Source: EURLEX
Language: en
Format: md

**Council of the**
**European Union**

**Interinstitutional File:**

**2022/0032(COD)**

**PROPOSAL**

**Brussels, 11 February 2022**
**(OR. en)**

**6170/22**

**COMPET 84**
**IND 34**
**MI 103**
**RC 9**
**RECH 74**
**TELECOM 51**
**FIN 149**
**CADREFIN 12**
**CODEC 140**

From: Secretary-General of the European Commission, signed by Ms Martine
DEPREZ, Director

date of receipt: 10 February 2022

To: Mr Jeppe TRANHOLM-MIKKELSEN, Secretary-General of the Council
of the European Union

No. Cion doc.: COM(2022) 46 final

Subject: 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)

Delegations will find attached document COM(2022) 46 final.

Encl.: COM(2022) 46 final

6170/22 TP/cb

#### COMPET.2 EN

EUROPEAN

COMMISSION

Brussels, 8.2.2022
COM(2022) 46 final

2022/0032 (COD)

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)**

(Text with EEA relevance)

### **EN EN**

**EXPLANATORY MEMORANDUM**

**1.** **CONTEXT** **OF** **THE** **PROPOSAL**

**•** **Reasons for and objectives of the proposal**

Semiconductor chips are central to the digital economy. They make digital products work:
from smartphones and cars, to critical applications and infrastructures in health, energy,
communications and automation to most other industry sectors. They are also key to the
technologies of the future, including artificial intelligence (AI) and 5G/6G communication.
There is no “digital” without chips.

Within the past year, Europe has witnessed disruptions in the supply of chips, causing
shortages across multiple economic sectors and potentially serious societal consequences.
Many European sectors, including automotive, energy, communication and health as well as
strategic sectors such as defence, security, and space are under threat by such supply
disruptions. At the same time, fake chips start appearing on the market, compromising the
security of electronic devices and systems.

The current crisis has revealed structural vulnerabilities of the European value chains. The
global semiconductor shortage has exposed European dependency on supply from a limited
number of companies and geographies, and its vulnerability to third country export
restrictions and other disruptions in the present geopolitical context. Furthermore, this
dependency is exacerbated by the extremely high barriers to entry and capital intensity of the
sector. For example, the most computationally powerful chips require manufacturing to a
precision of a few nanometres (nm). [1] Building such facilities entails an upfront investment of
at least EUR 15 billion [2] and requires three years to achieve production-readiness with
adequate yields [3] . The expenditures to design such chips can range from EUR 0.5 billion to
well over EUR 1.0 billion. Research and development (R&D) intensity in the sector is high
and more than 15%. [4]

Today, European players invest mainly in R&D, but not enough in translating its results into
industrial benefits. Such R&D is a key enabler of miniaturisation in semiconductor
technologies required for the production of the next generation computationally powerful
chips. Europe is home to world-leading research and technology organisations (RTOs).
However, many results of European R&D are industrially deployed outside the Union.

The Union is strong in the design of semiconductor components for power electronics, radio
frequency and analogue devices, sensors and microcontrollers that have a widespread use in
the automotive and manufacturing industries today. It is less strong in the design of digital
logic (processors and memory), which become essential as data, AI and connectivity become
increasingly pervasive.

The Union is also very well positioned in terms of the materials and equipment needed to run
large chip manufacturing plants, with many companies playing essential roles along the
supply chain. It has strong and diversified industrial user sectors, e.g. automotive, industrial

1 In semiconductor manufacturing, the process technology has traditionally been correlated with the transistor
dimension. The process “node” is measured in nanometres (nm); 1 nanometre = 1 billionth of a meter.
Smaller process nodes produce smaller transistors, which are faster and more power-efficient. The state of
the art process node is 5 nm today, with 3 nm in pre-production, and 2 nm under development.
2 [https://news.samsung.com/global/samsung-electronics-announces-new-advanced-semiconductor-fab-site-in-](https://news.samsung.com/global/samsung-electronics-announces-new-advanced-semiconductor-fab-site-in-taylor-texas)
[taylor-texas, 24.11.2021.](https://news.samsung.com/global/samsung-electronics-announces-new-advanced-semiconductor-fab-site-in-taylor-texas)
3 [https://semianalysis.substack.com/p/tsmc-3nm-wafer-shipments-pushed-into, 14.10.2021](https://semianalysis.substack.com/p/tsmc-3nm-wafer-shipments-pushed-into)
4 [https://min.news/en/tech/def29226dea2b06f47efea4aae13e8f3.html, 22.01.2022](https://min.news/en/tech/def29226dea2b06f47efea4aae13e8f3.html)

### EN 1 EN

automation, healthcare, energy, communication, etc. However, collaboration along the value
chain is weak.

The Union’s overall global semiconductors market share is 10% in value [5], well below its
economic weight. Despite its strong global position in materials and equipment
manufacturing, the Union is heavily dependent on third-country suppliers for the design,
manufacturing, packaging, testing and assembly of chips.

Today, semiconductors are at the centre of strong geostrategic interests and at the core of the
global technological race. Countries are keen to secure their supply in the most advanced
chips as it will condition their capacity to act (economically, industrially and militarily) and
drive digital transformation. All major world regions are heavily investing and rolling out
support measures to innovate and strengthen their production capabilities.

The Union has the assets to become an industrial leader in the chips market of the future. Its
ambition is to double its world production share today to 20% in value by 2030 [6] . The goal is
not only to reduce dependencies, but also to seize the economic opportunities as the global
market for semiconductors is expected to double before the end of the decade, increasing
competitiveness of the semiconductor ecosystem, and of industry at large, through innovative
products for European citizens.

New market trends and opportunities are emerging. Semiconductor companies increasingly
co-design customised chips with end-user companies to improve system performance through
hardware-software optimisation. AI, edge cloud and the digital transformation of industrial
sectors offer new opportunities for future competitiveness of European technology and
industry leadership.

At the same time, technology is constantly evolving. Further miniaturisation continues,
towards smaller node dimensions in the mainstream process technologies (FinFET and
FDSOI) along the lines of Moore’s law [7], while more energy-efficient solutions are in high
demand to ensure that the ever-growing processing footprint remains sustainable. Emerging
computing paradigms, such as neuromorphic computing and quantum technologies are
promising technologies for new application areas. New materials such as Silicon Carbide
(SiC) and Gallium Nitride (GaN) are essential for power management, e.g. the optimal use of
battery power, in particular for electric vehicles of all kinds and renewable energy generation.

This explanatory memorandum accompanies the proposal for a **Regulation of the European**
**Parliament and Council establishing a framework of measures for strengthening the**
**semiconductor ecosystem** **in the Union (Chips Act)** .

This proposal delivers on the political commitment by President von der Leyen, who
announced in her 2021 State of the Union speech that the aim is to jointly create a state-ofthe-art European chip ecosystem, including production [8] . The proposal’s underlying strategic

5 Strengthening the Global Semiconductor Supply Chain in an uncertain era, BCGxSIA, April 2021.
[https://www.bcg.com/publications/2021/strengthening-the-global-semiconductor-supply-chain](https://www.bcg.com/publications/2021/strengthening-the-global-semiconductor-supply-chain)
6 The Digital Compass fixed as an objective that by 2030 “the production of cutting-edge and sustainable
semiconductors in Europe including processors is at least 20% of world production in value” (COM(2021)
118, 9.3.2021). The Proposal for the 2030 Policy Programme “Path to the Digital Decade” has reaffirmed this
ambition (see footnote 15).
7 Moore’s law is the observation that the number of transistors in an integrated circuit doubles about every two

years.
8 [State of the Union address 2021. https://ec.europa.eu/info/sites/default/files/soteu_2021_address_en_0.pdf](https://ec.europa.eu/info/sites/default/files/soteu_2021_address_en_0.pdf)

### EN 2 EN

vision for strengthening Europe’s semiconductor ecosystem is explained in the accompanying
Communication. [9]

To fulfil this vision, the European Chips Strategy is articulated around five strategic
objectives:

    - Europe should strengthen its research and technology leadership;

    - Europe should build and reinforce its own capacity to innovate in the design,

manufacturing and packaging of advanced chips, and turn them into commercial products;

    - Europe should put in place an adequate framework to increase substantially its production

capacity by 2030;

    - Europe should address the acute skills shortage, attract new talent and support the

emergence of a skilled workforce;

    - Europe should develop an in-depth understanding of global semiconductor supply chains.

The proposal aims at reaching the strategic objective of increasing the resilience of Europe’s
semiconductor ecosystem and increasing its global market share. It also aims at facilitating
early adoption of new chips by European industry and increasing its competitiveness. For this,
it needs to attract investment in innovative production facilities, have a skilled workforce, but
also be in the position to design and produce the most advanced chips that will define the
markets of tomorrow, develop capabilities and have the possibility to test and prototype
innovative designs through pilot lines in close collaboration with its industrial vertical sectors.
These are necessary steps, but not sufficient unless the Union has the analytical capability of
increasing the knowledge of the policy makers of the value chain and is capable to benefit
from increased capacity to serve the common interest of the single market in case of crisis.
The objective is not to become self-sufficient, which is not an achievable target. We must
strengthen our strengths, develop new strengths and work with third countries in a supply
chain where interdependencies will remain strong.

In terms of delivering on these objectives, the proposal will aim to:

    - **Set up the Chips for Europe Initiative**, to support 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 that will
reinforce the Union’s advanced design, systems integration, chips production capabilities
and skills, including emphasis on start-ups and scale-ups (pillar 1, “Chips for Europe
Initiative”).

In particular, the Initiative will build an innovative virtual design platform to reinforce
Europe’s design capacity, which will be accessible on open, non-discriminatory and
transparent terms. The platform will stimulate a wide cooperation of user communities with
design houses, start-ups and SMEs, intellectual property (IP) and tool suppliers, designers and
RTOs, and will integrate existing and new design facilities with extended libraries and EDA [10]
tools.

The Initiative will support pilot lines that provide the means for third parties under open,
transparent, and non-discriminatory terms to test, validate and further develop their product
designs. The development of new advanced pilot lines will prepare for the next generation of
production capabilities and their validation.

9 COM(2022) 45, 08.02.2022. A Chips Act for Europe.
10
Electronic Design Automation tools, i.e. software tools for designing integrated circuits.

### EN 3 EN

Furthermore, the Initiative will contribute to building advanced technology and engineering
capacities for accelerating the innovative development of quantum chips, e.g. in the form of
design libraries for quantum chips, pilot lines, and testing and experimentation facilities.

The Initiative will support a network of competence centres across the Union that will provide
expertise to stakeholders, including end-user small and medium-sized enterprises (SMEs),
start-ups as well as vertical sectors, and improve their skills. Competence centres will
facilitate open, transparent, and non-discriminatory access to and effective use of the design
infrastructure and the pilot lines. They will become poles of attraction for innovation and for
new, highly skilled talent.

Additionally to the Initiative, activities to facilitate access to debt financing and equity in the
semiconductor value chain, to be described collectively as the ‘Chips Fund’, 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, scale-ups
and SMEs as well as investments across the value chain, including for companies in the
semiconductor value chains potentially with blending provided by the Initiative.

    - **Create a framework to ensure security of supply** by attracting investments and

enhanced production capacities in semiconductor manufacturing as well as advanced
packaging, test, and assembly via first-of-a-kind Integrated Production Facilities and Open
EU Foundries (pillar 2, “Security of supply”).

In particular, the proposal defines criteria for facilitating the implementation of specific
projects that contribute to the security of supply of semiconductors in the Union. To this end,
it distinguishes between two types of first-of-a-kind facilities [11], namely Integrated Production
Facilities and Open EU Foundries [12] . If an application by a facility to be recognised as one of
the two types of first-of-a-kind facilities is successful, the proposal requires Member States to
ensure efficient processing of administrative applications related to the planning, construction
and operation of a recognised first-of-a-kind facility.

In response to increasing need for cyber-resilient supply chains [13] the Commission will work
with Member States and private actors to identify sectorial requirements for trusted chips with
a view to establishing common standards and certification, as well as common requirements
for procurement, to be developed with the support of the European standardisation
organisations where appropriate and bearing in mind the principles of the New Legislative
Framework for conformity assessment and market surveillance.

    - **Set up a coordination mechanism between the Member States and the Commission**

for strengthening collaboration with and across Member States, monitoring the supply of
semiconductors, estimate demand, anticipate shortages, trigger the activation of a crisis
stage and act through a dedicated toolbox of measures (pillar 3, “Monitoring and Crisis
Response”).

11 ‘First-of-a-kind facility’ means an industrial facility capable of semiconductor manufacturing, including

front-end or back-end, or both, that is not substantively already present or committed to be built within the
Union, for instance with regard to the technology node, substrate material, such as silicon carbide and
gallium nitride, and other product innovation that can offer better performance, process innovation or energy
and environmental performance.
12 Integrated Production Facilities are first-of-a-kind semiconductor design and manufacturing facilities,

including front-end or back-end, or both, in the Union that contribute to the security of supply for the internal
market. Open EU Foundries are first-of-a-kind semiconductor front-end or back-end, or both, manufacturing
facilities in the Union that offer production capacity to unrelated undertakings and thereby contribute to the
security of supply for the internal market.
13 31 % of cyber-attacks in 2020 targeted the EU. https://www.ibm.com/security/data-breach/threat-intelligence

### EN 4 EN

**•** **Consistency with existing policy provisions in the policy area**

This proposal is coherent with the Commission’s overall digital vision, targets, and avenues
for a successful digital transformation of the European Union by 2030 as presented in the
Commission Communication “The 2030 Digital Compass: the European way for the Digital
Decade” (‘Digital Compass Communication’) [14] and the subsequent Commission’s proposal
for the Digital Decade Policy Programme [15], with the particular 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.

This proposal is consistent with the Commission’s Communication updating the 2020 new
industrial strategy [16] in May 2021 that identifies areas of strategic dependencies that could lead
to vulnerabilities such as supply shortages. The proposal addresses the design, manufacturing,
packaging, testing and assembly challenges identified in the Communication and
accompanying staff working document. The Communication announces the Industrial
Alliance on Processors and Semiconductor technologies (Alliance) [17] to identify gaps in the
production of microchips and the technology developments needed for companies and
organisations to thrive, help the competitiveness of companies, increase Europe’s digital
sovereignty, and address the demand for the next generation of secure, energy-efficient,
powerful chips and processors. In the context of this Regulation, the Alliance will play an
advisory role.

This proposal is consistent also with the Commission’s standardisation strategy [18] and the
2022 Annual Union Work Programme for European standardisation [19] that were adopted on 2
February 2022. They envisage the development of standards for the certification of chips in
terms of security, authenticity and reliability.

This proposal also takes account of the objectives of the Observatory for Critical
Technologies [20], which aims to help identify the Union’s current and possible future digital
strategic dependencies and contribute to strengthening its digital sovereignty.

This proposal addresses the sector-specific and unique challenges of the semiconductors
supply chain and is a separate initiative from the planned “Single Market Emergency
Instrument” that the Commission announced in its updated industrial strategy.

This proposal contributes to the implementation of the Declaration on A European Initiative
on Processors and semiconductor technologies, signed by 22 Member States on 7 December
2020. [21] In the declaration, the 22 Member States agreed to “undertake particular efforts to

14 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.
15 COM(2021) 574 final. Proposal for a Decision of the European Parliament and of the Council establishing

the 2030 Policy Programme “Path to the Digital Decade”. 15.9.2021.
16 Communication from the Commission to the European Parliament, the European Council, the Council, the

European Economic and Social Committee and the Committee of the Regions, “Updating the 2020 New
Industrial Strategy: Building a stronger Single Market for Europe’s recovery” COM(2021) 350 final.
17 The Commission launched the Alliance on Processors and Semiconductor technologies in July 2021.

[https://digital-strategy.ec.europa.eu/en/policies/alliance-processors-and-semiconductor-technologies.](https://digital-strategy.ec.europa.eu/en/policies/alliance-processors-and-semiconductor-technologies)
18 [Communication from the Commission to the European Parliament, the Council, the European Economic and](http://www.cc.cec/sg/vista/home?documentDetails&DocRef=COM/2022/31&ComCat=SPINE)

[Social Committee and the Committee of the Regions “An EU Strategy on Standardisation - Setting global](http://www.cc.cec/sg/vista/home?documentDetails&DocRef=COM/2022/31&ComCat=SPINE)
[standards in support of a resilient, green and digital EU single market”, COM(2022) 31.](http://www.cc.cec/sg/vista/home?documentDetails&DocRef=COM/2022/31&ComCat=SPINE)
19 C(2022) 546 Commission Notice - The 2022 annual Union work programme for European standardisation.
20 COM(2021) 70, Action Plan on synergies between civil, defence and space industries.
21 Joint declaration on processors and semiconductor technologies. 7 December 2020.

### EN 5 EN

reinforce the semiconductor ecosystem and to expand industrial presence across the supply
chain.” Member States also agreed to “work towards common standards and, where
appropriate, certification for trusted electronics, as well as common requirements for
procurement of secure chips and embedded systems in applications that rely on or make
extensive use of chip technology.” This proposal is consistent with these objectives.

Furthermore, the proposal is in line with the recent Communication “A competition policy fit
for new challenges”, where the Commission acknowledges that it may “envisage approving
public support to fill possible funding gaps in the semiconductor ecosystem for the
establishment in particular of European first-of-a-kind facilities in the Union, based on Article
107(3) TFEU. Such aid would have to be subject to strong safeguards to ensure aid is
necessary, appropriate and proportionate, undue competition distortions are minimised, and
that benefits are shared widely and without discrimination across the European economy.” [22]

The Chips for Europe Initiative will pool resources from the Union, Member States and third
countries associated with the existing Union programmes, as well as the private sector.

The actions under the Chips for Europe Initiative will be primarily implemented through the
Chips Joint Undertaking, i.e. the amended and renamed current Key Digital Technologies
Joint Undertaking [23] . This Joint Undertaking currently provides extensive support for
industrially driven research, technology development, and innovation in the area of electronic
components and systems, and related software and systems technologies. These activities will
become part of the Chips for Europe Initiative.

The Chips for Europe Initiative builds on and complements the five specific objectives of the
Digital Europe programme (DEP) [24], which support digital capacity building in key digital
domains where semiconductor technology underpins performance gains, including High
Performance Computing, Artificial Intelligence, and Cybersecurity, together with skills
development and the deployment of digital innovation hubs. The Chips for Europe Initiative
through new Specific Objective 6, which should have a thematic focus on semiconductor
technologies, will invest in capacity building to reinforce advanced research, design,
production and systems integration capabilities in cutting-edge and next generation
semiconductor technologies.

The Chips for Europe Initiative also builds on and complements Horizon Europe programme
(HE) [25], which in the area of semiconductors provides support for academically driven
research, technology development and innovation. The Initiative will focus on supporting
investment into cross-border and openly accessible research, development and innovation
infrastructures set up in the Union to enable the development of semiconductor technologies
across Europe. New semiconductor technologies from research and innovation actions
supported by Horizon Europe may be progressively taken up and deployed by the capacity

22 Communication from the Commission to the European Parliament, the Council, the European Economic and

Social Committee and the Committee of the Regions. A competition policy fit for new challenges,
COM(2021) 713, 18 November 2021.
23 Regulation (EU) 2021/2085 of the Council 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.
24 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.
25 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
participation and dissemination, and repealing Regulations (EU) No 1290/2013 and (EU) No 1291/2013, OJ
L 170, 12.5.2021, p. 1.

### EN 6 EN

building parts of the Chips for Europe Initiative. Conversely, the technology capacities of the
Initiative will be made available to the research and innovation community, including for
actions supported through Horizon Europe.

This proposal is provided in light of the opportunities offered by the InvestEU [26] programme
and the significant contribution to digital transformation provided by the Recovery and
Resilience Facility [27], for which at least 20% of funds must contribute to digital objectives .
This proposal is also consistent with the Security Union Strategy [28] .

In order to accelerate the implementation of the actions, the Chips for Europe Initiative

– –
provides for a new legal instrument the European Chips Infrastructure Consortium (ECIC)
that is specifically developed to simplify and structure the legal relationships between the
private-public consortium members, including particularly RTOs, and provide a structural
dialogue with the Commission for the implementation of the actions under the Initiative. This
new legal instrument is voluntary and will complement the Union’s toolbox of various other
legal instruments, including European Digital Infrastructure Consortium [15], that allow to
combine funding from Member States, the Union budget, and private investments. Legal
entities, when forming a public-private consortium for the purpose of the implementing
actions under the Initiative, will have a choice among the available Union’s legal instruments
that better fits the specific purpose, composition and set-up of a particular consortium. The
Chips Joint Undertaking entrusted with the overall implementation of the certain actions
under this Initiative, may under the conditions provided in the Article 134 of the
Commission’s Proposal for a Council Regulation amending Regulation (EU) 2021/2085
establishing the Joint Undertakings under Horizon Europe, as regards the Chips Joint
Undertaking [29] provide that certain actions may be carried out only by legal entities
cooperating within a consortium that may be structured in a form of European Chips
Infrastructure Consortium, or any other available Union legal instruments available for
forming a consortium.

**•** **Consistency with other Union policies**

The proposed measures can support some of the main policies of the Union, such as the Green
Deal [30] . The application of semiconductor technologies, and digital technologies in general,
are powerful enablers for the sustainability transition and can lead to new products and more
efficient and effective ways of working that contribute to the Green Deal objectives.

