductor Supply Chain Platform are new elements, as

well as the recognition of European Semiconductor Regions of Excellence.

These rules require a consistency mechanism for the cross-border application of the

obligations under this Regulation and coordination of the activities of national

authorities and of the Commission through the European Semiconductor Board.

In order to face the tasks to be performed by the Commission, it is necessary to

appropriately resource the Commission’s services.

For other parts, indirect management is justified because the Chips Joint Undertaking

is a public-private partnership with part of the co-financing brought in via

contributions from Participating States and via in-kind contributions by private

members.

Each year, the decision on the EU contribution to the Chips Joint Undertaking will be

taken by virtue of the EU Budget adopted for that year.

A Framework Financial Partnership Agreement signed between the European

Commission and the Chips Joint Undertaking will indicate that for the tasks to be

carried out each year the Commission will pay a contribution upon conclusion of a

contribution agreement with the Chips Joint Undertaking, and the issuing, by the

EN 10 EN

Joint Undertaking, of corresponding payment requests to the members other than the

Union.

The Commission will ensure that the rules applicable to the Chips Joint Undertaking

fully comply with the requirements of the Financial Regulation. In compliance with

Article 71 of Regulation (EU, Euratom) 2024/2509, the Joint Undertaking will

respect the principle of sound financial management. The Chips Joint Undertaking

shall also comply with the provisions of the Model Financial Regulation applicable

to the Joint Undertaking. Any departure from this Model Financial Regulation,

required for the purpose of the Joint Undertaking’s specific needs, shall be subject to

the Commission’s prior consent.

Monitoring arrangements, including through the Union representation in the

Governing Board and Public Authorities Board of the Chips Joint Undertaking, as

well as reporting arrangements will ensure that the Commission services can meet

the accountability requirements both to the College and to the Budgetary Authority.

The internal control framework for the Chips Joint Undertaking is built on:

- the implementation of the Internal Control Standards offering at least

equivalent guarantees to those of the Commission;

- procedures for selecting the best projects through independent evaluation, and

for translating them into legal instruments;

- project and contract management throughout the lifetime of every project;

- ex ante checks on 100% of claims, including receipt of audit certificates and

ex-ante certification of cost methodologies;

- ex post audits on a sample of claims as part of the Horizon Europe ex-post

audits;

- scientific evaluation of project results.

2.2.2. Information concerning the risks identified and the internal control system(s) set up

to mitigate them

This proposal is accompanied by an impact assessment report, which provides the

analytics underpinning the chosen policy approach. The preparation of the initiative

also drew on a public consultation as well as targeted consultations with industry

stakeholders, Member States and trade associations, which ensured the collection of

relevant data, information, and feedback. Nonetheless, unintentional consequences or

unforeseen impacts may still occur during implementation. These will be identified

through the monitoring procedures set out in the Regulation, allowing the

Commission to address them in an appropriate and timely manner.

Additionally, various measures have been established to mitigate the inherent risk of

conflict of interest within the Chips Joint Undertaking, especially:

- for standard decision-making, equal votes (one third) for the Commission,

Participating States (collectively) and for private members (collectively) in the

Governing Board; equal votes (one half) for the Commission and Participating

States (collectively) in the Public Authorities Board;

- high-level decisions on the activities/budgets dedicated to the activities of the

Chips for Europe Initiative 2.0 (capacity building in upcoming work

EN 11 EN

programmes) are taken by the Public Authorities Board with Member States

only,

- the part of the work programme dealing with capacity-building activities is

adopted by the Public Authorities Board with Member States only,

- selection of the Executive Director by the Governing Board based on a

proposal by the Commission,

- independence of staff,

- evaluations by independent experts based on published evaluation criteria

together with appeal mechanisms and full declarations of any interests,

- a requirement for the Governing Board to adopt rules for the prevention,

avoidance and management of conflicts of interest in the Joint Undertaking in

accordance with the financial rules of the Joint Undertaking and with the Staff

Regulations in respect of staff.

The continuation of existing ethical and organisational values will be one of the key

roles of the Joint Undertaking, and will be monitored by the Commission.

The Executive Director of the Chips Joint Undertaking, as Authorising Officer, is

required to introduce a cost-effective system of internal control and management.

They JU Office is required to report to the Commission on the internal control

framework adopted.

The Commission will monitor the risk of non-compliance through the reporting

system that it will develop, as well as by following the results of ex post audits on the

recipients of EU funds from the Chips Joint Undertaking, as part of ex post audits

covering the whole of Horizon Europe and Digital Europe.

There is a clear need to manage the budget in an efficient and effective manner, and

to prevent fraud and waste. However, the control system needs to strike a fair

balance between attaining an acceptable error rate and the control burden required

and avoid lowering the attractiveness of the Union’s programmes.

2.2.3. Estimation and justification of the cost-effectiveness of the controls (ratio between

the control costs and the value of the related funds managed), and assessment of the

expected levels of risk of error (at payment & at closure)

As the rules for participation of Horizon Europe and the Digital Europe programme

applicable to the Chips Joint Undertaking are similar to those that the Commission

will use in its work programmes, and with a population of beneficiaries with a

similar risk profile to those of programmes under direct management, it can be

expected that the error margin will be similar to that foreseen by the Commission for

Horizon Europe and the Digital Europe programme, i.e. to give reasonable assurance

that the risk of error over the course of the multiannual expenditure period is, on an

annual basis, within a range of 2-5 %, with the ultimate aim to achieve a residual

error rate as close as possible to 2 % at the closure of the multiannual programmes,

once the financial impact of all audits, correction and recovery measures have been

taken into account.

EN 12 EN

2.3. Measures to prevent fraud and irregularities

The Commission will ensure that procedures to fight against fraud at all stages of the

management process are applied by the Chips Joint Undertaking.

The Commission will ensure that appropriate measures are in place to ensure that,

when actions financed under this Regulation are implemented, the financial interest

of the Union is protected by the application of preventive measures against fraud,

corruption and any other illegal activities, by effective checks and, if irregularities

are detected, by the recovery of the amounts wrongly paid and, where appropriate, by

effective, proportionate and deterrent penalties.

The Court of Auditors shall have the power of audit, on the basis of documents and

on-the-spot checks, over all grant beneficiaries, contractors and subcontractors who

have received Union funds under the Programme.

The European Anti-fraud Office (OLAF) may carry out on-the-spot checks and

inspections on economic operators concerned directly or indirectly by such funding

in accordance with the procedures laid down in Regulation (Euratom, EC) No

2185/96 with a view to establishing whether there has been fraud, corruption or any

other illegal activity affecting the financial interests of the Union in connection with

a grant agreement or grant decision or a contract concerning Union funding. The

Joint Undertakings will also need to accede to the Interinstitutional Agreement of 25

May 1999 between the European Parliament, the Council of the European Union and

the Commission of the European Communities concerning internal investigations by

the European Anti-fraud Office (OLAF).

The European Public Prosecutor’s Office may carry out investigations in accordance

with the provisions and procedures laid down in Council Regulation (EU)

2017/193923, with a view to investigating criminal offences affecting the financial

interests of the Union.

EN 13 EN

3. ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE

3.1. Heading(s) of the multiannual financial framework and expenditure budget

line(s) affected

• Existing budget lines

In order of multiannual financial framework headings and budget lines.