Semiconductor supply disruptions and dependencies on other regions can slow down the
sustainability transition of European sectors benefiting from digital solutions. To address the
disruptions and dependencies, the proposal strengthens Europe’s semiconductor production
capacity. Where applicable, facilities should be fully compliant with requirements stemming
from Union legislation such as related to environmental impact assessment, emissions to air,
water and soil, including the risk and prevention of industrial accidents, and seek to ensure
high energy and resource and water efficiency. Strengthening the production capacity requires
quick set-up of semiconductor manufacturing facilities, which may exceptionally be

26 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.
27 Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing

the Recovery and Resilience Facility, OJ L 57, 18.2.2021, p. 17.
28 Communication on the EU Security Union Strategy. COM(2020) 605 final.
29 COM(2022) 47, 08.02.2022.
30 Communication from the Commission to the European Parliament, the European Council, the Council, the

European Economic and Social Committee and the Committee of the Regions. The European Green Deal.
COM(2019) 640, 11.12.2019.

### EN 7 EN

considered as being of overriding public interest where necessary for derogations in permit
granting procedures, including in certain environmental assessments, provided that the
remaining other conditions set out in the relevant provisions are fulfilled. At the same time,
the first-of-a-kind concept includes possible qualification also based on the facility’s
envisaged energy or environmental performance.

Digital technologies, both when manufactured and used have their own environmental
footprint, including from the release of fluorinated greenhouse gases during manufacturing to
their significant energy consumption for their production and during their use. The
information and communications technology (ICT) sector is responsible for 5-9% of the
world’s total electricity use and more than 2% of all emissions [31] . Data centres alone
accounted for 2.7% of electricity demand in 2018 in the Union and will reach 3.21% by 2030,
if development continues on the current trajectory [32] . Such energy consumption needs to be
reduced. The proposal, and in particular the setting up design facilities and pilot lines under
pillar 1, will lead to the design, testing and validation of new, low power processors.
Processors are the core components of servers that handle the computational workload in data
centres. Larger data centres contain millions of such servers and improvements in the power
consumption of processors can have a significant bearing on the overall power consumption
of a data centre. Such chips with a low-energy footprint contribute also to positioning the
Union as a leader in sustainable digital technologies.

The proposal contributes to the objectives of parts of the Fit for 55 package that focus on
promoting cleaner vehicles and fuels in a technologically neutral way [33] . The revision of the
CO 2 emission standards for new cars and vans aims at further reducing the greenhouse gas
emissions of these vehicles, providing a clear and realistic pathway towards zero-emission
mobility. Consumer demand for zero emission vehicles, such as electrically chargeable
vehicles, is increasing already [34] . Electrically chargeable vehicles typically have more than
twice the amount of semiconductor content per vehicle than cars with internal-combustion
engines [35] . Advanced packaging technologies are increasingly important to address increasing
power and energy-efficiency requirements by electrical vehicles. It follows that this is
consistent with the objectives of the Fit for 55 package.

The proposal is in line with the Circular Economy Action Plan [36], which identifies electronics
and ICT as a key value chain and announces a Circular Electronics Initiative to encompass
“regulatory measures for electronics and ICT including mobile phones, tablets and laptops
under the Ecodesign Directive so that devices are designed for energy efficiency and

”
durability, reparability, upgradability, maintenance, reuse and recycling .

31 Proposal for a Directive of the European Parliament and of the Council on energy efficiency (recast).

COM(2021) 558, 14.7.2021.
32 [https://digital-strategy.ec.europa.eu/en/library/energy-efficient-cloud-computing-technologies-and-policies-](https://digital-strategy.ec.europa.eu/en/library/energy-efficient-cloud-computing-technologies-and-policies-eco-friendly-cloud-market)

[eco-friendly-cloud-market](https://digital-strategy.ec.europa.eu/en/library/energy-efficient-cloud-computing-technologies-and-policies-eco-friendly-cloud-market)
33 Communication from the Commission to the European Parliament, the Council, the European Economic and

Social Committee and the Committee of the Regions. 'Fit for 55': delivering the EU's 2030 Climate Target on
the way to climate neutrality. COM(2021) 550, 14.7.2021.
34 For instance, the share of electric cars in new sales in Europe is increasing and is expected to make up 14% in

[2021. https://think.ing.com/articles/slow-start-for-electric-vehicles-in-the-us-but-times-are-changing](https://think.ing.com/articles/slow-start-for-electric-vehicles-in-the-us-but-times-are-changing)
35 [https://www.idtechex.com/en/research-article/ev-power-electronics-driving-semiconductor-demand-in-a-](https://www.idtechex.com/en/research-article/ev-power-electronics-driving-semiconductor-demand-in-a-chip-shortage/24820)

           chip [shortage/24820](https://www.idtechex.com/en/research-article/ev-power-electronics-driving-semiconductor-demand-in-a-chip-shortage/24820)
36 COM(2020) 98 final, 11.03.2020.

### EN 8 EN

Keeping electronic products in use for longer, through design for durability and upgrading
services, will reduce replacement rates and the need for new products. Microchip materials
can be recovered from electronic waste; it is, for instance, technically possible to recycle
compound semiconductor materials, although currently only in very small quantities. The
Sustainable Product Initiative, based on expansion of the scope of the Ecodesign Directive,
will provide a potential vehicle for such requirements. The Commission is also investigating
various possibilities for take-back and sell-back schemes for consumer electronics, to boost
the supply of functional used devices.

With digitalisation and electrification increasing, energy-efficient chips contribute to other
policies as well, including policies on industrial manufacturing, transport and energy, e.g. the
upcoming Digitalisation of Energy Action Plan [37] . The demand for semiconductor
technologies is expected to double in a decade. More and more chips are embedded in robots
and manufacturing machines, in industry and in agriculture, but also in transport vehicles and
other devices. Because the proposal aims at smart use of chips and other digital technologies,
and production of more energy-efficient chips, it is consistent with and contributes to several
sectoral policies.

**2.** **LEGAL** **BASIS,** **SUBSIDIARITY** **AND** **PROPORTIONALITY**

**•** **Legal basis**

This Regulation pursues two separate specific objectives, which form essential parts of its
general objective to establish a coherent framework for strengthening the Union’s
semiconductor ecosystem. The first specific objective of the Regulation, underlying pillar 1, is
creating large innovation capacities and the adequate technological capabilities in the
semiconductor industry to accelerate and adjust to innovation. In addition, underlying pillars 2
and 3, 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 2) and enabling coordinated monitoring and crisis
response (pillar 3).

The appropriate legal basis for the first objective are Articles 173(3), 182(1) and 183 of the
Treaty on the Functioning of the European Union (TFEU). Article 173(3) provides that the
European Parliament and the Council, acting in accordance with the ordinary legislative
procedure and after consulting the European Economic and Social Committee, may decide on
specific measures in support of actions taken in the Member States to secure the conditions
necessary for the competitiveness and innovation capacity of the Union and ensure the
adjustment of the industry to structural changes due to fast innovation cycles. This legal basis,
with regard to most activities undertaken under the Initiative, is appropriate given that pillar 1
of this Regulation aims to accelerate the semiconductor production of the Union’s industry,
reinforce sovereignty in the semiconductor supply chain, boost industrial capacities, facilitate
the development of innovative start-ups and SMEs, and encourage new investments in
innovation and technological development. In view of the broad nature of the Initiative, it is
also based on the TFEU Title ‘Research and technological development and space’ (Articles
182(1) and 183).

The appropriate legal basis for the second objective, underlying pillars 2 and 3, is Article 114
TFEU. Pillars 2 and 3 of this proposal aim to create a harmonised legal framework for

37 [https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13141-Digitalising-the-energy-](https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13141-Digitalising-the-energy-sector-EU-action-plan_en)

[sector-EU-action-plan_en](https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13141-Digitalising-the-energy-sector-EU-action-plan_en)

### EN 9 EN

increasing the Union’s resilience and security of supply. The use of semiconductors is critical
for multiple economic sectors and societal functions in the Union and therefore, a resilient
supply is essential for the functioning of the internal market. Thus, any supply disruption must
be anticipated and addressed without delay in order to preserve the stable functioning of
strategic downstream sectors. In light of the significant economic impact of the current
semiconductor shortage, it is likely that Member States initiate regulatory measures to address
the structural vulnerabilities of the sector that have led to the current shortage or to respond to
and mitigate future shortages in crisis situations [38] . While adequate with a view to addressing
deficiencies at a national level, such regulatory measures could entail an incoherent response
to the need to strengthen resilience and to address possible crises in the internal market,
thereby leading to fragmentation of the sector. With a view to enabling coordinated measures
for building resilience, harmonised rules for facilitating the implementation of specific
projects that contribute to the security of supply of semiconductors in the Union (pillar 2) are
necessary. The proposed monitoring and crisis response mechanism (pillar 3) should be
uniform to enable a coordinated approach to crisis preparedness for the cross-border
semiconductor value chain. The proposal provides for the appropriate governance structure
and cooperation between Member States at Union level, hence supporting trust, innovation
and growth in the internal market. Article 114 TFEU is therefore a pertinent legal basis for
pillars 2 and 3 in order to ensure the proper functioning of the internal market.

Other articles of the TFEU or each article on its own cannot justify both of the above
objectives. Article 122 TFEU is not pertinent, as it does not provide for a basis for both
objectives and is not compatible with either of Articles 114 and 173 TFEU. The proposed
elements are provided in one act, as all the measures constitute a coherent approach to
address, in different ways, the need for strengthening of the Union’s semiconductor
ecosystem.

**•** **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 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 a rapid and
coordinated joint action from a variety of stakeholders, and in cooperation with Member
States. No single Member State is capable of achieving this alone. Moreover, given the
complexity of the semiconductor ecosystem, the consequence of the Union’s structural
dependencies and supply shortages are so far-reaching that intervention at the level of the
Union is best placed to address such issues.

Action at Union level can clearly best drive European actors towards a common vision and
implementation strategy. This is key to generate economies of scale and of scope and generate
critical mass necessary for cutting-edge capacities, limiting, if not avoiding, fragmentation of
efforts, subsidy races, and suboptimal national solutions.

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

38 For instance, it has been announced that Spain intends to reform its National Security Law (Ley de Seguridad

Nacional) in this sense.

### EN 10 EN

    - With regard to the first pillar (“Chips for Europe Initiative”), the Initiative will support

large scale technological capacity building and innovation through 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. Member States set up a first ‘Important Project of Common European
Interest’ (IPCEI) in 2018, supporting cross-border innovative projects across the
microelectronics value chain, with a second IPCEI in this field being planned. [39] While
such initiatives are of strategic importance for the sector, at this stage it is likely that they
alone would not sufficiently address the capacity building in the form of pilot lines and
design infrastructures that need to be made widely available to all interested third parties
across Europe and which will also enable the Union to play a stronger role in a global and
interdependent ecosystem. Such 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”), actions aimed at accelerating

investment in semiconductor manufacturing can only be adequately designed and
implemented at Union level, given the scale of the investments needed and because such
manufacturing facilities will, by definition, serve the full internal market, strengthen the
whole ecosystem, and guarantee security of supply in crises.

    - In relation to the third pillar (“Monitoring and Crisis Response”), enhanced Union

cooperation will ensure the necessary and comparable intelligence gathering. Together,
Member States and Commission will be able to anticipate shortages, activate the crisis
stage in a situation of severe shortage and put in place the necessary measures 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 via short-term
preparedness and monitoring to increase transparency of semiconductor supply chains, midterm security of supply actions to enhance semiconductor production capacity in Europe, and
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 in pillar 1 puts in place the mechanisms necessary for
ensuring longer-term competitiveness and innovation capacity of European industry via
research and design capabilities, pilot lines for testing and experimentation, capacities for
quantum chips, competence centres, and a fund for start-ups, scale-ups and SMEs.

The security of supply actions to enhance the Union’s semiconductor production capacity in
pillar 2 may recognise a certain facility as an Integrated Production Facility or as an Open EU
Foundry. With such recognition, Member States are required to ensure permits for such
facilities and foundries are granted through fast procedures.

39 Four Member States (France, Germany, Italy, and Austria) and the United Kingdom participated in the first

IPCEI. It features 32 companies, with EUR 1.9 billion public support and a contribution by industry of
roughly EUR 6 billion.

### EN 11 EN

The preparedness actions in pillar 3 are based on monitoring and information exchange by
Member States and the Union to anticipate disruptions in the supply chain. In case of
(anticipated) disruptions, coordinated measures may be taken to mitigate or prevent
semiconductor shortages and other disruptions.

**•** **Choice of the instrument**

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 1 of the proposal setting up the Chips for
Europe Initiative, as only a Regulation, with its directly applicable legal provisions, can
provide the necessary degree of uniformity needed for the establishment and operation of a
Union Initiative aiming at supporting an industrial sector across the internal market. The
choice of a Regulation as a legal instrument for pillar 2 is justified by the need for a uniform
application of the new rules, in particular the definition of Integrated Production Facilities and
Open EU Foundries, as well as a uniform procedure for their recognition and support.
Additionally, a Regulation is the most suitable instrument for pillar 3, as this part should
provide for a mechanism to anticipate and address serious disruptions of the supply of
semiconductors in the Union. The mechanism does not require the transposition through
national measures and is directly applicable.

**3.** **RESULTS** **OF** **EX-POST** **EVALUATIONS,** **STAKEHOLDER**
**CONSULTATIONS** **AND** **IMPACT** **ASSESSMENTS**

**•** **Stakeholder consultations**

In her speech at the World Economic Forum in January 2022, President von der Leyen
mentioned that “we will propose our European Chips Act in early February” and that “we
have no time to lose” [40] . Leading economies are keen to secure their supply in the most
advanced chips as this increasingly conditions their capacity to act (economically,
industrially, militarily) and drives digital transformation. They are already heavily investing
and rolling out support measures to innovate and strengthen their production capacities, or
expect to do so soon [41] . There are indications that Union companies and RTOs may be
attracted to move to other regions. International players are less likely to expand existing
facilities or set up new production facilities in the Union without full clarity on investment
conditions, possibilities for public support, public investments in skills, infrastructure, and
advanced R&D, etc.

Given the urgent need to act, no impact assessment was carried out and no online public
consultation was foreseen. The analysis and all supporting evidence will be set out in a staff
working document published at the latest within three months of the proposal’s publication.

Nevertheless, ad-hoc workshops with industry stakeholders on specific topics related to pillar
1 indicated the need to consider facilities for upcoming technologies, such as photonics,
neuromorphic computing, and quantum technologies, as well as new materials [42] . In addition,

40 ‘State of the World' Special Address by President von der Leyen at the World Economic Forum.

https://ec.europa.eu/commission/presscorner/detail/en/speech_22_443
41 [For instance: USA: https://www.congress.gov/bill/117th-congress/senate-bill/1260?s=1&r=52](https://www.congress.gov/bill/117th-congress/senate-bill/1260?s=1&r=52)
[China: https://crsreports.congress.gov/product/pdf/R/R46767](https://crsreports.congress.gov/product/pdf/R/R46767)
Japan: [https://www.reuters.com/technology/japan-create-scheme-subsidise-domestic-chip-output-nikkei-](https://www.reuters.com/technology/japan-create-scheme-subsidise-domestic-chip-output-nikkei-2021-11-07/)
[2021-11-07/](https://www.reuters.com/technology/japan-create-scheme-subsidise-domestic-chip-output-nikkei-2021-11-07/)
[South Korea: https://spectrum.ieee.org/south-koreas-450billion-investment-latest-in-chip-making-push](https://spectrum.ieee.org/south-koreas-450billion-investment-latest-in-chip-making-push)
42 [https://ecscollaborationtool.eu/ecs-sria-workshops.html](https://ecscollaborationtool.eu/ecs-sria-workshops.html)

### EN 12 EN

these workshops emphasised the need for due consideration of alternative instruction set
architectures, such as RISC-V.

–
Furthermore, in the context of the ECSEL Joint Undertaking the predecessor of the Key

–
Digital Technologies Joint Undertaking meetings with industry representatives and public
authorities took place in summer 2021, where the Digital Compass objectives, the update of
the industrial strategy, the Industrial alliance, and the European Chips Act were discussed.

Regular meetings with Member States took place monthly in 2021 to prepare the planned
second IPCEI on Microelectronics. The Member States provided inputs for the definition and
assessment of Integrated Production Facilities and Open EU Foundries in pillar 2, as well as
for the definition of specific facilities under pillar 1.

A meeting with CEOs representing key stakeholders in the European semiconductor sector
took place on 10 January 2022. Key takeaways from that meeting were: the need to build on
European strengths, e.g. R&D and equipment manufacturing; clear support for pilot lines and
design infrastructures; support for start-ups and scale-ups; the need to increase Europe’s
manufacturing capacity for both mature and advanced technologies; and the need for a
worldwide level playing field [43] .

There were also numerous meetings with representatives of CEOs on the need to strengthen
the European semiconductors sector, following Commissioner Breton’s meetings with the
CEOs of the main semiconductor players and RTOs. These provided inputs particularly to
pillar 1.

The European Forum for Electronic Components and Systems (EFECS), in November 2021,
with over 500 participants, provided a large platform for discussion on industrial needs.
Further input was provided in meetings with industry associations and their members, such as
SEMI, ESIA, and Digital Europe.

Moreover, long-standing and regular contacts with industry stakeholders, Member States,
trade associations and user associations enabled the collection of a fair amount of information
and feedback relevant to the proposal.

Many reports have been published since end-2019 on the semiconductor sector describing
trends and providing facts and figures, and served to inform the proposal [44] .

     - **Impact assessment**

This proposal is not accompanied by a formal impact assessment. Considering the urgency as
explained above, an impact assessment could not have been delivered in the timeframe
available prior to the adoption of the proposal. The analysis and all supporting evidence will

43 [https://digital-strategy.ec.europa.eu/en/news/ceo-roundtable-semiconductors-10-january-2022](https://digital-strategy.ec.europa.eu/en/news/ceo-roundtable-semiconductors-10-january-2022)
44 A non-exhaustive list: Measuring distortions in international markets: The semiconductor value chain OECD

2019; The Geopolitics of Semiconductors, prepared by EURASIA group, Sept 2020; The global
semiconductor value chain, Stiftung Neue Verantwortung, Oct 2020; The Weak Links in China's Drive for
Semiconductors, Montaigne institute, Jan 2021; Strengthening the Semiconductor supply chain in an
uncertain Era, BCGxSIA, April 2021; SIA Factbook, May 2021; Building Resilient Supply Chains,
Revitalizing American Manufacturing, and Fostering Broad-Based Growth, A Report by the White House,
June 2021; Mapping China’s semiconductor ecosystem in global context, Stiftung Neue Verantwortung, June
2021; Semiconductors Global Policy Review Access Partnership, Sept 2021; Semiconductors: U.S. Industry,
Global Competition, and Federal Policy, Congressional Report Service October 2021; Semiconductor
Strategy for Germany and Europe, ZVEI, Oct 2021; A semiconductor strategy for the European Union,
Bundesagentur für Sprunginnovationen (SPRIN-D), 2021; Understanding the global chip shortage Stiftung
Neue Verantwortung, Nov 2021.

### EN 13 EN

be set out in a staff working document published at the latest within three months of the
proposal’s publication.

**•** **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 1 and 2 of this
proposal create innovation capacity and foster 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 3 needed to address
serious disruptions to of the semiconductor supply in the Union may 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.

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 to enable the identification of potential mitigation measures to
a semiconductor shortage crisis. These information requests are appropriate and effective to
attain the objective by providing information necessary to assess the crisis at hand. The
Commission in principle only requests the desired information from representative
organisations and may issue requests to individual undertakings only if it is necessary in
addition. Since information on the supply situation is not available otherwise, there is not any
equally effective measure to attain the information necessary to enable European decisionmakers to take mitigation action. 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 to the
freedom to conduct a business and the right to property are offset by appropriate safeguards.
Any request to 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 to ensure critical sectors affected by
supply disruptions on account of a semiconductor shortage continue to operate. The
obligation is appropriate and effective to attain this objective by ensuring the available
resources are preferentially utilised for products supplied to these sectors. There is no equally
effective measure. It is proportionate to oblige in a situation of crisis semiconductor
manufacturing facilities that have applied to be recognised as “Integrated Production
Facilities” and “Open EU Foundries”, other semiconductor manufacturing facilities which
have accepted such possibility in the context of 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 this impacts significantly the security of supply to critical
sectors, to accept and prioritise certain orders. Appropriate safeguards ensure that any
negative impact of the prioritisation obligation on the freedom to conduct a business, the
freedom of contract and the right to property does not amount to a violation of these 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 request the Commission to review the priority rated order if it is
unable to perform the order or performing the order would place unreasonable economic

### EN 14 EN

burden on them and entail particular hardship. Furthermore, the subject of the obligation is
exempt from any liability for damages for the violation of contractual obligations resulting
from compliance with the obligation.

**4.** **BUDGETARY** **IMPLICATIONS**

The proposal establishes the Chips for Europe Initiative, which will not have a separate
financial envelope, but will be supported by funding from the HE, and the DEP, to be
enlarged by a new Specific Objective 6. The Regulation 2021/2085 establishing the Joint
Undertakings under HE is amended and expanded to allow the Key Digital Technologies
Undertaking, renamed as a Chips Joint Undertaking (Chips JU) to implement the increased
contribution from HE and contributions from DEP under the Specific Objective 6. The
financial consequences of the proposal on the Union budget are presented in the financial
statement accompanying the proposal and will be met from the available resources of the
Multiannual financial framework 2021-2027.

The EU budget will support the Chips for Europe Initiative with a total of up to EUR 3.3
billion, including EUR 1.65 billion via HE and EUR 1.65 billion via DEP. Out of this total
amount, EUR 2.875 billion will be implemented through the Chips Joint Undertaking, EUR
125 million through InvestEU (to be complemented with other by 125 million under InvestEU
itself) and EUR 300 million through the EIC. This comes in addition to the budget already
dedicated to activities in microelectronics under this MFF to reach almost 5 billion.