Heading of

multiannual

financial

framework

Budget line Type of

expenditure Contribution

Number

Diff./Non-

diff.76

from

EFTA

countries 77

from

candidate

countries

and

potential

candidates 78

From

other

third

countries

other assigned

revenue

[XX.YY.YY.YY]

Diff./Non

-diff. YES/NO YES/NO YES/NO YES/NO

[XX.YY.YY.YY]

Diff./Non

-diff. YES/NO YES/NO YES/NO YES/NO

[XX.YY.YY.YY]

Diff./Non

-diff. YES/NO YES/NO YES/NO YES/NO

• New budget lines requested

In order of multiannual financial framework headings and budget lines.

Heading of

multiannual

financial

framework

Budget line Type of

expenditure Contribution

Number

Diff./Non-

diff.

from

EFTA

countries

from

candidate

countries

and

potential

candidates

from

other

third

countries

other assigned

revenue

[XX.YY.YY.YY]

Diff./Non

-diff. YES/NO YES/NO YES/NO YES/NO

[XX.YY.YY.YY]

Diff./Non

-diff. YES/NO YES/NO YES/NO YES/NO

[XX.YY.YY.YY]

Diff./Non

-diff. YES/NO YES/NO YES/NO YES/NO

76 Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations. 77 EFTA: European Free Trade Association. 78 Candidate countries and, where applicable, potential candidates from the Western Balkans.

EN 14 EN

3.2. Estimated financial impact of the proposal on appropriations

3.2.1. Summary of estimated impact on operational appropriations

–  The proposal/initiative does not require the use of operational appropriations

–  The proposal/initiative requires the use of operational appropriations, as explained below

3.2.1.1. Appropriations from voted budget

EUR million (to three decimal places)

Heading of multiannual financial framework Number 2

DG CNECT Year Year Year Year Year Year Year Post TOTAL MFF

2028-2034 2028 2029 2030 2031 2032 2033 2034 2034

Operational appropriations

Budget line [ECF] Commitments (1a) 30.000 20.000 10.000 10.000 70.000

Payments (2a) 18.000 6.000 15.000 7.000 8.000 4.000 7.000 5.000 70.000

Appropriations of an administrative nature financed from the envelope of specific programmes79

Budget line (3)

0

TOTAL

appropriations Commitments

=1a+1b+

3 30.000 20.000 10.000 10.000 70.000

for DG CNECT Payments =2a+2b+

3 18.000 6.000 15.000 7.000 8.000 4.000 7.000 5.000 70.000

Year Year Year Year Year Year Year Post T

O

T

A

L

2028 2029 2030 2031 2032 2033 2034 2034

79 Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former ‘BA’ lines), indirect research, direct research.

EN 15 EN

M

F

F

2

0

2

8

-

2

0

3

4

TOTAL

operational

appropriations

Commitments (4) 30.000 20.000 10.000 10.000

7

0

.

0

0

0

Payments (5) 18.000 6.000 15.000 7.000 8.000 4.000 7.000 5.000

7

0

.

0

0

0

TOTAL appropriations of an

administrative nature financed from

the envelope for specific programmes

(6) 0

TOTAL

appropriations

under

HEADING 2

Commitments =4+6 30.000 20.000 10.000 10.000

7

0

.

0

0

0

EN 16 EN

of the

multiannual

financial

framework

Payments =5+6 18.000 6.000 15.000 7.000 8.000 4.000 7.000 5.000

7

0

.

0

0

0

Year Year Year Year Year Year Year Post TO

TA

L

MF

F

202

8-

203

4

2028 2029 2030 2031 2032 2033 2034 2034

TOTAL

operational

appropriations

Commitme

nts (4) 30.000 0.000 20.000 0.000 10.000 0.000 10.000

70.0

00

Payments (5) 18.000 6.000 15.000 7.000 8.000 4.000 7.000 5.000 70.0

00

TOTAL appropriations of

an administrative nature

financed from the envelope

for specific programmes

(6)

TOTAL

appropriatio

ns under

HEADING 2

Commitme

nts =4+

6 30.0000.00020.0000. 00010.0000.00010.000

70.0

00

of the

multiannual

financial

framework

Payments =5+

6 18. 0006.00015.0007.0008.0004.0007.0005.000 70.0

00

Year Year Year Year Year Year Year Post T

O

T

A 2028 2029 2030 2031 2032 2033 2034 2034

EN 17 EN

L

M

F

F

2

0

2

8

-

2

0

3

4

• TOTAL

operational

appropriations

(all operational

headings)

Commitments (4) 30.000 0.000 20.000 0.000 10.000 0.000 10.000 0.000

7

0

.

0

0

0

Payments (5) 18.000 6.000 15.000 7.000 8.000 4.000 7.000 5.000

7

0

.

0

0

0

• TOTAL appropriations of an

administrative nature financed

from the envelope for specific

programmes (all operational

headings)

(6) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0

.

0

0

0

TOTAL

appropriations

Under Heading

1 to 3

Commitments =4+6 30.0000.00020.0000. 00010.0000.00010.000

7

0

.

0

0

EN 18 EN

0

of the

multiannual

financial

framework Payments =5+6 18.0006.00015.0007.0008.0004.0007.0005.000

7

0

.

0

0

0 (Reference

amount)

EN 19 EN

Heading of multiannual financial framework 4 ‘Administrative expenditure’80

DG: CNECT Year Year Year Year Year Year Year TOTAL

MFF

2028-

2034 2028 2029 2030 2031 2032 2033 2034

 Human resources 1.972 1.972 1.972 1.972 1.972 1.972 1.972 13.804

 Other administrative expenditure

TOTAL DG

CNECT

1.9721.9721.9721.9721.9721.9721.972 13.804

DG: COMP Year Year Year Year Year Year Year TOTAL

MFF

2028-

2034 2028 2029 2030 2031 2032 2033 2034

 Human resources 0.881 0.881 0.881 0.881 0.881 0.881 0.881 6.167

 Other administrative expenditure

TOTAL DG

COMP Appropriations 0.881 0.881 0.881 0.881 0.881 0.881 0.881 6.167

TOTAL appropriations under HEADING 4 of

the multiannual financial framework

(Total

commitments =

Total payments) 2.853 2.853 2.853 2.853 2.853 2.853 2.853 19.971

EUR million (to three decimal places)

80 The necessary appropriations should be determined using the annual average cost figures available on the appropriate BUDGpedia webpage.

EN 20 EN

Year Year Year Year Year Year Year Post TOTAL

MFF 2028-

2034 2028 2029 2030 2031 2032 2033 2034 2034

TOTAL

appropriations

under HEADINGS 1

to 4

Commitments 32.853 2.853 22.853 2.853 12.853 2.853 12.853 0.000 89.971

of the multiannual

financial framework Payments 20.853 8.853 17.853 9.853 10.853 6.853 9.853 5.000 89.971

The estimated impact on expenditure and staffing for 2028 and beyond is added for illustrative purposes only and does not pre-judge the next

Multiannual Financial Framework. The source of financing and scope of Union financial commitment in the post-2027 period remain subject to

the outcome of interinstitutional negotiations on the MFF 2028-2034 and thereafter shall be determined through the annual budgetary procedure.

All appropriations and staffing allocations as of 2028 are indicative.

EN 21 EN

3.2.2. Estimated output funded from operational appropriations (not to be completed for decentralised agencies)

Commitment appropriations in EUR million (to three decimal places)

Indicate

objectives and

outputs



Year 2028

Year 2029

Year 2030

Year 2031

Enter as many years as necessary to show the

duration of the impact (see Section1.6) TOTAL

OUTPUTS

Type81

Avera

ge

cost

N o

Cost N o

Cost N o

Cost N o

Cost N o

Cost N o

Cost N o

Cost Total

No

Total

cost

SPECIFIC OBJECTIVE No 182…

- Output

- Output

- Output

Subtotal for specific objective No 1

SPECIFIC OBJECTIVE No 2 ...

- Output

Subtotal for specific objective No 2

TOTALS

81 Outputs are products and services to be supplied (e.g. number of student exchanges financed, number of km of roads built, etc.). 82 As described in Section 1.3.2. ‘Specific objective(s)’

EN 22 EN

3.2.3. Summary of estimated impact on administrative appropriations

–  The proposal/initiative does not require the use of appropriations of an

administrative nature

–  The proposal/initiative requires the use of appropriations of an administrative

nature, as explained below

3.2.3.1. Appropriations from voted budget

VOTED APPROPRIATIONS Year Year Year Year Year Year Year TOTAL

2028 -

2034 2028 2029 2030 2031 2032 2033 2034

HEADING 4

Human resources 2.853 2.853 2.853 2.853 2.8532.8532.853 19.971

Other administrative expenditure 0.000 0.000 0.000 0.000 0.0000.0000.000 0.000

Subtotal HEADING 4 2.853 2.853 2.853 2.853 2.853 2.853 2.853 19.971

Outside HEADING 4

Human resources 0.000 0.000 0.000 0.000 0.0000.0000.000 0.000

Other expenditure of an administrative

nature 0.000 0.000 0.000 0.000 0.0000.0000.000 0.000

Subtotal outside HEADING 4 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

TOTAL 2.853 2.853 2.853 2.853 2.853 2.853 2.853 19.971

In order to support the work on monitoring and crisis management, DG CNECT may conclude an

Administrative Agreement with the JRC for roughly 2 FTEs (CA), subject to the availability of

resources and expertise. This LFDS does not contain budget for such possible Administrative

Agreement.

The estimated impact on expenditure and staffing for 2028 and beyond is added for illustrative

purposes only and does not pre-judge the next Multiannual Financial Framework. The source of

financing and scope of Union financial commitment in the post-2027 period remain subject to the

outcome of interinstitutional negotiations on the MFF 2028-2034 and thereafter shall be determined

through the annual budgetary procedure. All appropriations and staffing allocations as of 2028 are

indicative.

3.2.4. Estimated requirements of human resources

–  The proposal/initiative does not require the use of human resources

–  The proposal/initiative requires the use of human resources, as explained

below

3.2.4.1. Financed from voted budget

Estimate to be expressed in full-time equivalent units (FTEs)83

VOTED APPROPRIATIONS Year Year Year Year Year Year Year

2028 2029 2030 2031 2032 2033 2034

 Establishment plan posts (officials and temporary staff)

83 Please specify below the table how many FTEs within the number indicated are already assigned to the

management of the action and/or can be redeployed within your DG and what are your net needs.

EN 23 EN

20 01 02 01 (Headquarters and

Commission’s Representation

Offices)

12 12 12 12 12 12 12

20 01 02 03 (EU Delegations) 0 0 0 0 0 0 0

(Indirect research) 0 0 0 0 0 0 0

(Direct research) 0 0 0 0 0 0 0

Other budget lines (specify) 0 0 0 0 0 0 0

• External staff (in FTEs)

20 02 01 (AC, END from the

‘global envelope’) 5 5 5 5 5 5 5

20 02 03 (AC, AL, END and JPD

in the EU Delegations) 0 0 0 0 0 0 0

Admin. Support

line

• at

Headquarte

rs

0 0 0 0 0 0 0

[XX.01.YY.YY] • in EU

Delegations 0 0 0 0 0 0 0

(AC, END - Indirect research) 0 0 0 0 0 0 0

(AC, END - Direct research) 0 0 0 0 0 0 0

Other budget lines (specify) -

Heading 4 0 0 0 0 0 0 0

Other budget lines (specify) -

Outside Heading 4 0 0 0 0 0 0 0

TOTAL 17 17 17 17 17 17 17

The estimated impact on expenditure and staffing for 2028 and beyond is added for illustrative

purposes only and does not pre-judge the next Multiannual Financial Framework. The source of

financing and scope of Union financial commitment in the post-2027 period remain subject to the

outcome of interinstitutional negotiations on the MFF 2028-2034 and thereafter shall be determined

through the annual budgetary procedure. All appropriations and staffing allocations as of 2028 are

indicative.

The staff required to implement the proposal (in FTEs):

To be covered by

current staff

available in the

Commission

services

Exceptional additional staff*

To be financed

under Heading 4

or Research

To be financed

from BA line

To be financed

from fees

Establishment

plan posts 5 7

N/A

External staff

(CA, SNEs, INT) 2 3

EN 24 EN

Description of tasks to be carried out by:

Officials and temporary staff Some tasks can be executed by redeployment of staff working currently on similar

tasks, e.g. related to programme supervision, stakeholder liaison, and reporting for

research & development and capacity-building activities under Pillar I.

Additional tasks under the proposal should be carried out by additional staff, e.g.

definition and supervision of Strategic Projects, including monitoring of milestones

and deliverables; compliance checks (State aid, procurement); cross-border

coordination with Member States; defining grand challenges and supervising their

implementation; coordinating administrative (non-fiscal) oversight; assessment of

regional investment plans; assessment of ownership and control of domestic

undertakings; consultation of the European Semiconductor Board on strategic projects,

recommendations of chips from domestic undertakings in public procurement,

consultations with the Alliance with a view to defining a common strategy on

semiconductor technologies, advice on risk-prone sectors; setting up strategic

partnerships with third countries; providing guidance on public procurement to

Member States and to contracting authorities; providing methodological

recommendations on carrying out security of supply risk assessments; executing crisis

preparedness exercises; setting up and facilitating demand forums; supporting co-

design activities between semiconductor manufacturers and downstream industrial

users; providing technical and legal guidance for procurement of systems integrating

innovative semiconductor design and solutions; ensuring coherence between the

Initiative 2.0 and national/regional strategies; supervising organisation and reporting to

Council / Parliament.

In addition, the proposal implies additional tasks related to the Business-to-Business

Semiconductor Supply Chain Platform, e.g. monitoring of semiconductor supply

chains; analysis and crisis preparedness functions; issuing and handling of Requests

for Information (RFIs) and checking and aggregating data during pre-crisis stage; and

cross-sector coordination with industry stakeholders.

A considerable part of the above additional tasks can be implemented via the

redeployment of existing staff.

External staff Idem

3.2.5. Overview of estimated impact on digital technology-related investments

Compulsory: the best estimate of the digital technology-related investments entailed

by the proposal/initiative should be included in the table below.

Exceptionally, when required for the implementation of the proposal/initiative, the

appropriations under Heading 4 should be presented in the designated line.