In particular, an amount of up to EUR 1.65 billion will be implemented under HE in favour of
the Chips for Europe Initiative: EUR 900 million under Cluster 4 EUR 150 million from
Cluster 3, EUR 300 million from Cluster 5 and EUR 300 million under the European
Innovation Council (EIC). In addition, the Commission proposes to reduce the budget of HE
by an amount of EUR 400 million to increase the amounts available for DEP. In order to
compensate for this reduction of EUR 400 million, the Commission proposes to make
available again, for the benefit of the HE programme, a further amount of EUR 400 million
(in current prices) of commitment appropriations over the period 2023-2027, resulting from
total or partial non-implementation of projects belonging to that programme or its
predecessor. This amount will be in addition to the EUR 0.5 billion (in 2018 prices) already
mentioned in the Joint Declaration by the European Parliament, the Council and the
Commission on the re-use of decommitted funds in relation to the research programme [45] . The
Commission therefore invites the European Parliament and Council to supplement this Joint
Declaration with a mention of the additional amount to make available again.

Under DEP, a new Specific Objective 6 is proposed for the purposes of the Chips for Europe
Initiative. This Specific Objective 6, covers components a to d of Article 5, and it is to be
implemented by the Chips JU. A total of up to EUR 1.65 billion will be allocated to this new
Specific Objective 6 of the programme: EUR 600 million reallocated from the existing
objectives of the DEP, a reduction of EUR 400 million of the Connecting Europe Facility
Programme (CEF), including EUR 150 million from CEF-Digital and EUR 250 million from
CEF-Transport [46], the reduction of EUR 400 million of cluster 4 of the HE programme (as

45 OJ C 444I, 22.12.2020, p. 3–3.
46 In line with the conclusion above on consistency of the EU Chips Act with other Union policies, in particular

the European Green Deal and the Fit for 55 package, this should not negatively affect the overall CEF
Transport objectives and the deployment of sustainable transport infrastructure.

### EN 15 EN

mentioned in the above paragraph, compensated by the reuse of decommitments), and EUR
250 million from the unallocated margin of heading 1 to finance the Initiative under the DEP.

The Commission proposes to handle the reductions of the financial envelopes of CEF and HE
within the 15% variation provided by Point 18 of the Interinstitutional Agreement of 16
December 2020 between the European Parliament, the Council of the European Union and the
European Commission on budgetary discipline, on cooperation in budgetary matters and on
sound financial management, as well as on new own resources, including a roadmap towards
the introduction of new own resources [47] . The Commission invites the European Parliament
and Council to refer to these variations, which are required for the efficient implementation of
the Chips for Europe Initiative, in the Joint Declaration referred to in the previous paragraph.

Further details are provided in the Legislative Financial Statement annexed to this proposal.

**5.** **OTHER** **ELEMENTS**

**•** **Implementation plans and monitoring, evaluation and reporting arrangements**

The Commission will evaluate the output, results and impact of this proposal three years after
the date on which it becomes applicable and every four years thereafter. The main findings of
the evaluation will be presented in a report to the European Parliament and the Council, which
will be made public. In order to conduct the evaluation, the European Semiconductor Board,
the Member States and national competent authorities will provide information to the
Commission on 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 establishes a framework, consisting of three
“pillars”, for strengthening Europe’s semiconductor ecosystem. In particular, the Regulation
establishes the Chips for Europe Initiative that creates the conditions necessary to strengthen
the Union’s industrial innovation capacity (pillar 1), includes the definition and criteria of
first-of-a-kind Integrated Production Facilities and Open EU Foundries (pillar 2) and a
coordination mechanism for monitoring and crisis response (pillar 3).

1.2. Chapter II – Chips for Europe Initiative

**Chapter II** sets up the Chips for Europe Initiative that will reinforce the Union’s
competitiveness, resilience and innovation capacity. Through investments into the Chips for
Europe Initiative, the Union should increase its effectiveness in turning its research and
technology developments into demand-oriented, application-driven, secure and energyefficient semiconductor technologies of the highest quality. At the same time, the Union
should provide an opportunity for its supply industry to leverage on such investments.

To this end, this Chapter includes the general provisions and objectives of the Chips for
Europe Initiative. The Initiative aims to support large-scale capacity building throughout the
Union in existing and cutting-edge and next generation semiconductor technologies. The
Initiative comprises five components: design capacities for integrated semiconductor
technologies, pilot lines for preparing innovative production, and testing and experimentation
facilities, advanced technology and engineering capacities for accelerating the development of

47 OJ L 433I, 22.12.2020, p. 28–46.

### EN 16 EN

quantum chips, a network of Competence Centres and skills development and the ‘Chips
Fund’ activities for access to capital by start-ups, scale-ups and SMEs.

The Initiative shall be supported by funding from HE and DEP, and in particular its new
Specific Objective 6 thereof, and implemented in accordance with the Regulations
establishing those programmes.

The Regulation provides for a procedural framework to facilitate combined funding from
Member States, investment without prejudice with State aid rules, the Union budget and
private investment. This will take the form of a new instrument with legal personality, the
European Chips Infrastructure Consortium (‘ECIC’), which can be used by legal entities to
structure their collaborative work within a consortium, on a voluntary basis. In addition,
Section 1 sets up a mechanism for establishing a European network of Competence Centres
for the purpose of implementing actions on competence centres and skills under the Chips for
Europe Initiative.

The Chapter also includes provisions on the implementation. The primary implementation of
the Initiative will be entrusted to the Chips Joint Undertaking as proposed in the
Commission’s Proposal for a Council Regulation amending Regulation (EU) 2021/2085 . The
technical description of the actions is provided in Annex I. Annex II includes measurable
indicators to monitor the implementation and to report on the progress of the Initiative
towards the achievement of its objectives. The Commission is enabled to adopt delegated acts
to amend the list of measurable indicators. The Initiative builds on Europe’s existing strengths
in the global semiconductor value chain and enhances synergies with actions currently
supported by the Union and Member States. Therefore, in order to maximise its positive
impacts, the Initiative should enable synergies with Union programmes described in Annex
III.

1.3. Chapter III – Security of Supply

**Chapter III** sets out the framework for Integrated Production Facilities and Open EU
Foundries. Integrated Production Facilities and Open EU Foundries are manufacturing
facilities providing semiconductor manufacturing capabilities that are “first-of-a-kind” in the
Union and contribute to the security of supply and to a resilient ecosystem in the internal
market. In particular, in order to qualify as Integrated Production Facilities and Open EU
Foundries, the facility should have a clear positive impact on the semiconductor value chain
in the Union.

While Integrated Production Facilities are vertically integrated production facilities, Open EU
Foundries offer a significant degree of their production capacity to other industrial players,
such as fabless semiconductor companies (i.e. companies that design but do not manufacture
chips). Investment in these facilities facilitates the development of semiconductor
manufacturing in the Union. Hence, upon recognition as an Integrated Production Facility or
Open EU Foundry by the Commission, these facilities shall be considered to contribute to the
security of supply of semiconductors in the Union and therefore in the public interest. In order
to reach security of supply, Member States may, without prejudice to State aid rules, apply
support schemes and shall provide for administrative support, including fast tracking of
administrative application procedures related to their planning, construction and operation.
The Commission will recognise a facility as an Integrated Production Facilities or Open EU
Foundries if they fulfil the criteria set out in this Chapter. The Commission may repeal its
decision if the recognition was based on incorrect information or the facility no longer fulfils
the criteria.

### EN 17 EN

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 of the supply of semiconductors that have an impact on
the proper functioning of the internal market.

**Section 1** (Monitoring) sets out a monitoring and alerting system of the semiconductor value
chain. The system is based on regular monitoring activities of Member States consisting of, in
particular, the observation of early warning indicators and the availability and integrity of the
services and goods provided by key market actors. The Commission provides the basis for the
monitoring activities through a Union risk assessment in which it identifies the early warning
indicators. To ensure industry participation, the Member States will invite relevant
stakeholders and industry associations to inform about significant fluctuations in demand and
disruptions of their supply chain. Member States should provide regular updates and
exchange their findings in the European Semiconductor Board. If Member States become
aware of a potential semiconductor crisis or the occurrence of a relevant risk factor in the
frame of their monitoring activities or through an update from stakeholders, they shall alert
the Commission. Upon this alert, or upon an alert through other sources including information
from international partners, the Commission shall convene an extraordinary meeting of the
European Semiconductor Board. The meeting will serve to assess the need to activate the
crisis stage and discuss potential coordinated procurement ahead of a shortage. Furthermore,
the Commission shall enter into consultations or cooperation, on behalf of the Union, with
relevant third countries with a view to seeking cooperative solutions to address supply chain
disruptions.

**Section 2** (Crisis Stage) provides the rules to activate the semiconductor crisis stage and
details the emergency measures that can be used to respond to the crisis.

The Commission is enabled to activate the crisis stage by means of an implementing act when
there is concrete, serious, and reliable evidence of a semiconductor crisis. Such a
semiconductor crisis occurs when there are serious disruptions in the supply of
semiconductors leading to significant shortages, which involve 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 will specify the duration of
the crisis stage or its prolongation. Before the expiry of the crisis stage, the Commission shall
assess, taking into account the opinion of the European Semiconductor Board, whether the
activation of the crisis stage should be prolonged. During the crisis stage, the European
Semiconductor Board will hold extraordinary meetings to allow for Member States to work
closely with the Commission and coordinate any national measures taken with regard to the
semiconductor supply chain.

When the crisis stage is activated, the Commission may take certain emergency measures set
out in this Regulation. The Commission may request representative organisations of
undertakings, or, if need be, individual undertakings operating along the semiconductor
supply chain for information necessary for assessing the semiconductor crisis and identifying
potential mitigation measures. These entities are obliged to provide the Commission with the
requested information. The requested information can consist of information regarding their
production capabilities, production capacities, current primary disruptions or any other
existing data necessary to assess the nature of the semiconductor crisis or to identify and
assess potential mitigation or emergency measures at national or Union level. Where
appropriate, the Commission may oblige IPFs, OEFs, semiconductor manufacturing facilities
which have previously accepted this possibility in the context of receiving public support, or
undertakings along the semiconductor supply chain which have been subjected to a priority

### EN 18 EN

rated order request from a third country to an extent that significantly impacts the operation of
critical sectors, to accept and prioritise the production of crisis-relevant products for critical
sectors. Additionally or alternatively, upon the request of two or more Member States, the
Commission may, on their behalf, act as a central purchasing body in order to procure crisisrelevant products for critical sectors. The Commission will, in consultation with the European
Semiconductor Board, assess the utility, necessity and proportionality of the request. For the
definition of critical sectors, this Regulation refers to the sectors enlisted in Annex of the
Commission proposal for a Directive of the European Parliament and of the Council on the
resilience of critical entities [48], and additionally the defence sector and other activities that are
relevant for public safety and security, and provides that the Commission may limit these
emergency measures to certain sectors within this list.

1.5. Chapter V – Governance

**Chapter V** sets up the governance systems at Union and national level. At Union level, the
proposal establishes a European Semiconductor Board, composed of representatives from the
Member States and chaired by the Commission. The European Semiconductor Board will
provide advice on the Initiative to the Public Authorities Board of the Chips Joint
Undertaking (pillar 1); provide advice and assistance to the Commission in order to exchange
information on the functioning of the IPF and OEF (pillar 2); discuss and prepare the
identification of specific critical sectors and technologies, address monitoring and crisis
response issues (pillar 3), and to provide support in the consistent application of the proposed
Regulation and facilitate cooperation among Member States. The European Semiconductor
Board shall support the Commission in international cooperation. It shall also coordinate and
exchange information with relevant crisis structures established under Union law. The
European Semiconductor Board will meet in different compositions and hold separate
meetings for its tasks under pillar 1 and for its tasks under pillars 2 and 3. The Commission
may establish standing or temporary sub-groups of the European Semiconductor Board and
invite organisations representing the interests of the semiconductor industry and other
stakeholders to such sub-groups as observers.

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. Chapter VI, VII, VIII – Final Provisions

**Chapter VI** emphasizes the obligation of all parties 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 European Semiconductor Board and the
Committee. The Chapter also establishes rules on effective, proportionate, and dissuasive
penalties and fines for noncompliance with the obligations under this Regulation, subject to
appropriate safeguards. The Commission may impose periodic penalty payments for failure of
the relevant undertakings 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 the information within the
prescribed time limit.

**Chapter VII** sets out rules and conditions for the exercise of delegation and implementing
powers. The proposal empowers the Commission to adopt, where appropriate, implementing

48 COM(2020) 829. 16.12.2020.

### EN 19 EN

acts to allow for procedural specification 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 Initiative) and Annex II (the measurable indicators and the provisions on
the establishment of a monitoring and evaluation framework to supplement this Regulation).

**Chapter VIII** contains amendments to other acts, including the Digital Europe programme,
and 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.

### EN 20 EN

2022/0032 (COD)

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)**

(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
**Articles** 173(3), 182(1), 183 and 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 Committee [49],

Having regard to the opinion of the Committee of the Regions [50],

Acting in accordance with the ordinary legislative procedure,

Whereas:

(1) Semiconductors are at the core of any digital device: from smartphones and cars,
through critical applications and infrastructures in health, energy, communications and
automation to most other industry sectors. While semiconductors are essential to the
functioning of our modern economy and society, the Union has witnessed
unprecedented disruptions in their supply. The current supply shortage is a symptom
of permanent and serious structural deficiencies in the Union’s semiconductor value
and supply chain. The disruptions have exposed long-lasting vulnerabilities in this
respect, notably a strong third-country dependency in manufacturing and design of
chips.

(2) A framework for increasing the Union’s resilience in the field of semiconductor
technologies should be established, stimulating investment, strengthening the
capabilities of the Union’s semiconductor supply chain, and increasing cooperation
among the Member States and the Commission.

(3) This framework pursues two objectives. The first objective is to ensure the conditions
necessary for the competitiveness and innovation capacity of the Union and to ensure
the adjustment of the industry to structural changes due to fast innovation cycles and
the need for sustainability. The second objective, separate and complementary to the
first one, is to improve the functioning of the internal market by laying down a
uniform Union legal framework for increasing the Union’s resilience and security of
supply in the field of semiconductor technologies.

49 OJ C,, p. .
50 OJ C,, p. .

### EN 21 EN

(4) It is necessary to take measures to build capacity and strengthen the Union’s
semiconductor sector in line with Article 173(3) of the Treaty. These measures do not
entail the harmonisation of national laws and regulations. In this regard, the Union
should reinforce the competitiveness and resilience of the semiconductor technological
and industrial base, whilst strengthening the innovation capacity of its semiconductor
sector, reducing dependence on a limited number of third country companies and
geographies, and strengthening its capacity to design and produce advanced
components. The Chips for Europe Initiative (the ‘Initiative’) should support these
aims by bridging the gap between Europe’s advanced research and innovation
capabilities and their sustainable industrial exploitation. It should promote capacity
building to enable design, production and systems integration in next generation
semiconductor technologies, enhance collaboration among key players across the
Union, strengthening Europe's semiconductor supply and value chains, serving key
industrial sectors and creating new markets.

(5) The use of semiconductors is critical for multiple economic sectors and societal
functions in the Union and therefore, a resilient supply is essential for the functioning
of the internal market. Given the wide circulation of semiconductor products across
borders, the resilience and security of supply of semiconductors can be best addressed
through Union harmonising legislation based on Article 114 of the Treaty. With a
view to enabling coordinated measures for building resilience, harmonised rules for
facilitating the implementation of specific projects that contribute to the security of
supply of semiconductors in the Union are necessary. The proposed monitoring and
crisis response mechanism should be uniform to enable a coordinated approach to
crisis preparedness for the cross-border semiconductor value chain.

(6) The achievement of these objectives will be supported by a governance mechanism.
At Union level, this Regulation establishes a European Semiconductor Board,
composed of representatives of the Member States and chaired by the Commission.
The European Semiconductor Board will provide advice to and assist the Commission
on specific questions, including the consistent application of this Regulation,
facilitating cooperation among Member States and exchanging information on issues
relating to this Regulation. The European Semiconductor Board should hold separate
meetings for its tasks under the different chapters of this Regulation. The different
meetings may include different compositions of the high-level representatives and the
Commission may establish subgroups.

(7) Given the globalised nature of the semiconductor supply chain, international
cooperation with third countries is an important element to achieve a resilience of the
Union’s semiconductor ecosystem. The actions taken under this Regulation should
also enable the Union to play a stronger role, as a centre of excellence, in a better
functioning global, interdependent semiconductors ecosystem. The Commission,
assisted by the European Semiconductor Board, should cooperate and build
partnerships with third countries with a view to seeking solutions to address, to the
extent possible, disruptions of the semiconductor supply chain.

(8) The semiconductor sector is characterised by very high development and innovation
costs and very high costs for building state of the art testing and experimentation
facilities to support the industrial production. This has direct impact on the
competitiveness and innovation capacity of the Union industry, as well as on the
security and resilience of the supply. In light of the lessons learnt from recent
shortages in the Union and worldwide and the rapid evolution of technology
challenges and innovation cycles affecting the semiconductor value chain, it is

### EN 22 EN

necessary to strengthen the Union’s competitiveness, resilience and innovation
capacity by setting up the Initiative.

(9) Member States are primarily responsible for sustaining a strong Union industrial,
competitive, sustainable and innovative base. However, the nature and scale of the
innovation challenge in the semiconductor sector requires action to be taken
collaboratively at Union level.

(10) The Horizon Europe Framework programme established by Regulation (EU) 2021/695
of the European Parliament and of the Council [51] (Horizon Europe) – the Framework
Programme for Research and Innovation, has the objective to strengthen the European
research area (ERA), encouraging it to become more competitive, including in its
industry, while promoting all research and innovation (R&I) activities to deliver on the
Union's strategic priorities and commitments, which ultimately aim to promote peace,
the Union's values and the well-being of its peoples. As a major priority of the Union,
the total financial resources allocated to the programme should not be reduced and the
reduction of the financial resources of the programme, aimed to reinforce the financial
envelope of the Digital Europe programme with the aim of contributing to the Chips
initiative, should be compensated by another source. Consequently, without prejudice
to the institutional prerogatives of the European Parliament and of the Council, an
amount of commitment appropriations equivalent to the reduction should be made
available to Horizon Europe over the period 2023-2027, resulting from total or partial
non-implementation of projects belonging to that programme or its predecessor, as
provided for in Article 15(3) of Regulation (EU, Euratom) 2018/1046 of the European
Parliament and of the Council [52] (the Financial Regulation). This amount will be in
addition to the EUR 0.5 billion (in 2018 prices) already mentioned in the Joint
Declaration by the European Parliament, the Council and the Commission on the reuse of decommitted funds in relation to the research programme.

(11) In order to equip the Union with the semiconductor technology research and
innovation capacities needed to maintain its research and industrial investments at a
leading edge, and bridge the current gap between research and development and
manufacturing, the Union and its Member States should better coordinate their efforts
and co-invest. To achieve this, the Union and Member States, should take into
consideration the twin digital and green transition goals. The Initiative throughout all
components and actions, to the extent possible, should mainstream and maximise the
benefits of application of semiconductor technologies as powerful enablers 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
production and the whole lifecycle use of semiconductors.

51 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
participation and dissemination, and repealing Regulations (EU) No 1290/2013 and (EU) No 1291/2013. (OJ
L 170, 12.5.2021, p. 1).
52 Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the

financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013,
(EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013,
(EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU,
Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).

### EN 23 EN

(12) In order to achieve its general objective, and address both the supply and demand side
challenges of the current semiconductor ecosystem, the Initiative should include five
main components. First, to reinforce Europe’s design capacity, the Initiative should
support actions to build a virtual platform that is available across the Union. The
platform should connect the communities of design houses, SMEs and start-ups,
intellectual property and tool suppliers, with research and technology organisations to
provide virtual prototype solutions based on co-development of technology. Second, in
order to strengthen the security and resilience of supply and reducing the Union’s
dependency on third country production, the Initiative should support development
and access to pilot lines. The pilot lines should provide for the industry a facility to
test, experiment and validate semiconductor technologies and system design concepts
at the higher technology readiness levels beyond level 3 but under level 8 while
reducing environmental impacts as much as possible. Union investments along
Member States investment and with the private sector in pilot lines is necessary to
address the existing structural challenge and market failure where such facilities are
not available in the Union hindering innovation potential and global competitiveness
of the Union. Third, in order to enable investments in alternative technologies, such as
quantum technologies, conducive to the development of the semiconductors sector, the
Initiative should support actions including on design libraries for quantum chips, pilot
lines for building quantum chips and testing and experimentation facilities for
quantum components. Fourth, in order to promote the use of the semiconductor
technologies, to provide access to design and pilot line facilities, and to address skills
gaps across the Union, the Initiative should support establishment of the competence
centres on semiconductors in each Member State. Access to publicly funded
infrastructure, such as pilot and testing facilities, and to the competence network,
should be open to a wide range of users and must be granted on a transparent and nondiscriminatory basis and on market terms (or cost plus reasonable margin basis) for
large undertakings, while SMEs can benefit from preferential access or reduced prices.
Such access, including for international research and commercial partners, can lead to
broader cross-fertilisation and gains in know-how and excellence, while contributing
to cost recovery. Fifth, The Commission should set-up a dedicated semiconductor
investment facility support (as part of the investment facilitation activities described
collectively as the ‘Chips Fund’) 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 Council [53], 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 value chain, including for other
companies in the semiconductor value chains. In this context, the European Innovation
Council will provide further dedicated support through grants and equity investments
to high risk, market creating innovators.

(13) In order to overcome the limitations of the current fragmented public and private
investments efforts, facilitate integration, cross-fertilisation, and return on investment
on the ongoing programmes and to pursue a common strategic Union vision on

53 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).

### EN 24 EN

semiconductors as a means to realising the ambition of the Union and of its Member
States to ensure a leading role in the digital economy, the Chips for Europe Initiative
should facilitate better coordination and closer synergies between the existing funding
programmes at Union and national levels, better coordination and collaboration with
industry and key private sector stakeholders and additional joint investments with
Member States. The implementation set up of the Initiative is built to pool resources
from the Union, Member States and third countries associated with the existing Union
Programmes, as well as the private sector. The success of the Initiative can therefore
only be built on a collective effort by Member States, with the Union, to support both
the significant capital costs and the wide availability of virtual design, testing and
piloting resources and diffusion of knowledge, skills and competences. Where
appropriate, in view of the specificities of the actions concerned, the objectives of the
Initiative, specifically the ‘Chips Fund’ activities, should also be supported through a
blending facility under the InvestEU Fund.

(14) Support from the Initiative should be used to address market failures or sub-optimal
investment situations in a proportionate manner, and actions should not duplicate or
crowd out private financing or distort competition in the internal market. Actions
should have a clear added value for the Union.

(15) The Initiative should build 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 supply chain, in particular Horizon Europe and the Digital
Europe programme established by Regulation (EU) 2021/694 of the European
Parliament and of the Council [54] with the aim by 2030, to reinforce the Union as global
player in semiconductor technology and its applications, with a growing global share
in manufacturing. Complementing those activities, the Initiative would closely
collaborate with other relevant stakeholders, including with the Industrial Alliance on
Processors and Semiconductor Technologies.

(16) With a view to accelerating implementation of the actions of the Initiative, it is
necessary to provide an option of implementing some of the Initiative actions, in
particular on pilot lines, through a new legal instrument, the European Chips
Infrastructure Consortium (ECIC). The ECIC should have legal personality. This
means that when applying for the actions to be funded by the Initiative, the ECIC
itself, and not individual entities forming the ECIC, can be the applicant. The main
aim of the ECIC should be to encourage effective and structural collaboration between
legal entities, including Research and Technology Organizations. For this reason, the
ECIC has to involve the participation of at least three legal entities from three Member
States and be operated as a public-private sector consortium for a specific action. The
setting up of ECIC should not involve the actual setting up of a new Union body and
should not be targeted at one specific action under the Initiative. It should address the
gap in the Union’s toolbox to combine funding from Member States, the Union budget
and private investment for the purposes of implementing actions of the Initiative. In
particular, strong synergies can be attained through combined development of the
different pilot lines in an ECIC, pooling the Union’s contribution with the collective
resources of the Member States and other participants. The budget of the ECIC that
would be made available by Member States and private sector participants over its

54 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).

### EN 25 EN

projected period of operation should respect the timeframes of the actions
implemented under this Initiative. The Commission should not be directly a party in
the Consortium.

(17) The primary implementation of the Initiative should be entrusted to the Chips Joint
Undertaking as established by Council Regulation XX/XX amending Regulation (EU)
2021/2085 establishing the Joint Undertakings under Horizon Europe, as regards the
Chips Joint Undertaking [55] .

(18) In order to encourage the establishment of the necessary manufacturing and related
design capabilities, and thereby ensure the security of supply in the Union, public
support may be appropriate. In that respect, it is necessary to set out the criteria for
facilitating the implementation of specific projects that contribute to achieving the
objectives of this Regulation and distinguish between two types of facilities, namely:
Integrated Production Facilities and Open EU Foundries.

(19) Integrated Production Facilities and Open EU Foundries should provide
semiconductor manufacturing capabilities that are “first-of-a-kind” in the Union and
contribute to the security of supply and to a resilient ecosystem in the internal market.
The qualifying factor for the production of a first-of-a-kind facility could be with
regard to the technology node, substrate material, such as silicon carbide and gallium
nitride, and other product innovation that can offer better performance, process
technology or energy and environmental performance. A facility of a comparable
capability on an industrial scale should not yet substantively be present or committed
to be built within the Union, excluding facilities for research and development or
small-scale production sites.

(20) Where an Open EU Foundry offers production capacity to undertakings not related to
the operator of the facility, the Open EU Foundry 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 gained in the design and in the front-end or back-end
manufacturing processes.

(21) In order to qualify as Integrated Production Facilities or Open EU Foundries, the
establishment and operation of the facility should have a clear positive impact on the
semiconductor value chain in the Union, in particular with regard to providing a
resilient supply of semiconductors to users on the internal market. The impact on
several Member States, including cohesion objectives, should be considered as one of
the indicators of a clear positive impact of an Integrated Production Facility and Open
EU Foundry on the semiconductor value chain in the Union.

(22) It is important that Integrated Production Facilities and Open EU Foundries are not
subject to extraterritorial application of public service obligations imposed by third
countries that could undermine their ability to use their infrastructure, software,
services, facilities, assets, resources, intellectual property or knowhow needed to fulfil
the obligation on priority rated orders under this Regulation, which they would have to
guarantee.

(23) In light of the fast development of semiconductor technologies and to strengthen the
future industrial competitiveness of the Union, Integrated Production Facilities and
Open EU Foundries should commit to continued and efficient investment into the next

55 […].

### EN 26 EN

generations of semiconductors, including by testing and experimenting new
developments through priority access to the pilot lines set up by the Chips for Europe
Initiative, without prejudice to effective access by others.

(24) To allow for a uniform and transparent procedure to attain recognition as an Integrated
Production Facility and Open EU Foundry, the recognition decision should be adopted
by the Commission following the application by an individual undertaking or a
consortium of several undertakings. To account for the importance of a coordinated
and cooperated implementation of the planned facility, the Commission should take
into account in its assessment the readiness of the Member State or Member States
where the applicant intends to establish its facilities to support the set-up. Furthermore,
when assessing the viability of the business plan, the Commission could take into
account the overall record of the applicant. In light of the privileges attached to
recognition as an Integrated Production Facility or Open EU Foundry, the Commission
should monitor whether facilities that have been granted this status continue to comply
with the criteria set out in this Regulation.

(25) In light of their importance for ensuring the security of supply and enabling a resilient
semiconductor ecosystem, Integrated Production Facilities and Open EU Foundries
should be considered to be in the public interest. Ensuring the security of supply of
semiconductors is important also for digitalisation that enables the green transition of
many other sectors. To contribute towards security of supply of semiconductors in the
Union, Member States may apply support schemes and provide for administrative
support in national permit granting procedures. This is without prejudice to the
competence of the Commission in the field of State aid under Article 107 and 108 of
the Treaty, where relevant. Member States should support the set-up of Integrated
Production Facilities and Open EU Foundries in accordance with Union law.

(26) It is necessary that Integrated Production Facilities and Open EU Foundries are set-up
as quickly as possible, while keeping the administrative burden to a minimum. For that
reason, Member States should treat applications related to the planning, construction
and operation of Integrated Production Facilities and Open EU Foundries in the most
rapid manner possible. They should appoint an authority which will facilitate and
coordinate the permit granting processes and appoint a coordinator, serving as a single
point of contact for the project. Moreover, where necessary for granting a derogation
under Council Directive 92/43/EEC [56] and Directive 2000/60/EC of the European
Parliament and Council [57], the establishment and operation of these facilities may be
considered as being of overriding public interest within the meaning of the
aforementioned legal texts, provided that the remaining other conditions set out in
these provisions are fulfilled.

(27) The internal market would greatly benefit from common standards for green, trusted
and secure chips. Future smart devices, systems and connectivity platforms will have
to rely on advanced semiconductor components and they will have to meet green, trust
and cybersecurity requirements which will largely depend on the features of the
underlying technology. To that end, the Union should develop reference certification

56 Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and

flora.
57 Directive 2000/60/EC of the European Parliament and of the Council of 23 October 2000 establishing a

framework for Community action in the field of water policy.

### EN 27 EN

procedures and require the industry to jointly develop such procedures for specific
sectors and technologies with potential high social impact.

(28) In light of this, the Commission, in consultation with the European Semiconductor
Board, should prepare the ground for a certification of green, trusted and secure chips
and embedded systems that rely on or make extensive use of semiconductor
technologies. In particular, they should discuss and identify the relevant sectors and
products in need of such certification.

(29) In light of the structural deficiencies of the semiconductor supply chain and the
resulting risk of future shortages, this Regulation provides instruments for a
coordinated approach to monitoring and effectively tackling possible market
disruptions.

(30) Due to the complex, quickly evolving and interlinked semiconductor value chains with
various actors, a coordinated approach to regular monitoring is necessary to increase
the ability to mitigate risks that may negatively affect the supply of semiconductors.
Member States should monitor the semiconductor value chain focusing on early
warning indicators and the availability and integrity of the services and goods
provided by key market actors, in such a way that it would not represent an excessive
administrative burden for undertakings.

(31) Any 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 between high-level representatives of
Member States and for integration of the information into a monitoring overview of
the semiconductor value chains.

(32) It is important to take into account the specific insights into the supply situation of
users of semiconductors. Therefore, Member States should identify and regularly
exchange with the main user categories on their national markets. Furthermore,
Member States should offer the possibility for relevant stakeholder organisations,
including industry associations and representatives of the main user categories, to
provide information regarding significant changes in demand and supply, and known
disruptions of their supply chain, this could include the unavailability of critical
semiconductors or raw materials, longer than average lead-time, delays in delivery and
exceptional price surges.

(33) In order to carry out these monitoring activities, the competent authorities of Member
States may need certain information, which may not be publicly accessible, such as
information on the role of an individual undertaking along the semiconductor value
chain. In those limited circumstances in which it is necessary and proportionate for the
purpose of carrying out the monitoring activities, the competent authorities of Member
States should be able to request this information from the undertaking in question.

(34) Member States should alert the Commission if relevant factors indicate a potential
semiconductor crisis. In order to ensure a coordinated response to address such crises,
the Commission should upon the alert by a Member State or through other sources,
including information from international partners, convene an extraordinary meeting
of the European Semiconductor Board for assessing the need to activate the crisis
stage and for discussing whether it may be appropriate, necessary and proportionate
for Member States to carry out coordinated joint procurement. The Commission
should engage in consultations and cooperation with relevant third countries with a
view to addressing any disruptions in the international supply chain, in compliance

### EN 28 EN

with international obligations and without prejudice to procedural requirements under
the Treaty on international agreements.

(35) As part of the monitoring, national competent authorities should also do a mapping of
undertakings operating in the Union along the semiconductor supply chain established
in their national territory and notify this information to the Commission.

(36) In order to facilitate effective monitoring, in-depth assessment of the risks associated
with different stages of the semiconductor value chain is needed, including on the
origins and sources of supplies beyond the Union. Such risks may be related to critical
inputs and equipment for the industry, including digital products that may be
vulnerable, possible impact of counterfeit semiconductors, manufacturing capacities
and other risks that may disrupt, compromise or negatively affect the supply chain.
Those risks could include supply chains with a single point of failure or which are
otherwise highly concentrated. Other relevant factors could include the availability of
substitutes or alternative sources for critical inputs and resilient and sustainable
transport. The Commission should, assisted by the European Semiconductor Board
and taking also into account information received from the main user categories,
develop a Union level risk assessment.

(37) In order to forecast and prepare for future disruptions of the different stages of the
semiconductor value chain in the Union, the Commission should, assisted by the
European Semiconductor Board, identify early warning indicators in the Union risk
assessment. Such indicators could include the availability of raw materials,
intermediate products and human capital needed for manufacturing semiconductors, 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, delocalisations or acquisitions of key market actors.
Member States should monitor these early warning indicators.

(38) 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 should identify those key market actors in their territory.

(39) Under Article 4 of Regulation (EU) 2019/452 establishing a framework for the
screening of foreign direct investments into the Union [58], in determining whether a
foreign direct investment is likely to affect security or public order, Member States
and the Commission may consider its potential effects on critical technologies and
dual use items as defined in point 1 of Article 2 of Council Regulation (EC) No
428/2009 [59], including semiconductors.

(40) As part of the monitoring, Member States could specifically consider the availability
and integrity of the services and goods of key markets actors. Such issues could be

58 Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a

–
framework for the screening of foreign direct investments into the Union (OJ L 79I, 21.3.2019, p. 1 14).
59 Council Regulation (EC) No 428/2009 of 5 May 2009 setting up a Community regime for the control of

–
exports, transfer, brokering and transit of dual-use items (OJ L 134, 29.5.2009, p. 1 269).

### EN 29 EN

brought to the attention of the European Semiconductor Board by the Member State
concerned.

(41) 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 decision-makers on the
unfolding operational situation as well as by ensuring that effective measures to secure
the supply of semiconductors to affected critical sectors can be taken.

(42) The semiconductor crisis stage should be triggered in the presence of concrete,
serious, and reliable evidence of such a crisis. A semiconductor crisis occurs in case of
serious disruptions to the supply of semiconductors leading to significant shortages
which entail significant delays and negative effects on one or more important
economic sectors in the Union, either directly or through ripple effects of the shortage,
given that the Union’s industrial sectors represent a strong user base of
semiconductors. Alternatively or in addition, a semiconductor crisis also occurs when
serious disruptions of the supply of semiconductors lead to significant shortages which
prevent the supply, repair and maintenance of essential products used by critical
sectors, for instance medical and diagnostic equipment.

(43) In order to ensure an agile and effective response to such a semiconductor crisis, the
Commission should be empowered to activate the crisis stage by means of an
implementing acts and for a predetermined duration period, taking into account the
opinion of the European Semiconductor Board. The Commission should assess the
need for prolongation and prolong the duration of the crisis stage for a predetermined
period, should such a necessity be ascertained, taking into account the opinion of the
European Semiconductor Board.

(44) 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 this 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.

(45) 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 the 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, oblige
Integrated Production Facilities and Open EU Foundries 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 could limit the measures to
certain critical sectors. In addition, the European Semiconductor Board may advise on
the necessity of introducing an export control regime pursuant to Regulation (EU)
2015/479 of the European Parliament and of the Council [60] . The European
Semiconductor Board may also assess and advise on further appropriate and effective
measures. The use of all these emergency measures should be proportionate and
restricted to what is necessary to address the significant disturbances at stake insofar
as this is in the best interest of the Union. The Commission should regularly inform

60 Regulation (EU) 2015/479 of the European Parliament and of the Council of 11 March 2015 on common

rules for exports (OJ L 83, 27.3.2015, p. 34).

### EN 30 EN

the European Parliament and the Council of the measures taken and the underlying
reasons. The Commission may, after consulting with the Board, issue further guidance
on the implementation and use of the emergency measures.

(46) A number of sectors are critical for the proper functioning of the internal market.
Those critical sectors are the sectors listed in the Annex of the Commission proposal
for a Directive of the European Parliament and of the Council on the resilience of
critical entities [61] . For the purposes of this Regulation, defence and other activities that
are relevant for public safety and security should be additionally considered as a
critical sector. Certain measures should only be enacted fur the purpose of securing
supply to critical sectors. The Commission may limit the emergency measures to
certain of these sectors or to certain parts of them when the semiconductor crisis has
disturbed or is threatening to disturb their operation.

(47) The purpose of requests for information from undertakings along the semiconductor
supply chain established in the Union in the crisis stage is an in-depth assessment of
the semiconductor crisis in order to identify potential mitigation or emergency
measures at Union or national level. Such information may include production
capability, production capacity and current primary disruptions and bottlenecks. These
aspects could include the typical and current actual stock of crisis-relevant products in
its production facilities located in the Union and third country facilities which it
operates or contracts or purchases supply from; 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; reasons that prevent the
filling of production capacity; or other existing data necessary to assess the nature of
the semiconductor crisis or potential mitigation or emergency measures at national or
Union level. 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 obliged 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 subject to confidentiality rules. Should an undertaking be subject to
a request for information related to its semiconductor activities from a third country, it
should inform the Commission so to enable an assessment whether an information
request by the Commission is warranted.

(48) In order to ensure that critical sectors can continue to operate in a time of crisis and
when necessary and proportionate for this purpose, Integrated Production Facilities
and Open EU Foundries could be obliged by the Commission to accept and prioritise
orders of crisis-relevant products. This obligation may also be extended to
semiconductor manufacturing facilities which have accepted such possibility in the
context of receiving public support. 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. Undertakings may be subject to penalties if they fail to
comply with the obligation for priority rated orders.

61 COM(2020) 829. 16.12.2020.

### EN 31 EN

(49) The undertaking concerned should be obliged to accept and prioritise a priority rated
order. In exceptional and duly justified cases, the undertaking could request the
Commission to review the imposed obligation. This applies either where the facility is
unable to fulfil the order even if prioritised, be it due to insufficient production
capability or production capacity, or because this would place an unreasonable
economic burden and entail particular hardship on the facility.

(50) 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 this request, so as to inform an
assessment of whether, if 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 enact a
priority rated order obligation.

(51) 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 the
violation of contractual obligations was necessary for compliance with the mandated
prioritisation. Undertakings potentially within scope of a priority rated order should
anticipate this possibility in the conditions of their commercial contracts. Without
prejudice to the applicability of other provisions, the liability for defective products, as
provided for by Council Directive 85/374/EEC of 25 July 1985 [62], is not affected by
this liability exemption.

(52) The obligation to prioritise the production of certain products respects the essence of
and will not disproportionately affect the freedom to conduct a business and the
freedom of contract laid down in Article 16 of the Charter of Fundamental Rights of
the European Union (‘the Charter’) and the right to property laid down in Article 17 of
the Charter. Any limitation of those rights in this Regulation 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.

(53) When the crisis stage is activated, two or more Member States could 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. The mandate could 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 Board. Where it intends to not follow the
request, it should inform the concerned Member States and the Board and give its
reasons. 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 and use of purchased
products should remain within the remit of the participating Member States.

62 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
(85/374/EEC) (OJ L 210, 7.8.1985, p. 29).

### EN 32 EN

(54) During a semiconductor shortage crisis, it might become necessary that the Union
considers protective measures. The European Semiconductor Board may 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.

(55) In order to facilitate a smooth, effective and harmonised implementation of this
Regulation, cooperation and the exchange of information, the European
Semiconductor Board should be established. The European Semiconductor Board
should provide advice to and assist the Commission on specific questions. These
should include providing advice on the Chips for Europe Initiative to the Public
Authorities Board of the Chips Joint Undertaking; exchanging information on the
functioning of the Integrated Production Facilities and Open EU Foundries; discussing
and preparing the identification of specific sectors and technologies with potential
high social impact and respective 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 support the Commission in international cooperation in
line with international obligations, including in information gathering and crisis
assessment. In addition, the European Semiconductor Board should coordinate,
cooperate and exchange information with other Union crisis response and crisis
preparedness structures with a view to ensure a coherent and coordinated Union
approach as regards crisis response and crisis preparedness measures for
semiconductor crises.

(56) A representative of the Commission should chair the European Semiconductor Board.

                                                              Each Member State’s national single point of contact should appoint at least one high
level representative to the European Semiconductor Board. They could also appoint
different representatives in relation to different tasks of the European Semiconductor
Board, for example, depending on which Chapter of this Regulation is discussed in the
meetings of the European Semiconductor Board. The Commission may establish subgroups and should be entitled to establish working arrangements by inviting experts to
take part in the meetings on an ad hoc basis or by inviting organisations representing
the interests of the Union semiconductors industry, such as the Industrial Alliance on
Processors and Semiconductor Technologies, in its sub-groups as observers.

(57) The European Semiconductor Board will hold separate meetings for its tasks under
Chapter II and for its tasks under Chapter III and IV. Member States should endeavour
to ensure effective and efficient cooperation in the European Semiconductor Board.
The Commission should be able to facilitate exchanges between the European
Semiconductor Board and other Union bodies, offices, agencies and advisory groups.
In light of the importance of the supply of semiconductors for other sectors and the
resulting need for coordination, the Commission 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 under Chapter IV. In order to continue and make use of the
work following the implementation of Commission Recommendation on a common
Union toolbox to address semiconductor shortages, the European Semiconductor
Board should carry out the tasks of the European Semiconductor Expert Group. Once

### EN 33 EN

the European Semiconductor Board is operational, this expert group should cease to
exist.

(58) Member States hold a key role in the application and enforcement of this Regulation.
In this respect, each Member State should designate one or more national competent
authorities for the purpose of effective implementation of this Regulation and ensure
that those authorities are adequately empowered and resourced. Member States could
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 Member State and Union levels, including the
Commission and the European Semiconductor Board, each Member State should
designate, within one of the authorities it designated 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.

(59) 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. The Commission and the national competent authorities, their officials,
servants and other persons working under the supervision of these authorities as well
as officials and civil servants of other authorities of the Member States should not
disclose information acquired or exchanged by them pursuant to this Regulation and of
the kind covered by the obligation of professional secrecy. This should also apply to
the European Semiconductor Board and the Semiconductor Committee established in
this Regulation. 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.

(60) 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 and periodic penalty payments should also be laid down for non-compliance with
the obligations. 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.

(61) The power to adopt acts in accordance with Article 290 of the Treaty should be
delegated to the Commission in order to amend Annex I to this Regulation to reflect
technological change and market developments, with regard to the actions set out
therein in a manner consistent with the objectives of this Regulation and to amend
Annex II thereto with regard to the measurable indicators where considered to be
necessary as well as to supplement this Regulation with provisions on the
establishment of a monitoring and evaluation framework. It is of particular importance
that the Commission carries 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-Making [63] . In particular, to ensure equal participation in the preparation of
delegated acts, the European Parliament and the Council receive all documents at the

63 OJ L 123, 12.5.2016, p. 1.

### EN 34 EN

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.