The appropriations under Headings 1-3 should be reflected as “Policy IT expenditure

on operational programmes”. This expenditure refers to the operational budget to be

used to reuse/ buy/ develop IT platforms/ tools directly linked to the implementation

of the initiative and their associated investments (e.g. licences, studies, data storage

etc). The information provided in this table should be consistent with details

presented under Section 4 “Digital dimensions”.

TOTAL Digital

and IT

appropriations

Year Year Year Year Year Year Year TOTAL

MFF

2028 -

2034 2028 2029 2030 2031 2032 2033 2034

HEADING 4

EN 25 EN

IT expenditure (corporate)

0 0 0 0 0 0 0 0

Subtotal

HEADING 4 0 0 0 0 0 0 0 0

Outside HEADING 4

Policy IT expenditure on operational programmes

0 0 0 0 0 0 0 0

Subtotal outside

HEADING 4 0 0 0 0 0 0 0 0

TOTAL 0 0 0 0 0 0 0 0

3.2.6. Compatibility with the current multiannual financial framework

The proposal/initiative:

–  can be fully financed through redeployment within the relevant heading of the

multiannual financial framework (MFF)

–  requires use of the unallocated margin under the relevant heading of the MFF

and/or use of the special instruments as defined in the MFF Regulation

–  requires a revision of the MFF

The estimated impact on expenditure and staffing for 2028 and beyond is added for

illustrative purposes only and does not pre-judge the next Multiannual Financial

Framework. The source of financing and scope of Union financial commitment in the

post-2027 period remain subject to the outcome of interinstitutional negotiations on

the MFF 2028-2034 and thereafter shall be determined through the annual budgetary

procedure. All appropriations and staffing allocations as of 2028 are indicative.

3.2.7. Third-party contributions

The proposal/initiative:

–  does not provide for co-financing by third parties

–  provides for the co-financing by third parties estimated below:

Appropriations in EUR million (to three decimal places)

Year Year Year Year Year Year Year

Total 2028 2029 2030 2031 2032 2033 2034

Specify the co-

financing body

EN 26 EN

TOTAL

appropriations

co-financed

3.3. Estimated impact on revenue

–  The proposal/initiative has no financial impact on revenue.

–  The proposal/initiative has the following financial impact:

–  on own resources

–  on other revenue

–  please indicate, if the revenue is assigned to expenditure lines

EUR million (to three decimal places)

Budget revenue line:

Appropriations

available for

the current

financial year

Impact of the proposal/initiative84

Year

2028

Year

2029

Year

2030

Year

2031

Year

2032

Year

2033

Year

2034

Article ………….

For assigned revenue, specify the budget expenditure line(s) affected.

Other remarks (e.g. method/formula used for calculating the impact on revenue or

any other information).

4. DIGITAL DIMENSIONS

This Section considers trans-European digital public services and their cross-border

interoperability requirements.

4.1. Requirements of digital relevance

High-level description of the requirements of digital relevance and related categories (data,

process digitalisation & automation, digital solutions and/or digital public services):

Reference to

the

requirement

Requirement

description

Actor(s)

affected or

concerned by

the requirement

High-level

Processes Categories

Article 15 Application for the

status as European

semiconductor

European

Commission Application Data

84 As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net

amounts, i.e. gross amounts after deduction of 20% for collection costs.

EN 27 EN

Reference to

the

requirement

Requirement

description

Actor(s)

affected or

concerned by

the requirement

High-level

Processes Categories

technology initiative

Article 22

Member States shall

establish a single

permit-granting

procedure based on a

single application

covering all permits

required for European

semiconductor

technology initiatives

and strategic projects

Member States

National

competent

authorities

Permit

granting

Data

Digital Solution

Process

digitalisation

and automation

Article 24

Member States shall

set up a single access

poirtal at national

level, , for the

submission of the

single permit

application for

European

semiconductor

technology facilities

and strategic projects

Member States

National

competent

authorities

Permit

granting

Process

digitalisation

and automation

Article 33

Strategic mapping of

the Union’s

semiconductor sector

European

Commission Monitoring Data

Article 34

Set up of the Business-

to-Business

Semiconductor Supply

Chain Platform

Private operators Data sharing Digital Solution

Data

Article 35

The Commission, in

consultation with the

European

Semiconductors Board

shall carry out regular

monitoring of the

semiconductor value

chain with a view to

identifying factors that

may disrupt,

compromise or

negatively affect the

European

Commission Monitoring Data

EN 28 EN

Reference to

the

requirement

Requirement

description

Actor(s)

affected or

concerned by

the requirement

High-level

Processes Categories

supply of

semiconductors or

trade in

semiconductors

Article 38 Preventive information

gathering

European

Commission Reporting Data

Article 41 Information gathering

in the crisis stage

European

Commission Reporting Data

4.2. Data

High-level description of the data in scope.

Type of data Reference to the

requirement(s)

Standard and/or

specification (if applicable)

Data in the context of the application

for status of a European

semiconductor technology initiative

Article 15 N/A

Permit-granting applications Article 22 N/A

Data needed for a strategic mapping

of the Union’s semiconductor sector Article 33 N/A

Data in the context of the Business-to-

Business Semiconductor Supply

Chain Platform

Article 34 N/A

Data needed for the monitoring of the

semiconductor value chain Article 35 N/A

Preventive information gathering Article 38 N/A

Information gathering in the crisis

stage Article 41 N/A

Data flows

High-level description of the data flows

Type of data Reference(s)

to the

document

Actors who

provide the

data

Actors who

receive the

data

Trigger for

the data

exchange

Frequency

(if

applicable)

Data in the Article 15 Industry European N/A N/A

EN 29 EN

context of the

application for

status of a

European

semiconductor

technology

initiative

Commission

Permit-

granting

applications

Article 22 Industry Member

States N/A N/A

Data needed

for a strategic

mapping of the

Union’s

semiconductor

sector

Article 33 Industry European

Commission N/A N/A

Data in the

context of the

Business-to-

Business

Semiconductor

Supply Chain

Platform

Article 34 Industry European

Commission N/A N/A

Data needed

for the

monitoring of

the

semiconductor

value chain

Article 35 Industry European

Commission N/A N/A

Preventive

information

gathering

Article 38 Industry European

Commission

Pre-Crisis

stage N/A

Information

gathering in

the crisis stage

Article 41 Industry European

Commission Crisis stage N/A

Alignment with the European Data Strategy

Explanation of how the requirement(s) are aligned with the European Data Strategy:

This legislative initiative is in line with the use of privately-held data by government

authorities (business-to-government – B2G) in order to ensure evidence-driven policy

decisions. The digital permitting system shall be designed to ensure interoperability and

automated data exchange between competent authorities, the reuse of data and documents

EN 30 EN

already held by public authorities, a high level of cybersecurity and information integrity, as

well as transparency and accountability in the permit-granting procedure.

Alignment with the once-only principle

Article 22 provides for the establishment of a single permit-granting procedure, based on a

single application to cover all permits required for European semiconductor technology

initiatives and strategic projects.

4.3. Digital solutions

For each digital solution, please provide the reference to the requirement(s) of digital

relevance concerning it, a description of the digital solution's mandated functionality, the

body that will be responsible for it, and other relevant aspects such as reusability and

accessibility. Finally, explain whether the digital solution intends to make use of AI

technologies.

Digital

solution

Reference

to the

requiremen

t(s)

Main

mandated

functionalit

ies

Responsi

ble body

How is

accessibil

ity

catered

for?

How is

reusabilit

y

considere

d?

Use of AI

technolog

ies

Digital

Permitting

System

Article 22

and Article

24

Permit-

granting

procedures

are carried

out through

fully digital

means.

The system

shall

provide a

single user

interface

enabling

interaction

with the

relevant

public

services.

The digital

permitting

system shall

enable the

paperless

submission,

tracking,

Member

States

National

Competen

t

Authoritie

s

The

digital

permitting

system

should be

designed

to ensure

user-

friendline

ss and

accessibili

ty for all

applicants

,

including

persons

with

disabilitie

s

The

digital

permitting

system

should be

designed

to ensure

reuse of

data and

document

s already

held by

public

authorities

//

EN 31 EN

Digital

solution

Reference

to the

requiremen

t(s)

Main

mandated

functionalit

ies

Responsi

ble body

How is

accessibil

ity

catered

for?

How is

reusabilit

y

considere

d?

Use of AI

technolog

ies

and

decision-

making of

permit

applications

.

Business-to-

Business

Semiconduc

tor Supply

Chain

Platform

Article 34

The

Platform

should

gather data

from

participatin

g

undertaking

s to increase

transparenc

y and

resilience of

the semi–

conductor

supply

chain

Private

operators

The

Platform

should be

designed

to ensure

user-

friendline

ss and

accessibili

ty for all

applicants

,

including

persons

with

disabilitie

s.

//

Digital Permitting System

Digital and/or sectoral

policy (when these are

applicable)

Explanation on how it aligns

EU Cybersecurity

framework

The national Digital Permitting System should be designed to

ensure a high level of data protection, cybersecurity, and

integrity of information.

European Business Wallets A national Digital Permitting System’s single access point shall

use the European Business Wallets.

Business-to-Business Semiconductor Supply Chain Platform

Digital and/or sectoral

policy (when these are

applicable)

Explanation on how it aligns

EN 32 EN

EU Cybersecurity

framework

The Business-to-Business Semiconductor Supply Chain

Platform should be designed to ensure a high level of data

protection, cybersecurity, and integrity of information.

4.4.Interoperability assessment

N/A

4.5. Measures to support digital implementation

N/A

EN EN

EUROPEAN COMMISSION

Brussels, 3.6.2026

COM(2026) 504 final

ANNEXES 1 to 7

ANNEXES

to the

PROPOSAL FOR A REGULATION OF THE EUROPEAN PARLIAMENT AND OF

THE COUNCIL

on a framework of measures for strengthening Europe's semiconductor ecosystem,

repealing Regulation (EU) 2023/1781 (Chips Act 2.0)

{SEC(2026) 504 final} - {SWD(2026) 504 final} - {SWD(2026) 505 final}

EN 1 EN

ANNEX I Actions under the Chips for Europe Initiative 2.0

Technical description of the Chips for Europe Initiative 2.0: scope of actions

Where appropriate, the actions supported by the Chips for Europe Initiative 2.0 shall be

implemented in accordance with the following technical descriptions:

1. Design capacities for integrated semiconductor technologies

Context

The Chips for Europe Initiative 2.0 shall support large-scale innovative design capacities for

semiconductor technologies through a cloud-based design platform available across the

Union. The design platform shall consist of innovative design facilities with extended libraries

and tools, integrating a large number of existing and new technologies, including emerging

technologies such as integrated photonics, quantum, and AI/neuromorphic. In combination

with existing Electronic Design Automation tools, it shall allow the design of innovative

components and new system concepts, and it demonstrates key functionalities, such as new

approaches to high-performance, low-energy, security, new 3D and heterogeneous system

architectures.

As the strategic backbone of the Chips for Europe Initiative 2.0, the platform shall provide a

one-stop entry point, guiding users from design to prototyping and manufacturing, and uniting

research, education, and industry. Its ultimate goal shall be to foster a new generation of

Union fabless start-ups. Those companies contribute to developing innovative chips for Union

user industries, capture the highest value in the semiconductor value chain, drive innovation

in fast-growing markets, and reduce the Union’s dependence on foreign design ecosystems.

Status

As of May 2026, a wide range of actors has been involved, including a Platform Coordination

Team (PCT)1, Design Enablement Teams2, cloud providers, Electronic Design Automation

(EDA) vendors, and IP providers. The design platform shall be implemented in a sequential

manner: a Platform Coordination Team was first selected and put in place to operate the

platform, host the central cloud infrastructure and coordinate user support services. The

Design Enablement Teams have also been selected to provide tailored, end-to-end support for

users throughout the chip development process. A contractor was selected for the central

cloud infrastructure, which will host IP, pilot line Process Design Kits, and open-source EDA

tools.

Negotiations are ongoing to select and onboard major EDA tool providers. These negotiations

are expected to be concluded by autumn 2026. The first full-scale facilities are expected to

become operational by end 2026.

1 The Platform Coordination Teams serves as the hosting entity for the Design Platform’s virtual

infrastructure and central services, coordinates access to a wide range of tools, assets and services, and

assists the Chips JU in procuring the cloud platform. 2 Design enablement teams assist users in setting up and customising design environments and flows, and

to deploy Electronic Design Automation tools on the cloud.

EN 2 EN

The Design Platform shall be complemented by other actions to cultivate design related

competences in the Union. This includes administering grants for start-ups and SMEs using

the platform, support for open-source EDA tools development, and for the EuroPractice

services that provide over 600 European universities with access to EDA tools for training at

nominal costs as well as access to fabrication from leading foundries.

Future outlook

The Design Platform shall be continuously upgraded with new design capabilities as it

continuously integrates more and more technologies and designs. This may include new open-

source processor architectures and other innovative architectures, chiplets, programmable

chips, new types of memory, processors, accelerators or low power chips.

The platform shall also integrate photonics and quantum chips IP, libraries and design

automation tools in a fully integrated system approach (see also points 3 and 5 below). It shall

also integrate the Process Design Kits (PDKs) of the main pilot lines of the Chips for Europe

Initiative 2.0, as well as PDKs of industrial manufacturing facilities (subject to their prior

agreement) in order to facilitate designing chips ready to be taped out in such pilot lines and

industrial facilities.

The platform shall offer its services via the cloud, maximising access and openness to the

whole community by networking existing and new design centres across the Member States.

In particular, the platform shall offer support to startups, scaleups, and SMEs. It shall enlarge

the Union’s semiconductor ecosystem by integrating with different market sectors, such as

health, mobility, energy, telecommunications, security, defence and space. More attention

shall be given to industrialisation of innovative components designed on the platform and

introduced on lead sectors.

2. Pilot lines for preparing for innovative production, testing and validation

Context

The Chips for Europe Initiative 2.0 shall support pilot lines for production, testing and

validation bridging the gap from the lab to the fab of advanced semiconductor technologies,

such as architectures and materials for power electronics, neuromorphic and embedded AI

chips, integrated photonics, graphene and other 2D-material-based technologies, integrating

electronics and microfluidics in heterogeneous systems.