(62) In order to ensure uniform conditions for the implementation of this Regulation,
implementing powers should be conferred on the Commission as regards the selection
of ECICs and as regards the procedure for establishing and defining the tasks of
competence centres and the procedure for establishing the network, so that the
objectives of the Initiative are achieved. Furthermore, implementing powers should be
conferred on the Commission as regards activating the crisis stage in a semiconductor
crisis, to allow a rapid and coordinated response, and for specifying the practical
arrangements for the treatment of confidential information. Those powers should be
exercised in accordance with Regulation (EU) No 182/2011 of the European
Parliament and of the Council [64] of the European Parliament and of the Council.

(63) Since the objective of this Regulation cannot be sufficiently achieved by the Member
States and 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. 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.

HAVE ADOPTED THIS REGULATION:

##### **C HAPTER I** **G ENERAL P ROVISIONS**

_Article 1_
_Subject matter_

1. This Regulation establishes a framework for strengthening the semiconductor sector
at Union level, in particular through the following measures:

(a) establishment of the Chips for Europe Initiative (the ‘Initiative’);

(b) setting the criteria to recognise and to support first-of-a-kind Integrated
Production Facilities and Open EU Foundries that foster the security of supply
of semiconductors in the Union;

(c) setting up a coordination mechanism between the Member States and the
Commission for monitoring the supply of semiconductors and crisis response
to semiconductor shortages.

_Article 2_
_Definitions_

1. For the purposes of this Regulation, the following definitions shall apply:

(1) ‘semiconductor’ means one of the following:

64 Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011
laying down the rules and general principles concerning mechanisms for control by Member States of
the Commission’s exercise of implementing powers, (OJ L 55, 28.2.2011, p. 13).

### EN 35 EN

(a) a material, either elemental, such as Silicon, or compound, such as
Silicon Carbide, whose electrical conductivity can be modified, or

(b) a 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 and analogue devices, also referred to as ‘integrated circuit’;

(3) ‘technology node’ means the structure on a semiconductor serving as transiting
element and providing a measure for manufacturing method in nanometres;

(4) ‘semiconductor supply chain’ means the system of activities, organisations,
actors, technology, information, resources and services involved in the
production of semiconductors, including raw materials, manufacturing
equipment, design, fabrication, assembly, testing and packaging;

(5) ‘semiconductor value chain’ means the set of activities in relation to a
semiconductor product from its conception to its end use, including raw
materials, manufacturing equipment, research, design, fabrication, testing,
assembly and packaging to embedding and validation in end products;

(6) ‘pilot line’ means an experimental project or action addressing higher
technology readiness levels from levels 3 to 8 to further develop an enabling
infrastructure necessary to test, demonstrate and calibrate a product or system
with the model assumptions;

(7) ‘coordinator’ means a legal entity which is a member of a European Chips
Infrastructure Consortium created in accordance with Article 7 and has been
appointed by all the members of that consortium to be the principal point of
contact for the purpose of the consortium’s relations with the Commission;

(8) ‘small and medium-sized enterprises’ or ‘SMEs’ means small and mediumsized enterprises as defined in Article 2 of the Annex to Commission
Recommendation 2003/361/EC [65] ;

                                       (9) ‘middle capitalisation company’ or ‘mid cap’ means an enterprise that is not a
SME and that employs a maximum of 1 500 persons, where the headcount of
staff is calculated in accordance with Articles 3 to 6 of the Annex to

Recommendation 2003/361/EC;

(10) ‘first-of-a-kind facility’ means an industrial facility capable of semiconductor

manufacturing, including front-end or back-end, or both, that is not
substantively already present or committed to be built within the Union, for
instance with regard to the technology node, substrate material, such as silicon
carbide and gallium nitride, and other product innovation that can offer better
performance, process innovation or energy and environmental performance;

(11) ‘next generation chips’ and ‘next generation semiconductor technologies’

means chips and semiconductor technologies that go beyond the state of the art

65 Commission Recommendation of 6 May 2003 concerning the definition of micro, small and mediumsized enterprises (OJ L 124, 20.5.2003, p. 36).

### EN 36 EN

in offering significant improvements in computing power or energy efficiency
as well as other significant energy and environmental gains;

(12) ‘front-end’ means the entire processing of a semiconductor wafer;

(13) ‘back-end’ means the packaging, assembly and test of each individual

integrated circuit;

(14) ‘user of semiconductors’ means an undertaking that produces products in

which semiconductors are incorporated;

(15) ‘key market actors’ means undertakings in the Union semiconductor sector, the

reliable functioning of which is essential for the semiconductor supply chain;

(16) ‘critical sector’ means any sector referred to in the Annex of the Commission

proposal for a Directive of the European Parliament and of the Council on the
resilience of critical entities, the defence sector and other activities that are
relevant for public safety and security;

(17) ‘crisis-relevant product’ means semiconductors, intermediate products and raw

materials required to produce semiconductors or intermediate products, that are
affected by the semiconductor crisis or of strategic importance to remedy the
semiconductor crisis or economic effects thereof;

(18) ‘production capability’ means the potential output of a semiconductor

manufacturing facility under optimal resources, typically the amount of wafers
of a certain size that can be processed in a given time;

(19) ‘production capacity’ means the output of a semiconductor manufacturing

facility, typically the amount of wafers of a certain size that is usually
processed in a given time.

##### **C HAPTER II** **C HIPS FOR E UROPE I NITIATIVE** **S ECTION 1** **G ENERAL P ROVISIONS**

_Article 3_
_Establishment of the Initiative_

1. The Initiative is established for the duration of the Multiannual Financial Framework

2021-2027.

2. The Initiative shall be supported by funding from the Horizon Europe programme
and the Digital Europe programme, and in particular Specific Objective 6 thereof, for
a maximum indicative amount of EUR 1.65 billion and EUR 1.65 billion
respectively. This funding shall be implemented in accordance with Regulation (EU)
No 2021/695 and Regulation (EU) No 2021/694.

### EN 37 EN

_Article 4_
_Objectives of the Initiative_

1. The general objective of the Initiative is to support large-scale technological capacity
building and innovation throughout the Union to enable development and
deployment of cutting-edge and next generation semiconductor and quantum
technologies that will reinforce the Union advanced design, systems integration and
chips production capabilities, as well as contribute to the achievement of the twin
digital and green transition.

2. The Initiative shall have the following five operational objectives:

(a) building up advanced large-scale design capacities for integrated
semiconductor technologies. This operational objective shall be achieved
through:

(1) building up an innovative virtual platform, available across the Union,
integrating existing and new design facilities with extended libraries and
Electronic Design Automation (EDA) tools;

(2) upgrading the design capacity with ongoing innovative developments,
such as processor architectures based on the open-source Reduced
Instruction Set Computer Architecture (RISC-V);

(3) enlarging the semiconductor ecosystem by integrating the vertical market
sectors, contributing to the green, digital and innovation agendas of the
Union.

(b) enhancing existing and developing new advanced pilot lines. This operational
objective shall be achieved through:

(1) strengthening technological capabilities in next generation chips
production technologies, by integrating research and innovation activities
and preparing the development of future technology nodes, including
leading-edge nodes below two nanometres, Fully Depleted Silicon on
Insulator (FD-SOI) at 10 nanometres and below, and 3D heterogeneous
systems integration and advanced packaging;

(2) supporting large scale innovation through access to new or existing pilot
lines for experimentation, test, and validation of new design concepts
integrating key functionalities, such as novel materials and architectures
for power electronics fostering sustainable energy and electro mobility,
lower energy consumption, security, higher levels of computing
performance or integrating breakthrough technologies such as
neuromorphic and embedded artificial intelligence (AI) chips, integrated
photonics, graphene and other 2D material based technologies;

(3) providing support to Integrated Production Facilities and Open EU
Foundries through priority access to the new pilot lines.

(c) building advanced technology and engineering capacities for accelerating the
innovative development of quantum chips.

(d) creating a network of competence centres across the Union, in order to

(1) strengthen capacities and offer a wide range of expertise to the
stakeholders, including end-user SMEs and start-ups, facilitating access
to and effective use of the above capacities and facilities;

### EN 38 EN

(2) address the skills shortage, attracting and mobilising new talent and
supporting the emergence of a suitably skilled workforce for
strengthening the semiconductor sector, including via reskilling and
upskilling of workers.

(e) undertaking activities, to be described collectively as a ‘Chips Fund’ activities
to facilitate access to debt financing and equity by start-ups, scale-ups and
SMEs and other companies in the semiconductor value chain, through a
blending facility under the InvestEU Fund and via the European Innovation
Council, with a view to:

(1) improving the leverage effect of the Union budget spending and
achieving a higher multiplier effect in terms of attracting private-sector
financing.

(2) providing support to companies facing difficulties in accessing finance,
and addressing the need to underpin the economic resilience of the Union
and its Member States;

(3) accelerating investment in the field of semiconductor manufacturing
technologies and chip design and to leveraging funding from both the
public and the private sectors, while increasing the security of supply for
the whole semiconductor value chain.

_Article 5_
_Components of the Initiative_

1. The Initiative shall have the following five components:

(a) design capacities for integrated semiconductor technologies;

(b) pilot lines for preparing innovative production, and testing and experimentation
facilities;

(c) advanced technology and engineering capacities for quantum chips;

(d) a network of competence centres and skills development;

(e) ‘Chips Fund’ activities for access to debt financing and equity to start-ups,
scale-ups, SMEs and other companies in the semiconductor value chain.

_Article 6_
_Synergies with Union programmes_

1. The Initiative shall enable synergies with Union programmes, as referred to in Annex
III. The Commission shall ensure that the achievement of the objectives is not
hampered when leveraging the complementary character of the Initiative with Union

programmes.

_Article 7_
_European Chips Infrastructure Consortium_

1. For the purpose of implementing eligible actions and other related tasks funded
under the Initiative a European Chips Infrastructure Consortium (‘ECIC’) may be
established under the conditions set out in this Article.

### EN 39 EN

2. The ECIC shall

(a) have legal personality from the date of entry into force of the Commission
decision referred to in paragraph 6;

(b) have one or more statutory seats, which shall be located on the territory of one
or more Member States;

(c) consist of at least three legal entities from at least three Member States and be
operated as a public-private sector consortium with the participation of the
Member States, and private legal entities;

(d) appoint the coordinator.

3. The coordinator shall submit an application to the Commission in writing which shall
contain the following:

(a) a request to the Commission to set up the ECIC, including a list of the
proposed legal entities that are forming the ECIC consortium;

(b) the draft Statutes of the ECIC that shall include at least the provisions on: the
procedure for setting-up, membership, budget, legal seat, applicable law and
jurisdiction, ownership of the results, governance, including decision making
procedure and specific role and if applicable voting rights of Member States
and the Commission, winding-up, reporting and liability.

4. The Commission shall review the application to set up the ECIC on the basis of all of
the following criteria:

(a) the appropriate competences, know-how and capabilities of the proposed ECIC
and of the legal entities forming it on the semiconductors;

(b) the appropriate management capacity, staff and infrastructure necessary to
carry out the eligible actions under the Initiative;

(c) the operational and legal means to apply the administrative, contractual and
financial management rules laid down at Union level;

(d) the appropriate financial viability corresponding to the level of Union funds it
will be called upon to manage and demonstrated, where appropriate, through
guarantees issued preferably by a public authority;

(e) the budget that would be made available by Member States and private sector
participants for the financing of the ECIC, and related modalities;

(f) the appropriate ability of the ECIC to ensure coverage of the needs of industry.

5. The Commission by means of an implementing act and based on the criteria set out
in paragraph 4, shall adopt one of the following decisions:

(a) setting up the ECIC after it has concluded that the requirements laid down in
paragraphs 3 and 4 are met;

(b) rejecting the application if it concludes that the requirements laid down in
paragraphs 3 and 4 are not met.

The implementing act shall be adopted in accordance with the examination procedure
referred to in Article 33(2).

6. The decision referred to in paragraph 5 shall be notified to the applicants.

### EN 40 EN

7. The decision setting up the ECIC shall be published in the Official Journal of the
European Union.

8. The ECIC shall have substantial overall autonomy to lay down its membership,
governance, funding, budget and the modalities by which the respective financial
contributions from the members are called upon, voting rights and working methods.
However, the organisation, composition and working methods of the ECIC,
including any amendments to the Statutes, shall be in accordance with and contribute
to the aims and objectives of this Regulation and the Chips for Europe Initiative and
shall be notified to the Commission.

9. The ECIC shall produce an annual activity report, containing a technical description
of its activities and financial statement. The annual activity report shall be
transmitted to the Commission and made publicly available. The Commission may
provide recommendations regarding the matters covered in the annual activity report.

_Article 8_
_European network of competence centres in semiconductors_

1. For the purpose of implementing actions under the Initiative’s component referred to
in Article 5, point (d), a European network of competence centres in semiconductors
(the ‘network’) may be established.

2. With respect to the implementation of actions under the Initiative’s component
referred to in Article 5, point (d), the network may perform all or some of the
following activities to the benefit of the Union industry, in particular SMEs and midcaps, as well as the public sector:

(a) providing access to design services and design tools under the Initiative’s
component referred to in Article 5, point (a), as well as to the pilot lines
supported under the Initiative’s component referred to in Article 5, point (b);

(b) raising awareness and providing the necessary knowhow, expertise and skills
to the stakeholders for helping them accelerate the development and integration
of new semiconductor technologies, design options and system concepts by
using effectively the infrastructure;

(c) raising awareness and providing or ensuring access to expertise, knowhow and
services, including system design readiness, new and existing pilot lines and
supporting actions necessary to build skills and competences capacities
supported by this Initiative;

(d) facilitating the transfer of expertise and knowhow between Member States and
regions encouraging exchanges of skills, knowledge and good practices and
encouraging joint programmes;

(e) developing and managing specific training actions on semiconductor
technologies to support the development of the talent pool in the Union.

3. Member States shall designate candidate competence centres in accordance with its
national procedures, administrative and institutional structures through an open and
competitive process. The Commission shall, by means of implementing acts, set the
procedure for establishing competence centres, including selection criteria, and
further tasks and functions of the centres with respect to the implementation of the

### EN 41 EN

actions under the Initiative, the procedure for establishing the network as well to
adopt decisions on the selection of entities forming the network. Those implementing
acts shall be adopted in accordance with the examination procedure referred to in
Article 33(2).

4. The network shall have substantial overall autonomy to lay down its organisation,
composition and working methods. However, the organisation, composition and
working methods of the network shall be in accordance with and contribute to the
aims and objectives of this Regulation and the Initiative.

_Article 9_
_Implementation_

1. The components listed in points (a) to (d) of Article 5 under the Initiative may be
entrusted to the Chips Joint Undertaking referred to in Council Regulation XX/XX
amending Council Regulation (EU) 2021/2085 and implemented in the work
programme of the Chips Joint Undertaking.

2. In order to reflect technological change and market developments, the Commission is
empowered to adopt delegated acts in accordance with Article 32 to amend Annex I
with regard to the activities set out therein in a manner consistent with the objectives
of the Initiative, as set out in Article 4.

3. In order to ensure effective implementation and evaluation of the Initiative, the
Commission is empowered to adopt delegated acts in accordance with Article 32 to
amend Annex II with regard to the measurable indicators to monitor the
implementation and to report on the Initiative towards the achievement of its
objectives as set out in Article 4.

##### **C HAPTER III** **S ECURITY OF S UPPLY**

_Article 10_
_Integrated Production Facilities_

1. Integrated Production Facilities are first-of-a-kind semiconductor design and
manufacturing facilities, including front-end or back-end, or both, in the Union that
contribute to the security of supply for the internal market.

2. An Integrated Production Facility shall meet the following criteria:

(a) it qualifies as a first-of-a-kind facility;

(b) its establishment and operation have a clear positive impact on the Union’s
semiconductor value chain with regard to ensuring the security of supply and
increasing qualified workforce;

(c) it guarantees not to be 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 21(1) and
commits to inform the Commission when such obligation arises;

(d) it commits to invest in the next generation of chips.

### EN 42 EN

3. For the purpose of investing in the next generation of chips according to paragraph 2,
point (d), the Integrated Production Facility shall have priority access to the pilot
lines set up in accordance with Article 5, point (b). Any such priority access shall be
without prejudice to effective access to the pilot lines by other interested
undertakings.

_Article 11_
_Open EU Foundries_

1. Open EU Foundries are first-of-a-kind semiconductor front-end or back-end, or both,
manufacturing facilities in the Union that offer production capacity to unrelated
undertakings and thereby contribute to the security of supply for the internal market.

2. An Open EU Foundry shall meet the following criteria:

(a) it qualifies as a first-of-a-kind facility;

(b) its establishment and operation have a clear positive impact on the Union’s
semiconductor value chain with regard to ensuring the security of supply and
increasing qualified workforce, taking into account in particular the extent to
which it offers front-end or back-end, or both, production capacity to
undertakings not related to the facility, if there is sufficient demand;

(c) it guarantees not to be 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 21(1) and
commits to inform the Commission when such obligation arises;

(d) it commits to invest in the next generation of chips.

3. Where an Open EU Foundry offers production capacity to undertakings not related to
the operator of the facility, it shall establish and maintain adequate and effective
functional separation of the design and manufacturing processes in order to ensure
the protection of information gained at each stage.

4. For the purpose of investing in the next generation of chips according to paragraph 2,
point (d), the Open EU Foundry shall have priority access to the pilot lines set up in
accordance with Article 5, point (b). Any such priority access shall be without
prejudice to effective access to the pilot lines by other interested undertakings.

_Article 12_
_Application and recognition_

1. Any undertaking or any consortium of undertakings (‘applicant’) may submit an
application to the Commission to recognise the applicant’s planned facility as an
Integrated Production Facility or Open EU Foundry.

2. The Commission shall, in consultation with the European Semiconductor Board,
assess the application through a fair and transparent process based on the following
elements:

(a) compliance with the criteria set out in Article 10(2) or in Article 11(2)
respectively;

(b) a business plan evaluating the financial viability of the project, including
information on any planned public support;

### EN 43 EN

(c) proven experience of the applicant in installing and operating similar facilities;

(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 facilitate the set-up of such a facility.

The Commission shall process the application and adopt its decision in a timely
manner and notify the applicant thereof.

3. The Commission shall monitor the activities of the Integrated Production Facilities
and the Open EU Foundries. Where the Commission finds that a facility no longer
fulfils the criteria set out in Articles 10(2) or in Article 11(2) respectively, it shall
notify the findings to the European Semiconductor Board. After consulting the
European Semiconductor Board and after hearing the facility, the Commission may
repeal the decision granting a facility the status of Integrated Production Facility or
Open EU Foundry.

4. The Commission may, after consulting the European Semiconductor Board, repeal a
decision recognising the status of an Integrated Production Facility or an Open EU
Foundry if the recognition was based on an application containing incorrect
information.

5. Facilities which are no longer Integrated Production Facilities and Open EU
Foundries shall lose all rights linked to the recognition of this status arising from this
Regulation.

_Article 13_
_Public interest and public support_

1. Integrated Production Facilities and Open EU Foundries shall be considered to
contribute to the security of supply of semiconductors in the Union and therefore to
be in the public interest.

2. In order to reach security of supply in the Union, Member States may, without
prejudice to Articles 107 and 108 of the Treaty, apply support schemes and provide
for administrative support to Integrated Production Facilities and Open EU Foundries
in accordance with Article 14.

_Article 14_
_National fast-tracking of permit granting procedures_

1. Member States shall ensure that administrative applications related to the planning,
construction and operation of Integrated Production Facilities and Open EU
Foundries are processed in an efficient and timely manner. To that end, all national
authorities concerned shall ensure that the most rapid treatment legally possible is
given to these applications.

2. Where such status exists in national law, Integrated Production Facilities and Open
EU Foundries shall be allocated the status of the highest national significance
possible and be treated as such in permit granting processes, including those relating
to environmental assessments and if national law so provides, in spatial planning.

3. The security of supply of semiconductors may be considered an imperative reason of
overriding public interest within the meaning of Article 6(4) and Article 16(1)(c) of
Directive 92/43/EEC and of overriding public interest within the meaning of Article
4(7) of Directive 2000/60. Therefore, the planning, construction and operation of

### EN 44 EN

Integrated Production Facilities and Open EU Foundries may be considered of
overriding public interest, provided that the remaining other conditions set out in
these provisions are fulfilled.

4. For each Integrated Production Facility and Open EU Foundry, the Member State
concerned shall nominate an authority responsible for facilitating and coordinating
administrative applications related to planning, construction and operation. The
authority shall appoint a coordinator who shall serve as the single point of contact for
the Integrated Production Facility or Open EU Foundry. The authority may establish
a working group where all authorities involved in the administrative applications are
represented in order to draw up a permit granting schedule and to monitor and
coordinate its implementation. If the setting up of an Integrated Production Facility
or an Open EU Foundry requires decisions to be taken in two or more Member
States, the respective authorities shall take all necessary steps for efficient and
effective cooperation and coordination among themselves.

##### **C HAPTER IV** **M ONITORING AND C RISIS R ESPONSE** **S ECTION 1** **M ONITORING**

_Article 15_
_Monitoring and alerting_

1. Member States shall carry out regular monitoring of the semiconductor value chain.
In particular, they shall:

(a) monitor early warning indicators identified pursuant to Article 16;

(b) monitor the availability and integrity of the services and goods provided by the
key market actors identified pursuant to Article 17.

Member States shall provide relevant findings to the European Semiconductor Board
in the form of regular updates.

2. Member States shall invite the main users of semiconductors and other relevant
stakeholders to provide information regarding significant fluctuations in demand and
known disruptions of their supply chain. To facilitate the exchange of information,
Member States shall provide for a mechanism and administrative set-up for these
updates.

3. National competent authorities designated pursuant to Article 26(1) may request
information from representative organisations of undertakings or individual
undertakings operating along the semiconductor supply chain where necessary and
proportionate for the purpose of paragraph 1. National competent authorities in such
case will pay particular attention to SMEs to minimise administrative burden
resulting from the request and will privilege digital solutions for obtaining such
information. Any information obtained pursuant to this paragraph shall be treated in
compliance with the confidentiality obligations set out in Article 27.

### EN 45 EN

4. Where a Member State becomes aware of a potential semiconductor crisis, a
significant fluctuation in demand or has concrete and reliable information of any
other risk factor or event materialising, it shall immediately alert the Commission
(‘early warning’).

5. Where the Commission becomes aware of a potential semiconductor crisis, a
significant fluctuation in demand or has concrete and reliable information of any
other risk factor or event materialising, based on an alert by a Member State provided
in accordance with paragraph 4, or through other sources, including information from
international partners, it shall without undue delay:

(a) convene an extraordinary meeting of the European Semiconductor Board to
coordinate the following actions:

(1) assessing whether the activation of the crisis stage referred to in Article
18 is warranted;

(2) discussing whether it may be appropriate, necessary and proportionate
for Member States to jointly purchase semiconductors, intermediate
products or raw materials affected or at threat of being affected by a
potential semiconductor crisis (‘coordinated procurement’);

(b) enter into consultations or cooperation, on behalf of the Union, with relevant
third countries with a view to seeking cooperative solutions to address supply
chain disruptions, in compliance with international obligations. This may
involve, where appropriate, coordination in relevant international fora.

6. The coordinated procurement referred to in paragraph 5, point (a)(ii), shall be carried
out by Member States in accordance with the rules set out in Article 38 of Directive
2014/24/EU of the European Parliament and of the Council [66] .

7. National competent authorities designated pursuant to Article 26(1) shall map
undertakings operating along the semiconductor supply chain in their national
territory, including non-confidential information on the services or goods, and
contact information. They shall notify this list and any subsequent update to the
Commission. The Commission may issue guidance, after consulting the European
Semiconductor Board, to further specify the information to be gathered and define
the technical specifications and formats.

_Article 16_
_Union risk assessment and early warning indicators_

1. The Commission shall, after consulting the European Semiconductor Board, assess
risks that may disrupt, compromise or negatively affect the supply of semiconductors
(Union risk assessment). In the Union risk assessment, the Commission shall identify
early warning indicators.

2. The Commission shall review the Union risk assessment including the early warning
indicators as necessary.

3. When monitoring the semiconductor value chain pursuant to Article 15, Member
States shall monitor the early warning indicators identified by the Commission.

66 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).

### EN 46 EN

_Article 17_
_Key market actors_

1. Member States shall identify key market actors along the semiconductor supply
chains in their national territory, taking into account the following elements:

(a) the number of other Union undertakings relying on the service or good
provided by a market actor;

(b) the Union or global market share of the key 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.

2. When monitoring the semiconductor value chain pursuant to Article 15, Member
States shall, after consulting the European Semiconductor Board, monitor the
availability and integrity of the services or goods which those key market actors
provide.

##### **S ECTION 2** **S EMICONDUCTOR SUPPLY C RISIS S TAGE**

_Article 18_
_Activation of the crisis stage_

1. A semiconductor crisis shall be considered to occur when there are serious
disruptions in the supply of semiconductors leading to significant shortages, which:

(a) entail significant delays or significant negative effects on one or more
important economic sectors in the Union, or

(b) prevent the supply, repair and maintenance of essential products used by
critical sectors.

2. Where an assessment of the Commission provides concrete, serious, and reliable
evidence of a semiconductor crisis, the Commission may activate the crisis stage by
means of implementing acts in accordance with Article 33(2). The duration of the
activation shall be specified in the implementing act. Where, in view of the scope
and gravity of the semiconductor crisis, duly justified imperative grounds of urgency
so require, the procedure provided for in Article 33(3) shall apply to implementing
acts adopted pursuant to this Article.

3. Before the expiry of the duration for which the crisis stage was activated, the
Commission shall, after consulting the European Semiconductor Board, assess
whether the activation of the crisis stage should be prolonged. Where the assessment
concludes that a prolongation is appropriate, the Commission may prolong the
activation by means of implementing acts. The duration of the prolongation shall be
specified in the implementing acts adopted in accordance with Article 33(2). The

### EN 47 EN

Commission may repeatedly decide to prolong the activation of the crisis stage
where this is appropriate.

4. 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 as necessary. Member States shall work closely with the Commission and
coordinate any national measures taken with regard to the semiconductor supply
chain within the European Semiconductor Board.

5. Upon expiry of the duration for which the crisis stage is activated, the measures
taken in accordance with Articles 20, 21 and 22 shall cease to apply. The
Commission shall review the Union risk assessment pursuant to Article 16(2) no
later than six months after the expiry of the duration of the crisis stage.

_Article 19_
_Emergency toolbox_

1. Where the crisis stage is activated and where appropriate in order to address the
semiconductor crisis in the Union, the Commission shall take the measure provided
for in Article 20 under the conditions laid down therein. In addition, the Commission
may take the measures provided for in Article 21 or Article 22, or both, under the
conditions laid down therein.

2. The Commission may, after consulting the European Semiconductor Board, limit the
measures provided for in Articles 21 and 22 to certain critical sectors the operation of
which is disturbed or under threat of disturbance on account of the semiconductor

crisis.

3. Where the crisis stage is activated and where appropriate in order to address the
semiconductor crisis in the Union, the European Semiconductor Board may:

(a) assess the impact of the possible imposition of protective measures, including
in particular whether the market situation corresponds to a significant shortage
of an essential product pursuant to Regulation 2015/479 and provide an
opinion to the Commission;

(b) assess and advise on further appropriate and effective emergency measures.

4. The use of the measures referred to in paragraph 1 shall be proportionate and
restricted to what is necessary for addressing serious disruptions of vital societal
functions or economic activities in the Union and must be in the best interest of the
Union. The use of these measures shall avoid placing disproportionate administrative
burden on SMEs.

5. The Commission shall regularly inform the European Parliament and the Council of
any measures taken in accordance with paragraph 1 and explain the reasons of its
decision.

6. The Commission may, after consulting the European Semiconductor Board, issue
guidance on the implementation and the use of the emergency measures.

### EN 48 EN

_Article 20_
_Information gathering_

1. The Commission shall, after consulting the European Semiconductor Board, request
representative organisations of undertakings or, if necessary, individual undertakings
operating along the semiconductor supply chain to inform the Commission about
their production capabilities, production capacities, current primary disruptions and
provide other existing data necessary to assess the nature of the semiconductor crisis
or to identify and assess potential mitigation or emergency measures at national or
Union level.

2. The request for information shall state its legal basis, 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 indicate the penalties provided for in
Article 28.

3. The owners of the undertakings or their representatives and, in the case of legal
persons, companies or firms, 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. Lawyers duly authorised to act may supply the information on behalf of
their clients. The latter shall remain fully responsible if the information supplied is
incomplete, incorrect or misleading.

4. Should an undertaking supply incorrect, incomplete or misleading information in
response to a request made pursuant to this Article, or not supply the information
within the prescribed time limit, it shall be subject to fines set in accordance with
Article 28.

5. Should an undertaking established in the Union be subject to a request for
information related to its semiconductor activities from a third country, it shall
inform the Commission in such a manner as to enable the Commission to request
similar information. The Commission shall inform the European Semiconductor
Board of the existence of such request from a third country.

_Article 21_
_Priority rated orders_

1. Where necessary and proportionate to ensure the operation of all or certain critical
sectors, the Commission may oblige Integrated Production Facilities and Open EU
Foundries to accept and prioritise an order of crisis-relevant products (‘priority rated
order’). The obligation shall take precedence over any performance obligation under
private or public law.

2. The obligation under paragraph 1 can also be imposed to other semiconductor
undertakings which have accepted such possibility in the context of receiving public
support.

3. When a semiconductor undertaking established in the Union is subject to a third
country priority rated order measure, it shall inform the Commission. Should that
obligation significantly impact the operation of certain critical sectors, the
Commission may oblige that undertaking to accept and prioritise orders of crisis
relevant products in line with paragraph 4, 5 and 6.

### EN 49 EN

4. The obligations under paragraph 1, 2 and 3 shall be enacted by the Commission via
decision. The decision shall be taken in accordance with all applicable Union legal
obligations, having regard to the circumstances 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 and effort 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 state the
penalties provided for in Article 28 for non-compliance with the obligation. The
priority rated order shall be placed at fair and reasonable price.

5. The undertaking concerned shall be obliged to accept and prioritise a priority rated
order. The undertaking may request the Commission to review the priority rated
order where it considers it to be duly justified based on one of the following grounds:

(a) if the undertaking is unable to perform the priority rated order on account of
insufficient production capability or production capacity, even under
preferential treatment of the order;

(b) if acceptance of the order would place an unreasonable economic burden and
entail particular hardship for the undertaking.

6. Where an undertaking is obliged to accept and prioritise a priority rated order, it shall
not be liable for any breach of contractual obligations that is required to comply with
the priority rated orders. The liability shall be excluded only to the extent the
violation of contractual obligations was necessary for compliance with the mandated
prioritisation.

_Article 22_
_Common purchasing_

1. The Commission may, upon the request of two or more Member States, establish a
mandate to act as a central purchasing body on behalf of the participating Member
States (‘participating Member States’) for their public procurement of crisis-relevant
products for certain critical sectors (‘common purchasing’).

2. The Commission shall, in consultation with the European Semiconductor Board,
assess the utility, necessity and proportionality of the request. 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 a framework agreement to be signed
by the participating Member States. This framework agreement shall organise in
detail the common purchasing referred to in paragraph 1.

4. Procurement under this Regulation shall be carried out by the Commission in
accordance with the rules set out in the Financial Regulation 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 advance financing of the production or the
development of such products in exchange for a priority right to the result.

### EN 50 EN

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 and
use of the purchased products shall remain the responsibility of the participating
Member States.

##### **C HAPTER V** **G OVERNANCE** **S ECTION 1** **E UROPEAN S EMICONDUCTOR B OARD**

_Article 23_
_Establishment and tasks of the European Semiconductor Board_

1. The European Semiconductor Board is established.

2. The European Semiconductor Board shall provide the Commission with advice and
assistance pursuant to this Regulation and, in particular, by:

(a) providing advice on the Initiative to the Public Authorities Board of the Chips
Joint Undertaking;

(b) exchanging information on the functioning of the Integrated Production
Facilities and Open EU Foundries;

(c) discussing and preparing the identification of specific sectors and technologies
with potential high social impact and respective security significance in need of
certification for trusted products;

(d) addressing monitoring and crisis response issues;

(e) providing advice regarding the consistent application of this Regulation,
facilitate cooperation among Member States and exchange of information on
issues relating to this Regulation.

3. The European Semiconductor Board shall support the Commission in international
cooperation, including information gathering and crisis assessment, in line with
international obligations.

4. 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 24_
_Structure of the European Semiconductor Board_

1. The European Semiconductor Board shall be composed of representatives of the
Member States and shall be chaired by a representative of the Commission.

### EN 51 EN

2. Each national single point of contact, referred to in Article 26(3), 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.

3. On a proposal by and in agreement with the Commission, the European
Semiconductor Board shall adopt its rules of procedure by a simple majority of its
members.

4. The Commission may establish standing or temporary sub-groups for the purpose of
examining specific questions. Where appropriate, the Commission may invite
organisations representing the interests of the semiconductor industry, including the
Industrial Alliance on Processors and Semiconductor Technologies and users of
semiconductors at Union level, to such sub-groups in the capacity of observers. A
sub-group including Union Research and Technology Organisations shall be
established for the purpose of examining specific aspects on strategic technology
directions and reporting on this to the European Semiconductor Board.

_Article 25_
_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 Article 15 and Article 18.

2. The European Semiconductor Board shall hold separate meetings for its tasks
referred to in Article 23(2), point (a), and for its tasks referred to in Article 23(2),
points (b), (c) and (d).

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
23.

4. The Commission may appoint observers to take part in the meetings, as appropriate.
The Commission may invite experts with specific expertise, including from relevant
stakeholder organisations, with respect to a subject matter on the agenda to take part
in the meetings of the European Semiconductor Board on an ad hoc basis. The
Commission may facilitate exchanges between the European Semiconductor Board
and other Union bodies, offices, agencies and advisory groups. The Commission
shall invite a representative from the European Parliament as an observer to the
European Semiconductor Board. The Commission 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.

5. The European Semiconductor Board shall take the necessary measures to ensure the
safe handling and processing of confidential information.

### EN 52 EN

##### **S ECTION 2** **N ATIONAL C OMPETENT A UTHORITIES**

_Article 26_
_Designation of national competent authorities and 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 Member States designates more than one national competent authority, they
shall clearly set out the respective responsibilities of the authorities concerned and
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 (‘single point of contact’). Where a Member State designates
only one competent authority, that competent authority shall also be the single point
of contact.

4. Each Member State shall notify the Commission of the designation of the national
competent authority and, where applicable, the reasons for designating 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.

5. Member States shall ensure that national competent authorities, including the 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.

### EN 53 EN

##### **C HAPTER VI** **C ONFIDENTIALITY AND P ENALTIES**

_Article 27_
_Treatment of confidential information_

1. The Commission and the national competent authorities, their officials, servants and
other persons working under the supervision of these authorities as well as officials
and civil servants of other authorities of the Member States shall not disclose
information acquired or exchanged by them pursuant to this Regulation and of the
kind covered by the obligation of professional secrecy. They shall respect the
confidentiality of information and data obtained in carrying out their tasks and
activities in such a manner as to protect in particular intellectual property rights and
sensitive business information or trade secrets. This obligation shall apply to all
representatives of Member States, observers, experts and other participants attending
meetings of the European Semiconductor Board pursuant to Article 23 and the
members of the Committee pursuant to Article 33(1).

2. The Commission and Member States may exchange, where necessary, confidential
information with competent authorities of third countries with which they have
agreed on bilateral or multilateral confidentiality arrangements to provide an
adequate level of confidentiality.

3. The Commission may adopt implementing acts, as necessary following experience
gained 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 33(2).

_Article 28_
_Penalties and fines_

1. The Commission may, by decision, where deemed necessary and proportionate:

(a) impose fines, where a representative organisations of undertakings or an
undertaking, intentionally or through gross negligence, supplies incorrect,
incomplete or misleading information in response to a request made pursuant
to Article 20, 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 Article 20(5) and Article 21(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 21.

2. Fines imposed in the cases referred to in paragraph 1 (a) and (b) shall not exceed 300
000 EUR.

### EN 54 EN

3. Periodic penalty payments imposed in the cases referred to in paragraph 1 (c) shall
not exceed 1.5 % of the average daily turnover in the preceding business year for
each working day of non-compliance with the obligation pursuant to Article 21
calculated from the date established in the decision.

4. In fixing the amount of the fine or periodic penalty payment, regard shall be had to
the nature, gravity and duration of the infringement, taking due account of the
principles of proportionality and appropriateness.

5. Where the undertaking has satisfied the obligation which the periodic penalty
payment was intended to enforce, the Commission may fix the definitive amount of
the periodic penalty payment at a figure lower than that which would arise under the
original decision.

6. The Court of Justice of the European Union 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 penalty payment
imposed.

_Article 29_
_Limitation period for the imposition of fines and periodic penalty payments_

1. The powers conferred on the Commission by Article 28 shall be subject to the
following limitation periods:

(a) two years in the case of infringements of provisions concerning requests of
information pursuant to Article 20;

(b) two years in the case of infringements of provisions concerning information
obligation pursuant to Article 20(5) and Article 21(3);

(c) three years in the case infringements of provisions concerning the obligation to
prioritise the production of crisis-relevant products pursuant to Article 21.

2. The time shall begin to run on the day on which the infringement is committed.
However, in case of continuous or repeated infringements, time shall begin to run on
the day on which the infringement ceases.

3. Any action taken by the Commission or the competent authorities of the Member
States for the purposes of ensuring compliance with the provisions of 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 in which a period equal to 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
limitation period is suspended because the decision of the Commission is the subject
of proceedings pending before the Court of Justice of the European Union.

### EN 55 EN

_Article 30_
_Limitation period for the enforcement of penalties_

1. The power of the Commission to enforce decisions taken pursuant to Article 28 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 penalties 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 so long as:

(a) time to pay is allowed;

(b) enforcement of payment is suspended pursuant to a decision of the Court of
Justice.

_Article 31_
_Right to be heard for the imposition of fines or periodic penalty payments_

1. Before adopting a decision pursuant to 28, the Commission shall give the
undertaking or representative organisations of undertakings 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 pursuant to point (a) of this paragraph.

2. Undertakings and representative organisations of undertakings concerned may
submit their observations to the Commission’s preliminary findings 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
and representative organisations of undertakings concerned have been able to

comment.

4. The rights of defence of the undertaking or representative organisations of
undertakings concerned shall be fully respected in any proceedings. The undertaking
or representative organisations of undertakings 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
the authorities of the Member States. Nothing in this paragraph shall prevent the

### EN 56 EN

Commission from disclosing and using information necessary to prove an
infringement.

##### **C HAPTER VII** **D ELEGATION OF P OWER AND C OMMITTEE P ROCEDURE**

_Article 32_
_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 9(2) and (3) shall be
conferred on the Commission for an indeterminate period of time from the date of
entry into force of the legislative act.

3. The delegation of power referred to in Article 9(2) and (3) 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 on Better Law-Making of 13 April 2016.

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 9(2) and (3) shall enter into force only if
no objection has been expressed by either the European Parliament or the Council
within a period of two months of notification of that act to the European Parliament
or 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 33_

_Committee_

1. The Commission shall be assisted by a 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.

### EN 57 EN

##### **C HAPTER VIII** **F INAL P ROVISIONS**

_Article 34_
_Amendments to Regulation (EU) 2021/694_ _establishing the Digital Europe Programme and_

_repealing Decision (EU) 2015/2240_

1. Regulation (EU) No 2021/694 is amended as follows:

(1) in **Article 3 (2)** the following point (f) is added:

‘(f) Specific Objective 6 – Semiconductors’;

(2) the following Article 8a is inserted:

‘Article 8a

Specific Objective 6 – Semiconductors

–
The financial contribution from the Union under Specific Objective 6
Semiconductors shall pursue the objectives laid down in points (a) to (d) of Article 4
of Regulation XX/XX of the European Parliament and of the Council.’;

(3) **Article 9 (1) and (2)** are amended as follows:

‘Article 9

Budget

1. The financial envelope for the implementation of the Programme for the period
from 1 January 2021 to 31 December 2027 shall be EUR 8 638 000 000 EUR in
current prices.

2. The indicative distribution of the amount referred to in paragraph 1 shall be:

–
EUR 2 076 914 000 for Specific Objective 1 High Performance Computing;

–
EUR 1 841 956 000 for Specific Objective 2 Artificial Intelligence;

–
EUR 1 529 566 000 for Specific Objective 3 Cybersecurity and Trust;

–
EUR 517 347 000 for Specific Objective 4 Advanced Digital Skills;

–
EUR 1 022 217 000 for Specific Objective 5 Deployment and Best Use of
Digital Capacities and Interoperability;

EUR 1 650 000 000 billion for Specific Objective 6 – Semiconductors.’;

(4) in **Article 11**, paragraph 2 is replaced by the following:

‘2. Cooperation with third countries and organisations as referred to in paragraph 1 of
this Article with respect to Specific Objectives 1, 2, 3 and 6 shall be subject to Article
12.’

### EN 58 EN

(5) in **Article 12,** paragraph 6 replaced by the following:

‘6. If duly justified for security reasons, the work programme may also provide that
legal entities established in associated countries and legal entities that are established
in the Union but are controlled from third countries may be eligible to participate in all
or some actions under Specific Objectives 1, 2 **and 6** only if they comply with the
requirements to be fulfilled by those legal entities to guarantee the protection of the
essential security interests of the Union and the Member States and to ensure the
protection of classified documents information. Those requirements shall be set out in
the work programme.’;

(6) in **Article 13** the following paragraph 3 is added:

‘3. The synergies of the Specific Objective 6 with other Union Programme, are
described in Article 6 and Annex III of Regulation XX/XX.’;

(7) **Article 14** is amended as follows:

Paragraph 1 is replaced by the following

(8) ‘1. The Programme shall be implemented under direct management, in accordance
with the Financial Regulation, or under indirect management by entrusting certain
implementation tasks to the bodies referred to in point (c) of the first subparagraph of
Article 62(1) of the Financial Regulation, in accordance with Articles 4 to 8a of this
Regulation. Bodies entrusted with the implementation of the Programme may depart
from the rules on participation and dissemination laid down in this Regulation only
where such departure is provided for in the legal act that establishes those bodies or
entrusts budget implementation tasks to them or, for the bodies referred to in point
(c)(ii), (iii) or (v) of the first subparagraph of Article 62(1) of the Financial
Regulation, where such departure is provided for in the contribution agreement and
the specific operating needs of such bodies or the nature of the action so require.’;

(9) in **Article 14**, the following paragraph is added:

‘4. Where the conditions set in Article 22 of Regulation XX/XX are fulfilled, the
provisions of that Article shall apply.’;

(10) in **Article 17**, paragraph 1 is replaced by the following:

‘1. Only actions contributing to the achievement of the objectives laid down in
Articles 3 to 8a shall be eligible for funding.’;

(11) in **Annex I** the following paragraph is added:

‘Specific Objective 6 – Semiconductors

Actions under Specific Objective 6 are provided in Annex I to Regulation XX/XX.’;

(12) in **Annex II** the following paragraph is added:

### EN 59 EN

‘Specific Objective 6 – Semiconductors

Measurable indicators to monitor the implementation and to report on the progress of
the Specific Objective 6 are provided Annex II of the Regulation XX/XX.’;

(13) in **Annex III** the following paragraph is added:

‘ –
Specific Objective 6 SemiconductorsSynergies with Union Programmes for the
Specific Objective 6 are provided in Annex III of Regulation XX/XX.’