Status

As of May 2026, five pilot lines are operational to varying extents, while more equipment,

machinery, and tools are being added to increase the capability and capacity of the pilot lines.

The pilot line technology areas were chosen to close the Union’s most critical semiconductor

gaps while building on existing strengths, securing long-term competitiveness, security of

supply, and industrial resilience. The five pilot lines are the following:

• sub-2 nm logic anchors the Union in the advanced nodes that power AI, HPC, data

centres and next-generation communications;

• FD-SOI capitalises on a field where the Union already leads, delivering low-power,

high-reliability chips for automotive, mobility, industrial automation, and Internet of

Things;

EN 3 EN

• advanced packaging and heterogeneous integration follow the observation that

future performance gains hinge on system-level integration; the Union faces a

strategic weakness in packaging but also a major opportunity to lead in chiplets, 3D

stacking, and the co-integration of logic, memory, sensing, and connectivity;

• wide-bandgap materials (such as SiC and GaN) match the Union’s strengths in

power electronics and are vital for the energy transition, electric mobility, renewable

infrastructure, and high-efficiency industrial systems; and

• photonic integrated circuits, which are increasingly important for high-bandwidth,

low-power data transmission, sensing and advanced computing architectures in

telecoms and data centres.

Moreover, ‘Lab to Fab Accelerators’ aim to achieve a rapid uptake by EU industry of the

technologies developed under the pilot lines, in particular technologies related to advanced

packaging and heterogeneous integration.

Future outlook

Pilot lines shall continue to support experimentation, test, and validation, including through

Process Design Kits (PDKs), of the performance of IP blocks, virtual prototypes, new designs

and novel integrated heterogeneous systems in an open and accessible way. Their PDKs shall

be integrated in the design platform in order to enable access for design and (virtual)

prototyping projects.

Current pilot lines shall increasingly focus on industrialisation and deployment of pilot line

technologies to support the Union’s semiconductor ecosystem.

New or upgraded pilot lines may be supported for emerging challenges, such as energy

efficient AI chips; leading edge technologies such as CFET devices and monolithic 3D

integrated circuits for higher performance and lower power consumption; ferroelectric,

resistive and charge based memories enabling ultra-fast and ultra-low power operations.

Furthermore, new or upgraded pilot testbeds may be supported where different innovative

technologies or products are combined and integrated for the development and validation of

new devices in key applications and user industries. An example is a testbed for the

miniaturisation, advanced optics, and laser projection technologies related to smart glasses.

Pilot testbeds shall help identify risks, validate performance, and ensure feasibility in real-

world conditions before full industrial-scale deployment.

3. Advanced technology and engineering capacities for quantum chips

Context

The Chips for Europe Initiative 2.0 shall support the development of quantum chips and

associated technologies, including those based on semiconductor material or integrated with

photonics. Dedicated actions shall include design libraries for quantum chips, pilot lines for

building quantum chips, and facilities for testing and validating quantum chips produced by

the pilot lines. The aim is to provide Union researchers, start-ups and industry with reliable

access to facilities capable of producing and validating the main quantum chip technologies.

Status

As of May 2026, six quantum chip pilot lines are established, one for each of the leading

Union technology platforms: superconducting, spin, photonic, diamond, neutral-atom, and

EN 4 EN

trapped-ion chips. The projects focus on setting up stable pilot-scale fabrication processes,

integrating testing and experimentation facilities, developing early industrialisation roadmaps,

and laying the groundwork for future scaling.

Pilot line Name Coordinator

Superconducting SUPREME VTT (FI)

Spin SPINS IMEC (BE)

Photonic P4Q University of Twente (NL)

Diamond DIREQT CNR (IT)

Neutral atoms Q-PLANET PASCAL (FR)

Trapped ion CHAMP-ION SAL (AT)

In addition, activities shall be addressed to support the emergence of a pan-European quantum

design community around quantum chip design, simulation, and verification libraries and

tools. Finally, enabling technologies shall be supported, including the electronics, cryogenics,

packaging and interfacing subsystems that prepare, protect, control, interconnect, and read-out

core quantum devices.

Future outlook

Advanced technology and engineering capacities for quantum chips shall continue to be built

out and enhanced. This includes design capabilities, design libraries for quantum chips, pilot

lines, testing and experimentation facilities, enabling technologies. Support to first

industrialisation efforts of the most mature developments shall also be provided. A

differentiation in support shall be made for different technology platforms. Maturation of

quantum chip technologies shall lead to increased industrialisation.

4. A network of semiconductor competence centres and skills development

Context

The Chips for Europe Initiative 2.0 shall support the operation of a network of semiconductor

competence centres. These centres shall provide structured access to technical expertise,

testing facilities, and advisory services, and enable companies (particularly SMEs and start-

ups) to strengthen their design capabilities, experiment with new technologies, and develop

specialised skills. Competence centres shall play a key role in addressing the Union’s skills

gap in semiconductor technologies.

Status

As of May 2026, competence centres have been established in all Member States, as well as

in Norway. In addition, a support action was defined to set up and coordinate the work of the

national competence centres. The support action has launched a Training and Skills

Development focus group which drives collaboration among the competence centres to roll

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out education and upskilling initiatives, to create training concepts, and to provide specific

training and access to the design platform and pilot lines.

Future outlook

Semiconductor competence centres shall continue to be supported. The possibility to launch

new centres or to refocus existing centres depending on market and technology developments

shall be analysed. The cooperation between competence centres in the overall network shall

be strengthened, where possible. Furthermore, the support by competence centres on skills

development shall be enhanced, including by fostering cooperation with higher education and

vocational training providers, by collaborating closely with the Pact for Skills and the skills

working group of the Industrial Alliance, and by increasing the visibility and attractiveness of

the semiconductor sector.

5. Advanced design, prototyping, and industrial deployment capacities for

photonic integrated circuit technologies

Context

This new component of the Chips for Europe Initiative supports the development of photonic

integrated circuits and associated technologies. Actions include developing design libraries

and design automation tools for photonic integrated circuits and enhancing existing and/or

setting up new pilot lines for the prototyping and production of photonic integrated circuits.

Capabilities in production technologies including co-packaging and heterogeneous integration

with electronic chips, manufacturing equipment, and materials platforms for photonic

integrated circuits shall be strengthened.

Status

As of May 2026, a pilot line on photonic integrated circuits has been inaugurated. This pilot

line offers open-access fabrication services across 14 hosting sites, covering multiple photonic

material platforms from silicon and silicon nitride to indium phosphide. Services include chip

fabrication runs, hybrid integration, packaging, testing, and reliability qualification.

Technology demonstrators are planned, including co-packaged optics for AI data centres,

LiDAR sensors, visible light engines for AR/VR, and programmable photonic processors.

Furthermore, apart from the pilot line, industrial-grade demonstrators of advanced photonic

technologies are developed that need to show scalability, reliability, and integration-readiness.

Future outlook

Photonic integrated circuits and associated technologies shall continue to be supported. This

shall include design tools, design libraries, pilot lines, demonstrators, training services.

Specific attention shall be dedicated to the transfer and industrial uptake of technologies

developed under this component of the Chips for Europe Initiative 2.0.