_Article 35_

_Evaluation and review_

1. By three years after the date of application of this Regulation 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 purpose of the evaluation and review, 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 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 36_
_Entry into force_

This Regulation shall enter into force on the twentieth 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.

Done at Brussels,

_For the European Parliament_ _For the Council_
_The President_ _The President_

### EN 60 EN

**LEGISLATIVE FINANCIAL STATEMENT**

1. FRAMEWORK OF THE PROPOSAL/INITIATIVE

1.1. Title of the proposal/initiative

1.2. Policy area(s) concerned

1.3. The proposal/initiative relates to:

1.4. Objective(s)

1.4.1. General objective(s)

1.4.2. Specific objective(s)

1.4.3. Expected result(s) and impact

1.4.4. Indicators of performance

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

1.5.2. Added value of Union involvement (it may result from different factors, e.g.
coordination gains, legal certainty, greater effectiveness or complementarities). For the
purposes of this point 'added value of Union involvement' is the value resulting from Union
intervention which is additional to the value that would have been otherwise created by
Member States alone.

1.5.3. Lessons learned from similar experiences in the past

1.5.4. Compatibility with the Multiannual Financial Framework and possible synergies with
other appropriate instruments

1.5.5. Assessment of the different available financing options, including scope for
redeployment

1.6. Duration and financial impact of the proposal/initiative

1.7. Management mode(s) planned

2. MANAGEMENT MEASURES

2.1. Monitoring and reporting rules

2.2. Management and control system(s)

2.2.1. Justification of the management mode(s), the funding implementation mechanism(s),
the payment modalities and the control strategy proposed

2.2.2. Information concerning the risks identified and the internal control system(s) set up to
mitigate them

2.2.3. Estimation and justification of the cost-effectiveness of the controls (ratio of "control
costs ÷ value of the related funds managed"), and assessment of the expected levels of risk of
error (at payment & at closure)

2.3. Measures to prevent fraud and irregularities

3. ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE

### EN 61 EN

3.1. Heading(s) of the multiannual financial framework and expenditure budget line(s)
affected

3.2. Estimated financial impact of the proposal on appropriations

3.2.1. Summary of estimated impact on operational appropriations

3.2.2. Estimated output funded with operational appropriations

3.2.3. Summary of estimated impact on administrative appropriations

3.2.4. Compatibility with the current multiannual financial framework

3.2.5. Third-party contributions

3.3. Estimated impact on revenue

This LFS introduces the budgetary consequences 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) and the proposal for a Council
Regulation amending Council Regulation (EU) 2021/2085 establishing the Joint Undertakings
under Horizon Europe. It comes in addition to the Legislative Financial Statement introduced
for the Key Digital Technologies Joint Undertaking (KDT JU), which is part of the Proposal
for a Council Regulation establishing the Joint Undertakings under Horizon Europe
(COM(2021) 87, 23 February 2021.

The budgetary consequences mentioned in this LFS are two-fold:

Expenditure for the Chips for Europe Initiative (with the exception of the Chips Fund) and
ongoing activities under the KDT JU, to be managed by the Chips JU. The total expenditure
to be managed by the Chips Joint Undertaking, formerly known as the ‘Key Digital
Technologies Joint Undertaking’, is EUR 4.175 billion, of which EUR 1.8 billion was
committed under the KDT JU before.

Expenditure for European Commission staff to cope with the new tasks entrusted to the
Commission to supervise the Chips JU, to review and decide on European Chips
Infrastructure Consortium applications, to review and decide on applications for an Integrated
Production Facility or Open EU Foundry, to support the European Semiconductor Board, and

– –
together with Member States to monitor semiconductor supply chains and decide on
actions, where appropriate. A total of 9 full time equivalent units is foreseen for these
activities.

**1.** **FRAMEWORK** **OF** **THE** **PROPOSAL/INITIATIVE**

**1.1** **Title of the proposal/initiative**

Regulation of the European Parliament and of the Council establishing a framework
of measures for strengthening Europe’s semiconductor ecosystem (Chips Act)

**1.2** **Policy area(s) concerned**

A Europe fit for the Digital Age

European Strategic Investments

### EN 62 EN

Activity: Shaping Europe’s digital future.

**1.1.** **The proposal/initiative relates to:**

 **a new action**

¨ **a new action following a pilot project/preparatory action** [67]

 **the extension of an existing action**

 **a merger or redirection of one or more actions towards another/a new action**

**1.2.** **Objective(s)**

_1.2.1._ _General objective(s)_

The European Chips Act aims to establish a coherent framework for strengthening
the Union’s semiconductor ecosystem. It will enlarge the resilience of Europe’s
semiconductor ecosystem and increase its global market share. It will facilitate early
adoption of new chips by European industry and increase its competitiveness.

_1.2.2._ _Specific objective(s)_

Set up the Chips for Europe Initiative, to support large-scale technological capacity building
throughout investment into cross-border and openly accessible innovative infrastructures set
up in the Union to enable the development of cutting-edge and next-generation semiconductor
technologies that will reinforce the EU’s advanced design, systems integration, and chips
production capabilities (pillar 1, “Chips for Europe Initiative”).

Create a framework to ensure security of supply by attracting investments and enhanced
production capacities in semiconductor manufacturing as well as advanced packaging, test,
and assembly via first-of-a-kind Integrated Production Facilities and Open EU Foundries
(pillar 2, “Security of supply”).

Set up a coordination mechanism between the Member States and the Commission for
strengthening collaboration with and across Member States, monitoring the supply of
semiconductors, estimate demand, anticipate shortages, trigger situations of crisis and act
through a dedicated toolbox of measures (pillar 3, “Preparedness and Monitoring”).

_1.2.3._ _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. Semiconductor facilities will benefit from more
effective permit granting processes.

67 As referred to in Article 58(2)(a) or (b) of the Financial Regulation.

### EN 63 EN

The Union’s semiconductor users in all sectors should benefit from increased
security of supply of semiconductors without disruptions. In addition, critical sectors
should benefit from enhanced security of supply of semiconductors.

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.

_1.2.4._ _Indicators of performance_

_Specify the indicators for monitoring progress and achievements._

Performance indicators are mostly relevant for the Chips for Europe Initiative.
Annex II gives first versions of measurable indicators to monitor the implementation
and to report on the progress of the Initiative towards the achievement of its
objectives:

1. The number of legal entities involved (subdivided by size, type and country of

establishment) in the actions supported by the Initiative.

2. The number of design tools developed or integrated under the Initiative.

3. The total amount co-invested in design capacities and pilot lines under the

Initiative.

4. The number of users or user communities getting access to design capacities and

pilot lines under the Initiative.

5. The number of businesses, which have used the services of national competence

centres supported by the Initiative.

6. The number of persons who have received training to acquire advanced skills

and training on semiconductor and quantum technologies supported by the
Initiative.

7. The number of start-ups, scale-ups and SMEs who have received venture capital

from the Chips Fund and the total amount of capital investments made.

8. The amount of investment by companies operating in the EU, taking into

consideration the segment of the value chain in which they operate

**1.3.** **Grounds for the proposal/initiative**

_1.3.1._ _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.
However, initial elements should be in place before, supported by the
Recommendation by the Commission, adopted at the same time as the proposed
Regulation.

### EN 64 EN

The European Semiconductor Board should be set up and Member States should
have appointed a point of contact to its meeting. By the time of applicability the
European Semiconductor Board should be fully operative.

Information gathering from representative organistions of semiconductor
undertakings should alreay be on-going and Member States should have already
discussed a number of possible measures in the crisis toolbox and carried out
monitoring of the semiconductor value chain.

_1.3.2._ _Added value of Union involvement (it may result from different factors, e.g._
_coordination gains, legal certainty, greater effectiveness or complementarities). For_
_the purposes of this point 'added value of Union involvement' is the value resulting_
_from Union intervention which is additional to the value that would have been_
_otherwise created by Member States alone._

Semiconductor chips are central to the digital economy. The global semiconductor
shortage has exposed Europe’s dependency on supply from a limited number of
companies and geographies, and its vulnerability to third country export restrictions
and other disruptions in the present geopolitical context. Furthermore, this
dependency is exacerbated by the extremely high barriers to entry and capital
intensity of the sector. For example, the most computationally powerful chips require
manufacturing to a precision of a few nanometers (nm). Building such facilities
entails an upfront investment of at least EUR 15 billion and requires three years to
achieve production-readiness with adequate yields. The expenditures to design such
chips can range from EUR 0.5 billion to well over EUR 1.0 billion. R&D intensity in
the sector is high and more than 15%. No single Member State is capable of
achieving this alone.

Intervention at the level of the Union is best placed to address the challenges
deriving from the complexity of the semiconductor ecosystem, from the Union’s
structural dependencies and from far-reaching supply chain disruptions.

The Chips for Europe Initiative, should be set as a Union-wide initiative for
supporting an industrial sector across Europe. A Union level initiative can provide
the necessary degree of uniformity needed for the effective operation of funding
programmes aimed at strengthening the Europen semiconductor ecosystem.

For the security of supply, Union level action is justified by the need for a uniform
application of the new rules, in particular the definition of Integrated Production
Facilities and Open EU Foundries, as well as a uniform procedure for their
recognition and support.

Furthermore, a key element of this proposal is to provide for measures to address
serious disruptions to vital societal functions or economic activities at Union level.
Important coordination gains should arise from setting up a mechanism for
coordination between Member States and the Commission for monitoring and crisis
response to semiconductor shortages.

### EN 65 EN

_1.3.3._ _Lessons learned from similar experiences in the past_

The Commission published a Communication in 2013 on “A European Strategy for
Micro- and Nanoelectronic Components and Systems” [68] . It proposed an industrial
strategy to ensure return to growth and reach, in a decade, a level of production in the
EU that is closer to its share of world GDP. In more detail, it aimed to:

            - Ensure the availability of micro- and nanoelectronics that are needed for the
competitiveness of key industries in Europe.

            - Attract higher investment in advanced manufacturing in Europe and reinforce
industrial competitiveness across the value chain from design to manufacturing.

            - Maintain leadership in equipment and material supply and in areas such as
“more than Moore” and energy-efficient components.

            - Build leadership in the design of chips in high growth markets, notably in the
design of complex components.

Clearly, the Union was not entirely successful in reaching the objectives of this
industrial strategy.

One reason is that EU actions following the Communication largely focused on
supporting R&D, for example via the ECSEL Joint Undertaking. However, capacity
building in the microelectronics sector was not well addressed.

Furthermore, the Communication mentioned demand-side actions to be addressed.
However, the actions undertaken did not adequately address such demand-side
actions. More emphasis on demand-side actions, e.g. actions addressing design
activities, is needed.

Finally, related to the first point, the 2013 Communication had few instruments at its
disposal. Currently, more instruments are available, an opening in the competition
policy has been provided, and the political momentum is now clearer.

_1.3.4._ _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 (pillar 1)
will build 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 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 would closely collaborate with the Industrial Alliance on
Processors and Semiconductor Technologies.

68       https://ec.europa.eu/transparency/documents

[register/api/files/COM(2013)298_0/de00000000485396?rendition=false](https://ec.europa.eu/transparency/documents-register/api/files/COM(2013)298_0/de00000000485396?rendition=false)

### EN 66 EN

Furthermore, the Regulation provides for a procedural framework to facilitate
combined funding from Member States, the EU budget and private investment.

The proposed initiative can be set in the context of a number of recently announced
European policies and priorities:

            - Industrial Strategy;

            - Recovery Plan for Europe;

            - Green Deal;

            - Artificial Intelligence;

            - Research and Innovation under the proposed Horizon Europe programme,
Pillar II Cluster “Digital, Industry and Space” aims to make concrete
contributions to three overarching EU policies: ‘A Europe fit for the Digital
Age’, ‘An economy that works for people’, and ‘A European Green Deal’.

            - Recovery and Resilience Facility

As regards possible synergies with other appropriate instruments, the role of
competent authorities at national level can be performed by national authorities
fulfilling similar functions under other Union law. See also Chapter 1 of the
Explanatory Memorandum.

_1.3.5._ _Assessment of the different available financing options, including scope for_
_redeployment_

**1.4.** **Duration and financial impact of the proposal/initiative**

 **limited duration**

 in effect from 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)

 Financial impact from 2023 to 2027 for commitment appropriations and from
2023 to 2031 for payment appropriations.

 **unlimited duration**

1 Implementation with a start-up period from YYYY to YYYY,

2 followed by full-scale operation.

**1.5.** **Management mode(s) 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;

### EN 67 EN

 international organisations and their agencies (to be specified);

 the EIB 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 provide 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 provide adequate
financial guarantees;

 persons entrusted with the implementation of specific actions in the CFSP
pursuant to Title V of the TEU, and identified in the relevant basic act.

_If more than one management mode is indicated, please provide details in the ‘Comments’ section._

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
will be implemented under indirect management by entrusting the implementation of tasks to
the Key Digital Technologies Joint Undertaking, to be renamed to ‘Chips Joint Undertaking’.
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
European Chips Infrastructure Consortium applications, to review and decide on applications
for an Integrated Production Facility or Open EU Foundry, to support the European

– –
Semiconductor Board, and together with Member States to monitor semiconductor supply
chains and decide on actions, where appropriate.

### EN 68 EN

**2.** **MANAGEMENT** **MEASURES**

**2.1.** **Monitoring and reporting rules**

_Specify frequency and conditions._

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 will be
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 management mode(s), the funding implementation mechanism(s),_
_the payment modalities and the control strategy proposed_

The Regulation introduces a new policy framework with regard to attracting
investment in and enhancing advanced semiconductor manufacturing in the Union
and introduces harmonised rules for a coordinated approach to monitoring and
preparedness for semiconductor shortages.

These new 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 a new advisory group, the European
Semiconductor Board.

These tasks under direct management. In order to face these new tasks under pillar 2
and 3 and related to the Chips Fund, 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
Joint Undertaking, of corresponding payment requests to the members other than the
Union.

### EN 69 EN

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) 2018/1046 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.

_2.2.1._ _Information concerning the risks identified and the internal control system(s) set up_
_to mitigate them_

Various measures have been established to mitigate the inherent risk of conflict of
interest within the Chips Joint Undertaking, especially:

-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
initiative (capacity building in upcoming work 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,

### EN 70 EN

-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 establishment of 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, will
be required to introduce a cost-effective system of internal control and management.
They will be 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 the Horizon 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 Research programme.

_2.2.3_ _Estimation and justification of the cost-effectiveness of the controls (ratio of "control_
_costs ÷ 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 multi-annual programmes,
once the financial impact of all audits, correction and recovery measures have been
taken into account.

**2.3.** **Measures to prevent fraud and irregularities**

_Specify existing or envisaged prevention and protection measures, e.g. from the Anti-Fraud Strategy._

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.

### EN 71 EN

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 (EPPO) 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 72 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<br>multiannual<br>financial<br>framework|Budget line|Type of<br>expenditure|Contribution|Col5|Col6|Col7|
|---|---|---|---|---|---|---|
|Heading of<br>multiannual<br>financial<br>framework|Number <br>|Diff./Non-<br>diff.69|from<br>EFTA<br>countries<br>70 <br>|from<br>candidate<br>countries71 <br>|from third<br>countries|within the<br>meaning of<br>Article 21(2)(b) of<br>the Financial<br>Regulation|
|1|01 02 02 30– Cluster Civil Security for<br>Society|Diff.|YES|YES|YES|NO|
|1|01 02 02 40 - Cluster Digital, Industry<br>and Space|Diff.|YES|YES|YES|NO|
|1|01 02 02 42 Horizon Europe Programme<br>— <br>Key<br>Digital<br>Technologies<br>joint<br>undertaking|Diff|YES|YES|YES|NO|
|1|01 02 02 50– Cluster Climate, Energy<br>and Mobility|Diff|YES|YES|YES|NO|
|1|01 02 03 01 - European Innovation<br>Council|Diff.|YES|YES|YES|NO|
|1|02 03 01 - Connecting Europe Facility<br>(CEF)— Transport|Diff.|NO|YES|YES|NO|
|1|02 03 03 01 - Connecting Europe Facility<br>(CEF)— Digital|Diff.|NO|YES|YES|NO|
|1|02 04 01 10 - Digital Europe programme -<br>Cybersecurity|Diff.|YES|YES|YES|NO|
|1|02 04 01 11 - Digital Europe programme -<br>European<br>Cybersecurity<br>Industrial,<br>Technology and Research Competence<br>Centre|Diff|YES|YES|YES|NO|
|1|02 04 02 11 - Digital Europe programme -<br>High-Performance<br>Computing<br>joint<br>undertaking (EuroHPC)|Diff|YES|YES|YES|NO|
|1|02 04 03 - Digital Europe programme -<br>Artificial intelligence|Diff.|YES|YES|YES|NO|

69 Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations.
70 EFTA: European Free Trade Association.
71 Candidate countries and, where applicable, potential candidates from the Western Balkans.

### EN 73 EN

|1|02 04 04 - Digital Europe programme –<br>Skills|Diff.|YES|YES|YES|NO|
|---|---|---|---|---|---|---|
|1|02 04 05 01 - Digital Europe programme -<br>Deployment|Diff.|YES|YES|YES|NO|
|1|02 04 05 02 - Digital Europe programme -<br>Deployment / Interoperability|Diff.|YES|YES|YES|NO|
|1|Unallocated margin– Heading 1|Diff.|NO|NO|NO|NO|

New budget lines requested

_In order of multiannual financial framework headings and budget lines._

|Heading of<br>multiannual<br>financial<br>framework|Budget line|Type of<br>expenditure|Contribution|Col5|Col6|Col7|
|---|---|---|---|---|---|---|
|Heading of<br>multiannual<br>financial<br>framework|Number <br>|Diff./Non-<br>diff.|from<br>EFTA<br>countries|from<br>candidate<br>countries|from third<br>countries|within the<br>meaning of<br>Article 21(2)(b) of<br>the Financial<br>Regulation|
|1|02 04 06 10 - Digital Europe programme<br>– Chips|Diff.|YES|YES|YES|NO|
|1|02 04 06 11 - Digital Europe Programme<br>— Chips joint undertaking|Diff|YES|YES|YES|NO|

### EN 74 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:

EUR million (to three decimal places)

**Heading of multiannual financial**

**1** **Single Market, Innovation and Digital**
**framework**

The proposal will not increase the total level of expenditure programmed under Heading 1 of the Multiannual Financial Framework 2021-2027.
Indeed, the contribution from the EU Budget to the Chips for Europe Initiative will be pooled from the Horizon Europe Programme and the
Digital Europe Programme and, with the exception of the action under the European Innovation Council, channelled to the Key Digital
Technologies (future Chips) Joint Undertaking for implementation. To this end, a sixth specific objective will be created under the Digital
Europe Programme.

This sixth specific objective will be financed by

i an internal redeployment of the current envelope of the Digital Europe Programme,

ii a use of unallocated margin of Heading 1, and

iii a reduction from the envelopes of the Connecting Europe Facility – Transport and the Connecting Europe Facility – Digital.

The summary table under section 3.2.4 provides a full overview of all sources of funding.

- Operational appropriations earmarked or reallocated within **Horizon Europe** for being used for the purpose of the Chips for Europe
Initiative

|Operational appropriations under Horizon<br>Europe|Col2|Col3|Col4|2021|2022|2023|2024|2025|2026|2027|Post<br>2027|TOTAL|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Operational appropriations**earmarked** under**Horizon Europe**|Operational appropriations**earmarked** under**Horizon Europe**|Operational appropriations**earmarked** under**Horizon Europe**|Operational appropriations**earmarked** under**Horizon Europe**|Operational appropriations**earmarked** under**Horizon Europe**|Operational appropriations**earmarked** under**Horizon Europe**|Operational appropriations**earmarked** under**Horizon Europe**|Operational appropriations**earmarked** under**Horizon Europe**|Operational appropriations**earmarked** under**Horizon Europe**|Operational appropriations**earmarked** under**Horizon Europe**|Operational appropriations**earmarked** under**Horizon Europe**|Operational appropriations**earmarked** under**Horizon Europe**|Operational appropriations**earmarked** under**Horizon Europe**|
|01 02 02 42- Horizon Europe Programme— <br>Key Digital Technologies joint undertaking|Commitments|(1a)|(1a)|||108.850|112.609|97.470|91.781|89.290||500.000|

### EN 75 EN

|01 02 03 01 - European Innovation Council72|Commitments|(1a)|Col4|Col5|75.251|55.054|55.501|56.499|57.696|Col11|300.000|
|---|---|---|---|---|---|---|---|---|---|---|---|
|Operational appropriation**reallocated** within** Horizon Europe**|Operational appropriation**reallocated** within** Horizon Europe**|Operational appropriation**reallocated** within** Horizon Europe**|Operational appropriation**reallocated** within** Horizon Europe**|Operational appropriation**reallocated** within** Horizon Europe**|Operational appropriation**reallocated** within** Horizon Europe**|Operational appropriation**reallocated** within** Horizon Europe**|Operational appropriation**reallocated** within** Horizon Europe**|Operational appropriation**reallocated** within** Horizon Europe**|Operational appropriation**reallocated** within** Horizon Europe**|Operational appropriation**reallocated** within** Horizon Europe**|Operational appropriation**reallocated** within** Horizon Europe**|
|01 02 02 30– Cluster Civil Security for<br>Society|Commitments|(1a)|||40.800|47.400|41.400|10.200|10.200||150.000|
|01 02 02 40 - Cluster Digital, Industry and<br>Space|Commitments|(1a)|||108.800|126.400|110.400|27.200|27.200||400.000|
|01 02 02 50 Cluster Climate, Energy and<br>Mobility|Commitments|(1a)|||81.600|94.800|82.800|20.400|20.400||300.000|
|**TOTAL appropriations under Horizon**<br>**Europe**<br>|Commitments||||**415.302**|**436.263**|**387.570**|**206.080**|**204.785**|**- **|**1,650.000**|

- Operational appropriations to be pooled under a sixth specific objective of the **Digital Europe Programme** for the purpose of the Chips
for Europe Initiative to be implemented by the future Chips Joint Undertaking:

|Operational appropriations under<br>Digital Europe – sixth objective|Col2|Col3|Col4|2021|2022|2023|2024|2025|2026|2027|Post<br>2027|TOTAL|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Operational appropriations**redeployed** from other programmes (**Horizon Europe**, **Connecting Europe Facility**)|Operational appropriations**redeployed** from other programmes (**Horizon Europe**, **Connecting Europe Facility**)|Operational appropriations**redeployed** from other programmes (**Horizon Europe**, **Connecting Europe Facility**)|Operational appropriations**redeployed** from other programmes (**Horizon Europe**, **Connecting Europe Facility**)|Operational appropriations**redeployed** from other programmes (**Horizon Europe**, **Connecting Europe Facility**)|Operational appropriations**redeployed** from other programmes (**Horizon Europe**, **Connecting Europe Facility**)|Operational appropriations**redeployed** from other programmes (**Horizon Europe**, **Connecting Europe Facility**)|Operational appropriations**redeployed** from other programmes (**Horizon Europe**, **Connecting Europe Facility**)|Operational appropriations**redeployed** from other programmes (**Horizon Europe**, **Connecting Europe Facility**)|Operational appropriations**redeployed** from other programmes (**Horizon Europe**, **Connecting Europe Facility**)|Operational appropriations**redeployed** from other programmes (**Horizon Europe**, **Connecting Europe Facility**)|Operational appropriations**redeployed** from other programmes (**Horizon Europe**, **Connecting Europe Facility**)|Operational appropriations**redeployed** from other programmes (**Horizon Europe**, **Connecting Europe Facility**)|
|01 02 02 40– Horizon Europe - Cluster<br>Digital, Industry and Space|Commitments|(1a)|(1a)|||80.000|80.000|80.000|80.000|80.000||400.000|
|02 03 01 - Connecting Europe Facility (CEF)<br>— Transport|Commitments|(1a)|(1a)||||96.000|86.000|34.000|34.000||250.000|

72 Up to 300.000 EUR million will be earmarked under the EIC for being used for the purpose of the Chips Europe Initiative. The yearly programming of the envelope is indicative.