6. Chips Fund activities for access to capital by start-ups, scale-ups, and SMEs

Context

The Chips for Europe Initiative 2.0 shall support the creation of a thriving semiconductor and

quantum innovation ecosystem by supporting access to venture capital for start-ups, scale-ups

and SMEs to grow their business and expand their market presence in a sustainable manner.

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Status

As of May 2026, the Chips Fund is implemented through two thematic investment facilities:

the European Innovation Council’s Accelerator programme, with Horizon Europe funding in

blended grant and equity for high-risk, deep-tech startups; and the InvestEU Fund, managed

by the European Investment Fund, with a guarantee from the Digital Europe Programme, for

intermediated equity investments ranging from seed to growth stage. The EUR 300 million

available budget for the Accelerator programme was fully deployed in just two years and

supports 24 highly innovative startups with a total of EUR 62 million in grants and EUR 238

million in recommended equity investment. On the InvestEU leg of the Chips Fund, four

financial partners have been selected and EUR 68 million in funds have been signed or

approved with them, resulting so far in 31 companies from early to growth stage having

received EUR 116 million equity investment.

Future outlook

Whereas attention for startups shall continue, more focus shall be put on scaleups and later

stage funding. Considerable funding from the Scaleup Europe Fund for deep-tech scaleups

shall be increasingly deployed, leveraging additional private venture capital.

7. Grand challenges

Context

This new component of the Chips for Europe Initiative 2.0 shall support large-scale, cross-

sectoral initiatives addressing major technological and industrial challenges of strategic

relevance for the Union (‘grand challenges’), which potentially affect different ecosystems.

Grand challenges are expected to result in technology advances in mainstream and leading-

edge technologies, end-to-end product integration through the whole product development

lifecycle, and their pre-commercial industrialisation.

Status

As of May 2026, no prior activities have been carried out under the banner of ‘grand

challenges’ under the Initiative.

Future outlook

Possible grand challenges that can be targeted may include the development of new

computing technologies for drastic (say times 1000) energy reduction. The grand challenge

would result in energy-efficient, secure and distributed AI infrastructures, enabling high-

performance AI accelerators (HBM-class memory, stacked logic, optical/RF interconnects),

agentic/embodied AI systems, contextual edge intelligence and secure low-power

infrastructures. The development of energy-efficient chips, including AI chips, shall also

support the grand challenge “pioneering energy- and resource-efficient compute

infrastructure, with a view to enhancing their sustainability at scale” as identified under the

Cloud and AI Development Act (CADA)3. A close link between the R&I activities to address

the two complementary challenges shall be established, including possible coordinated calls

for proposals.

Another grand challenge shall be the development of processors and accelerators, which are

designed and, where appropriate, manufactured in the EU, and that would become part of a

cloud and AI stack. This grand challenge shall again be closely linked and contribute to a

3 See Article 4 of the Cloud and AI Development Act

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CADA grand challenge, namely ‘reaching autonomy across the cloud and AI stack, with a

view to eliminate dependencies in critical technologies’ 4. The grand challenge may target in

particular solutions developed by upcoming startups and may include the use of innovation

procurement. Again, a close link between the R&I activities to address the two

complementary challenges shall be established, including possible coordinated calls for

proposals.

A third grand challenge may be in physical AI, to provide the foundational technologies to

enable a wide range of future applications, services, and autonomous systems from, for

example, humanoid to industrial robots and their deployment, in particular, in med-tech and

healthcare to manufacturing, aerospace and defence. R&I in physical AI shall lead to

advances in mainstream technologies such as power semiconductors, microcontrollers, and

analog-/mixed signal- and sensor technologies. R&I shall be followed by industrial

production and commercialisation of embedded advanced AI into autonomous machines,

robots, broadband networks, and next-generation connected devices.

A fourth grand challenge may be on smart glasses and virtual worlds. A recent Commission

Communication sets out the strategy and proposed actions on virtual worlds and Web 4.05. In

this context, optics, photonics and semiconductor technologies are crucial for realizing

sensing and visualization devices supporting Virtual Worlds applications such as smart

glasses. R&I shall significantly improve the quality, performance, and efficiency of

processing and communicating Virtual Worlds content. A grand challenge for smart glasses

shall aim at integrating relevant ultra-low power components, such as power electronics,

sensors, cameras, audio devices, lasers, specialty glasses, displays, neuromorphic or AI chips

into working prototypes and demonstrators.

Grand challenges may address market targets as well, for example, taping out chips from 100

fabless startups including 10 unicorns by 2035. Another type of grand challenges may address

lead markets and demand stimulation, for example, by developing automotive hardware

platforms or the full stack for AI (Giga) Factories. Grand challenges may also address new

semiconductor production technologies, for instance increasing recycling and boosting

circularity of materials, or the development of advanced semiconductors cooling technologies.

Industrialisation of new technologies shall be an essential part of the grand challenges.

4 See Article 5 of the Cloud and AI Development Act 5 Communication from the Commission to the European Parliament, the Council, the European

Economic and Social Committee and the Committee of the Regions, “An EU initiative on Web 4.0 and

virtual worlds: a head start in the next technological”, COM(2023) 442 final, 11 July 2023.

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Annex II Priority areas for strategic projects

Technical description of potential priority areas for strategic projects: scope of actions

1. European Advanced Semiconductor Manufacturing6

Reinforced action should be taken to create a sustained demand for advanced semiconductors

through the development of the EU advanced technology ecosystem. EU sovereignty and

supply security in the area of advanced chips production and innovation is essential to foster a

thriving and competitive EU semiconductor ecosystem, with reduced reliance on foreign

supply chains. This is particularly important to cater for the increased demand for AI and

cloud infrastructure. In addition, advanced chips are indispensable for strategic industry

sectors such as defence, health, space, robotics, healthcare, secure communications, drones,

and autonomous vehicles. They are also critical inputs for emerging and high-value areas such

as photonics and quantum chips.

This strategic project aims to establish an EU semiconductor plant that combines leading-edge

node chip manufacturing with chiplet integration and 2.5D/3D packaging. It shall build on

solid research foundations, which have been validated in the Chips for Europe Initiative under

the Chips Act. The manufacturing facility shall adhere to European values, including

guarantees for confidentiality, integrity and traceability of chips, in particular for sensitive and

strategic applications and infrastructure. European companies could help create demand by

offering growth incentives for fabless chips and AI-driven system design. Public and private

investments are estimated between EUR 20 and 40 billion depending on the option chosen.

EUR 3 to 4 billion public and private investments could be mobilised to foster the growth of

fabless chip design companies across the EU through funding from under the next MFF,

Member States, and relevant industries and private investors.

This project to be developed in close collaboration with domestic and international

stakeholders, including credible technology and manufacturing partners, shall enable the

establishment of cutting-edge capacities that reduce structural dependencies on non-EU

suppliers, increase supply security for sectors such as AI, defence, space, healthcare, telecoms

and automotive, and reinforce the EU’s technological sovereignty.

As a first step, an informal call for expressions of interest may be launched. After analysis of

submitted expressions, a call for proposals may follow.

2. AI chips and systems for EU compute infrastructure

The Union is currently dependent on foreign AI chips and integrated systems, resulting in

significant capital outflow to import critical foreign AI technologies. Strengthening the

Union’s technological sovereignty therefore requires building competitive, home-grown

capacity at chip level and across the entire compute stack.

This strategic project aims to design, develop, prototype, and tape-out AI chips and compute

systems based on advanced European technologies. AI chip design shall result in the

development of demonstrators and prototypes that can be evaluated on a common testbed

against clear benchmarks. Full-rack AI system prototypes shall be developed, including AI

accelerators, high bandwidth memory, boards, ultra-low-latency networking and full software

6 This part expands on a potential implementation of Article 19.

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stack, and shall be delivered for comparative evaluation on agreed workloads. Rack-level

system prototypes shall be demonstrated on a common EU testbed. Final testing and scoring

shall use clear KPIs on common EU testbeds operated by a neutral facility.

This strategic project shall reduce reliance on non-EU suppliers and increase technological

sovereignty across the full AI stack. It shall strengthen the EU ecosystem for design,

integration and optimisation of high-performance AI systems, with R&D activities, data

handling and testing executed in the Union, thereby anchoring skills, know-how and supply

chains in Europe. Take-up of the AI systems shall create further demand to justify further

investments in manufacturing in Europe.

As a first step, an informal call for expressions of interest may be launched. After analysis of

submitted expressions, a call for proposals may follow.

3. Automotive application processor for autonomous driving

The automotive industry is currently undergoing a pivotal transformation, primarily driven by

the emergence of electric, connected, autonomous vehicles. This shift necessitates a more

centralised, integrated, and flexible electrical/electronic (E/E) architecture to accommodate

the advanced computing needs of autonomous driving systems, ensure seamless vehicle

connectivity, support electric vehicle (EV) power management, and enable new mobility

services. Currently, European automotive OEMs rely on non-European suppliers for the

application processors that enable autonomous driving, which creates dependencies, possible

vulnerabilities that can be exploited, as well as potential security risks.

This strategic project aims to design, develop, prototype, and tape-out high-performance

RISC-V based automotive application processors. These processors shall include advanced

computer architecture techniques, multi-core configurations and support for high-bandwidth

memory interfaces, catering to the complex computing demands of autonomous driving

systems. In addition, AI and ML accelerators shall be developed with specialised Instruction

Set Architecture (ISA) extensions for efficient data-intensive computations. These

accelerators shall be optimised for automotive applications, supporting advanced AI models

with a focus on energy efficiency, reduced latency, and real-time processing capabilities. The

end result shall be an industry-grade silicon tape-out, incorporating a competitive RISC-V

application processor alongside memory, accelerators and any other relevant IP taking

advantage of advanced packaging techniques. A mature toolset shall accompany the hardware

development. Automotive companies shall be able to deploy the results in an operational

environment as qualified devices.

The strategic project shall address Europe’s technological sovereignty in automotive AI

processors and accelerators. It shall reduce the dependence of European automotive OEMs on

foreign suppliers. Take-up of the application processors and accelerators shall create further

demand to justify further investments in manufacturing in Europe.

As a first step, an informal call for expressions of interest may be launched. After analysis of

submitted expressions, a call for proposals may follow.

4. European memory fabrication facility

Memory chips, such as DRAM, NAND, and emerging non-volatile memories, are essential

components in datacentres, AI systems, automotive electronics, telecommunications

equipment, industrial automation, and defence applications. Currently, the global memory

market is heavily concentrated in Asia (South Korea, Taiwan, China) and the United States.

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The EU lacks indigenous memory production capacity, leaving critical European supply

chains highly vulnerable to geopolitical shocks, trade disputes and natural disasters. This

dependency has become critically apparent in 2026, as surging demand for AI-related high-

bandwidth memory (HBM) has led manufacturers to reallocate production capacity away

from standard DRAM and NAND, triggering price surges in some segments and severe

allocation shortages for European industries. Hence, the absence of a European memory fab

constitutes a strategic vulnerability for the EU’s digital sovereignty, economic resilience and

defence readiness. A strategic project for a European memory fab would be necessary not

only to secure supply for key industries, but also to anchor advanced manufacturing know-

how, stimulate innovation across the semiconductor value chain and support the EU’s broader

objectives under industrial, digital, and economic security policies.

The strategic project for the establishment of a European memory fabrication facility shall

require a consortium-based approach, combining public funding from the EU and

participating Member States with substantial private investment, likely in the range of EUR

15-30 billion given the capital intensity of modern memory fabs. A European-led joint

venture could be considered to build a differentiated position, such as embedded memory,

low-power memory, or emerging technologies linked to AI and edge computing. A phased

approach may begin with a pilot/R&D line before scaling to high-volume manufacturing,

mitigating risk and building capability incrementally.

A dedicated call for expressions of interest may be structured to identify industrial partners,

technology providers, and Member State hosts willing to commit to this strategic initiative.

5. Leading-edge chip design

While building physical manufacturing facilities is vital, a large share of the economic value,

profit margins, and technological control in the semiconductor supply chain lies in chip

design, architecture, and intellectual property. Europe has important strengths in research,

automotive semiconductors, and semiconductor equipment; however, it remains

comparatively weak in the large-scale design of the most advanced logic chips, particularly

those based on leading-edge architectures and process nodes. As a result, the EU relies

heavily on non-European companies for advanced compute and AI capabilities. Without

indigenous leading-edge design capacity, Europe risks remaining dependent on foreign

architectures, leaving critical infrastructure, defence, and AI-related industries exposed to

geopolitical restrictions, supply dependencies, and vendor lock-in. Strengthening chip design

capabilities would allow the EU not only to capture more value within the semiconductor

value chain, but also to embed European priorities such as security, privacy, resilience, and

energy efficiency directly into advanced hardware.

A strategic project for leading-edge chip design shall aim to establish sovereign, world-class

capability within the EU for the design of cutting-edge logic chips, focusing on intellectual

property, architecture, and verification rather than manufacturing. Focus areas may include:

• Advanced AI accelerators for cloud, edge, and industrial applications (including for

geospatial modelling and digital twins)

• High-performance processors for supercomputing and datacentres

• Secure-by-design chips for critical infrastructure, defence, aeronautics and space

• Domain-specific processors for autonomous vehicles, robotics, and industrial

automation

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• Application-Specific Integrated Circuits (ASICs) and System-on-Chips (SoCs) for

5G/6G telecommunications

• RISC-V-based open-architecture processors at leading-edge nodes

• Advanced chiplet platforms for 2.5D/3D integration across automotive, aerospace,

and telecom applications

Implementation may take the form of a large-scale public-private partnership mobilising EUR

8-12 billion in combined EU, Member State, and private funding, structured around consortia

centred around fabless semiconductor firms, and involving ASIC design houses, Electronic

Design Automation tool vendors, IP providers, research institutes, and end-user industries

(automotive and aeronautical Original Equipment Manufacturers, telecom operators, defence

primes). Investment shall cover chip architecture and design teams, advanced design tools and

IP libraries, prototyping, verification, software stacks, and industrialisation. The project shall

have guaranteed access to advanced fabrication through partnerships with leading foundries or

European pilot lines at 2nm and below. A phased approach may begin with capability

mapping and target application selection, followed by design and validation programmes,

pilot tape-outs, ecosystem development, and commercial deployment, alongside dedicated

measures to develop talent and attract world-class engineering expertise.