### EN 76 EN

|02 03 03 01 - Connecting Europe Facility<br>(CEF) — Digital|Commitments|(1a)|Col4|Col5|Col6|57.600|51.600|20.400|20.400|Col11|150.000|
|---|---|---|---|---|---|---|---|---|---|---|---|
|Operational appropriation**reallocated** within the**Digital Europe** programme|Operational appropriation**reallocated** within the**Digital Europe** programme|Operational appropriation**reallocated** within the**Digital Europe** programme|Operational appropriation**reallocated** within the**Digital Europe** programme|Operational appropriation**reallocated** within the**Digital Europe** programme|Operational appropriation**reallocated** within the**Digital Europe** programme|Operational appropriation**reallocated** within the**Digital Europe** programme|Operational appropriation**reallocated** within the**Digital Europe** programme|Operational appropriation**reallocated** within the**Digital Europe** programme|Operational appropriation**reallocated** within the**Digital Europe** programme|Operational appropriation**reallocated** within the**Digital Europe** programme|Operational appropriation**reallocated** within the**Digital Europe** programme|
|02 04 01 10 - Digital Europe programme– <br>Cybersecurity|Commitments|(1a)|||16.320|18.960|16.560|4.080|4.080||60.000|
|02 04 01 11 - Digital Europe programme -<br>European Cybersecurity Industrial,<br>Technology and Research Competence Centre|Commitments|(1a)|||16.320|18.960|16.560|4.080|4.080||60.000|
|02 04 02 11 - Digital Europe programme -<br>High-Performance Computing joint<br>undertaking (EuroHPC)|Commitments|(1a)|||40.800|47.400|41.400|10.200|10.200||150.000|
|02 04 03 - Digital Europe programme -<br>Artificial intelligence|Commitments|(1a)|||59.840|69.520|60.720|14.960|14.960||220.000|
|02 04 04 - Digital Europe programme - Skills|Commitments|(1a)|||16.320|18.960|16.560|4.080|4.080||60.000|
|02 04 05 01 - Digital Europe programme– <br>Deployment|Commitments|(1a)|||10.880|12.640|11.040|2.720|2.720||40.000|
|02 04 05 02 - Digital Europe programme -<br>Deployment / Interoperability|Commitments|(1a)|||2.720|3.160|2.760|0.680|0.680||10.000|
|Contribution from the available**margin** under**Heading 1** of the Multiannual Financial Framework|Contribution from the available**margin** under**Heading 1** of the Multiannual Financial Framework|Contribution from the available**margin** under**Heading 1** of the Multiannual Financial Framework|Contribution from the available**margin** under**Heading 1** of the Multiannual Financial Framework|Contribution from the available**margin** under**Heading 1** of the Multiannual Financial Framework|Contribution from the available**margin** under**Heading 1** of the Multiannual Financial Framework|Contribution from the available**margin** under**Heading 1** of the Multiannual Financial Framework|Contribution from the available**margin** under**Heading 1** of the Multiannual Financial Framework|Contribution from the available**margin** under**Heading 1** of the Multiannual Financial Framework|Contribution from the available**margin** under**Heading 1** of the Multiannual Financial Framework|Contribution from the available**margin** under**Heading 1** of the Multiannual Financial Framework|Contribution from the available**margin** under**Heading 1** of the Multiannual Financial Framework|
|Unallocated margin Heading 1|Commitments|(1a)|||50.000|50.000|50.000|50.000|50.000||250.000|
|**TOTAL appropriations pooled to**<br>**Digital Europe **|Commitments|=1a|||**293.200**|**473.200**|**433.200**|**225.200**|**225.200**|**- **|**1,650.000**|

### EN 77 EN

##### **For information purposes: overview of the implementation by the European Innovation Council and the Chips Joint** **Undertaking**

**A** **Horizon Europe**

**Implementation by the European Innovation Council**

|Operational appropriations “earmarked”<br>under Horizon Europe - EIC|Col2|Col3|2021|2022|2023|2024|2025|2026|2027|Post<br>2027|TOTAL|
|---|---|---|---|---|---|---|---|---|---|---|---|
|01 02 03 01 - European Innovation Council73|Commitments|(1a)|||75.251|55.054|55.501|56.499|57.696||300.000|
|01 02 03 01 - European Innovation Council73|Payments|(2a)|||45.151|48.082|51.836|58.030|56.973|39.928|300.000|

**Implementation by the Chips Joint Undertaking**

EUR 500 million earmarked for the purposes of the Chips for Europe Initiative within the pre-existing financial envelope of the Key Digital
Technologies Joint Undertaking will be implemented by the Chips joint undertaking:

|Operational appropriations “earmarked”<br>under Horizon Europe - KDT|Col2|Col3|2021|2022|2023|2024|2025|2026|2027|Post<br>2027|TOTAL|
|---|---|---|---|---|---|---|---|---|---|---|---|
|01 02 02 42- Horizon Europe Programme— <br>Key Digital Technologies joint undertaking|Commitments|(1a)|||108.850|112.609|97.470|91.781|89.290||500.000|
|01 02 02 42- Horizon Europe Programme— <br>Key Digital Technologies joint undertaking|Payments|(2a)|||60.897|74.926|83.997|83.126|79.271|117.783|500.000|

–
The EUR 850 million reallocated under Horizon Europe will be implemented by the Key Digital Technologies (future Chips) joint undertaking
and split between operational and support expenditure as follows:

73 Up to 300.000 EUR million will be earmarked under the EIC for being used for the purpose of the Chips for Europe Initiative. The yearly profiling of the envelope is purely indicative.

### EN 78 EN

|Operational appropriations|Col2|Col3|Col4|Col5|Col6|Col7|Col8|Col9|Col10|Col11|Col12|
|---|---|---|---|---|---|---|---|---|---|---|---|
|01 02 02 42<br>Horizon Europe Programme<br>— Key Digital Technologies joint undertaking<br>- Operational expenditure|Commitments|(1a)|||230.809|267.842|233.371|56.546|52.897||841.465|
|01 02 02 42<br>Horizon Europe Programme<br>— Key Digital Technologies joint undertaking<br>- Operational expenditure|Payments|(2a)|||138.329|206.642|216.371|130.326|95.281|54.516|841.465|
|Appropriations of an administrative nature financed from the envelope of specific programmes74|Appropriations of an administrative nature financed from the envelope of specific programmes74|Appropriations of an administrative nature financed from the envelope of specific programmes74|Appropriations of an administrative nature financed from the envelope of specific programmes74|Appropriations of an administrative nature financed from the envelope of specific programmes74|Appropriations of an administrative nature financed from the envelope of specific programmes74|Appropriations of an administrative nature financed from the envelope of specific programmes74|Appropriations of an administrative nature financed from the envelope of specific programmes74|Appropriations of an administrative nature financed from the envelope of specific programmes74|Appropriations of an administrative nature financed from the envelope of specific programmes74|Appropriations of an administrative nature financed from the envelope of specific programmes74|Appropriations of an administrative nature financed from the envelope of specific programmes74|
|01 02 02 42<br>Horizon Europe Programme<br>— Key Digital Technologies joint undertaking<br>- Support expenditure|Commitments|(1b)|||0.391|0.758|1.229|1.254|4.903||8.535|
|01 02 02 42<br>Horizon Europe Programme<br>— Key Digital Technologies joint undertaking<br>- Support expenditure|Payments|(2b)|||0.391|0.758|1.229|1.254|1.279|3.624|8.535|
|**TOTAL additional appropriations** <br>**for the Chips Joint Undertaking under**<br>**Horizon Europe **|Commitments|=1a+1b<br>+3|||**231.200**|**268.600**|**234.600**|**57.800**|**57.800**|**- **|**850.000 **|
|**TOTAL additional appropriations** <br>**for the Chips Joint Undertaking under**<br>**Horizon Europe **|Payments|=2a+2b<br>+3|||**138.720**|**207.400**|**217.600**|**131.580**|**96.560**|**58.140**|**850.000 **|

The consolidated appropriations of the Key Digital Technologies (future Chips) joint undertaking under the Horizon Europe, including
appropriations covering former activities of the KDT Joint Undertaking that are not part of the Chips for Europe Initiative, will be as follows:

|Chips Joint Undertaking|Col2|Col3|2021|2022|2023|2024|2025|2026|2027|Post<br>2027|TOTAL|
|---|---|---|---|---|---|---|---|---|---|---|---|
|Operational appropriations|Operational appropriations|Operational appropriations||||||||||
|01 02 02 42<br>Horizon Europe Programme<br>— Key Digital Technologies joint undertaking<br>- Operational expenditure|Commitments|(1a)|207.637|247.490|518.207|565.170|490.661|298.788|287.185||2,615.139|
|01 02 02 42<br>Horizon Europe Programme<br>— Key Digital Technologies joint undertaking<br>- Operational expenditure|Payments|(2a)|51.909|113.782|334.342|447.834|486.757|397.896|350.073|432.545|2,615.139|
|Appropriations of an administrative nature financed from the<br>envelope of specific programmes|Appropriations of an administrative nature financed from the<br>envelope of specific programmes|Appropriations of an administrative nature financed from the<br>envelope of specific programmes||||||||||
|01 02 02 42<br>Horizon Europe Programme<br>— Key Digital Technologies joint undertaking|Commitments|(1b)|2.363|2.510|2.993|3.430|3.939|4.012|15.615||34.861|
|01 02 02 42<br>Horizon Europe Programme<br>— Key Digital Technologies joint undertaking|Payments|(2b)|2.363|2.510|2.993|3.430|3.939|4.012|4.076|11.539|34.861|

74 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 79 EN

|- Support expenditure|Col2|Col3|Col4|Col5|Col6|Col7|Col8|Col9|Col10|Col11|Col12|
|---|---|---|---|---|---|---|---|---|---|---|---|
|**TOTAL appropriations** <br>**for Chips Joint Undertaking under the**<br>**Horizon Europe programme **|Commitments|=1a+1<br>b +3|**210.000**|**250.000**|**521.200**|**568.600**|**494.600**|**302.800**|**302.800**||**2,650.000**|
|**TOTAL appropriations** <br>**for Chips Joint Undertaking under the**<br>**Horizon Europe programme **|Payments|=2a+2<br>b+3|**54.272**|**116.292**|**337.335**|**451.264**|**490.696**|**401.908**|**354.149**|**444.083**|**2,650.000**|

**B** **Digital Europe programme**

Under the Digital Europe Programme, except for EUR 125 million to be implemented under InvestEU, EUR 1 525 million will be implemented
by the Key Digital Technologies (future Chips) joint undertaking and split between operational and support expenditure as follows:

|Chips Joint Undertaking|Col2|Col3|Col4|2021|2022|2023|2024|2025|2026|2027|Post<br>2027|TOTAL|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Operational appropriations|Operational appropriations|Operational appropriations|Operational appropriations|Operational appropriations|Operational appropriations|Operational appropriations|Operational appropriations|Operational appropriations|Operational appropriations|Operational appropriations|Operational appropriations|Operational appropriations|
|02 04 06 11 - Digital Europe Programme— <br>Chips<br>joint<br>undertaking<br>- <br>Operational<br>expenditure|Commitments|(1a)|(1a)|||258.498|432.340|396.494|214.450|207.904||1,509.687|
|02 04 06 11 - Digital Europe Programme— <br>Chips<br>joint<br>undertaking<br>- <br>Operational<br>expenditure|Payments|(2a)|(2a)|||154.818|310.700|349.674|276.800|254.305|163.389|1,509.687|
|Appropriations of an administrative nature financed from the envelope of specific programmes|Appropriations of an administrative nature financed from the envelope of specific programmes|Appropriations of an administrative nature financed from the envelope of specific programmes|Appropriations of an administrative nature financed from the envelope of specific programmes|Appropriations of an administrative nature financed from the envelope of specific programmes|Appropriations of an administrative nature financed from the envelope of specific programmes|Appropriations of an administrative nature financed from the envelope of specific programmes|Appropriations of an administrative nature financed from the envelope of specific programmes|Appropriations of an administrative nature financed from the envelope of specific programmes|Appropriations of an administrative nature financed from the envelope of specific programmes|Appropriations of an administrative nature financed from the envelope of specific programmes|Appropriations of an administrative nature financed from the envelope of specific programmes|Appropriations of an administrative nature financed from the envelope of specific programmes|
|02 04 06 11 - Digital Europe Programme— <br>Chips joint undertaking- Support expenditure|Commitments|(1b)|(1b)|||0.702|1.360|2.206|2.250|8.796||15.313|
|02 04 06 11 - Digital Europe Programme— <br>Chips joint undertaking- Support expenditure|Payments|(2b)|(2b)|||0.702|1.360|2.206|2.250|2.295|6.501|15.313|
|**TOTAL appropriations** <br>**for Chips Joint Undertaking **|Commitments|=1a+1b<br>+3|=1a+1b<br>+3|||**259.200**|**433.700**|**398.700**|**216.700**|**216.700**||**1,525.000**|
|**TOTAL appropriations** <br>**for Chips Joint Undertaking **|Payments|=2a+2b<br>+3|=2a+2b<br>+3|||**155.520**|**312.060**|**351.880**|**279.050**|**256.600**|**169.890**|**1,525.000**|

The total **additional** appropriations pooled under Heading 1 to be implemented by the future Chips Joint Undertaking for the purpose of the
Chips for Europe Initiative amounts to EUR 2 375 million, of which EUR 850 million under Horizon Europe and EUR 1 525 million under
Digital Europe. It will split between operational (Title 3) and support (Title 1 and Title 2) expenditure as follows:

### EN 80 EN

|Col1|Col2|Col3|2021|2022|2023|2024|2025|2026|2027|Post<br>2027|TOTAL|
|---|---|---|---|---|---|---|---|---|---|---|---|
|Title 1|Commitments|(4)|||0.792|1.535|2.489|2.538|9.924||17.277|
|Title 1|Payments|(5)|||0.792|1.535|2.489|2.538|2.589|7.335|17.277|
|Title 2|Commitments|(4)|||0.301|0.584|0.947|0.966|3.775||6.572|
|Title 2|Payments|(5)|||0.301|0.584|0.947|0.966|0.985|2.790|6.572|
|Title 3|Commitments|(4)|||489.307|700.182|629.865|270.996|260.801||2,351.152|
|Title 3|Payments|(5)|||293.147|517.342|566.045|407.126|349.586|217.905|2,351.152|
|**TOTAL appropriations **|Commitments|=4+ 6|||**490.400**|**702.300**|**633.300**|**274.500**|**274.500**||**2,375.000**|
|**TOTAL appropriations **|Payments|=5+ 6|||**294.240**|**519.460**|**569.480**|**410.630**|**353.160**|**228.030**|**2,375.000**|

The **total appropriations** to be implemented by the future **Chips Joint Undertaking** under Horizon Europe and Digital Europe,

including appropriations covering former activities of the KDT Joint Undertaking that are not part of the Chips for Europe Initiative
amount to EUR 4 175 million. It will be split between operational (Title 3) and support (Title 1 and Title 2) expenditure as follows:

|Col1|Col2|Col3|2021|2022|2023|2024|2025|2026|2027|Post<br>2027|TOTAL|
|---|---|---|---|---|---|---|---|---|---|---|---|
|Title 1|Commitments|(4)|1.804|1.861|2.732|3.516|4.508|4.595|18.011|-|37.027|
|Title 1|Payments|(5)|1.804|1.861|2.732|3.516|4.508|4.595|4.685|13.326|37.027|
|Title 2|Commitments|(4)|0.559|0.649|0.963|1.274|1.637|1.666|6.399|-|13.147|
|Title 2|Payments|(5)|0.559|0.649|0.963|1.274|1.637|1.666|1.685|4.714|13.147|
|Title 3|Commitments|(4)|207.637|247.490|776.705|997.510|887.155|513.238|495.090||4,124.826|
|Title 3|Payments|(5)|51.909|113.782|489.161|758.534|836.432|674.696|604.378|595.933|4,124.826|

### EN 81 EN

|TOTAL appropriations|Commitments|=4+ 6|210.000|250.000|780.400|1,002.300|893.300|519.500|519.500|Col11|4,175.000|
|---|---|---|---|---|---|---|---|---|---|---|---|
|**TOTAL appropriations **|Payments|=5+ 6|**54.272**|**116.292**|**492.855**|**763.324**|**842.576**|**680.958**|**610.749**|**613.973**|**4,175.000**|

### EN 82 EN

**Heading of multiannual financial**

**7** ‘Administrative expenditure’
**framework**

[This section should be filled in using the 'budget data of an administrative nature' to be firstly introduced in the Annex to the Legislative](https://myintracomm.ec.europa.eu/budgweb/EN/leg/internal/Documents/2016-5-legislative-financial-statement-ann-en.docx)
[Financial Statement](https://myintracomm.ec.europa.eu/budgweb/EN/leg/internal/Documents/2016-5-legislative-financial-statement-ann-en.docx) (Annex V to the internal rules), which is uploaded to DECIDE for interservice consultation purposes.

EUR million (to three decimal places)

|Col1|Col2|2021|2022|2023|2024|2025|2026|2027|TOTAL|
|---|---|---|---|---|---|---|---|---|---|
|DG CNECT||||||||||
| Human resources| Human resources|||1.125|1.125|1.125|1.125|1.125|**5.625**|
| Other administrative expenditure| Other administrative expenditure|||||||||
|**TOTAL DG CNECT **||||1.125|1.125|1.125|1.125|1.125|**5.625**|

EUR million (to three decimal places)

|Col1|Col2|2021|2022|2023|2024|2025|2026|2027|Post<br>2027|TOTAL|
|---|---|---|---|---|---|---|---|---|---|---|
|**TOTAL appropriations** <br>**under HEADINGS 1 to 7** <br>of the multiannual financial framework|Commitments|||709.627|910.588|821.895|432.405|431.110|-|**3,305.625**|
|**TOTAL appropriations** <br>**under HEADINGS 1 to 7** <br>of the multiannual financial framework|Payments|||421.813|674.093|738.438|572.261|504.728|394.291|**3,305.625**|

### EN 83 EN

_3.2.2._ _Estimated output funded with operational appropriations_

The indicative objects and outputs in the table below are first drafts, largely based on the indicators provided in Annex II of the proposed
Regulation. More refined definitions are expected to become available in a later stage.

Commitment appropriations in EUR million (to three decimal places)

|Indicate<br>objectives<br>and outputs<br>|Col2|Col3|Year<br>2023|Year<br>2024|Year<br>2025|Year<br>2026|Year<br>2027|Col9|TOTAL|Col11|
|---|---|---|---|---|---|---|---|---|---|---|
|**Indicate**<br>**objectives**<br>**and outputs**<br> <br>|Type75 <br>|Aver<br>age<br>cost|No<br>Cost|No<br>Cost|No<br>Cost|No<br>Cost|No<br>Cost|Total<br>No<br>Total cost|Total<br>No<br>Total cost|Total<br>No<br>Total cost|
|SPECIFIC OBJECTIVE No 1 “Chips for Europe Initiative”|SPECIFIC OBJECTIVE No 1 “Chips for Europe Initiative”|SPECIFIC OBJECTIVE No 1 “Chips for Europe Initiative”|SPECIFIC OBJECTIVE No 1 “Chips for Europe Initiative”|SPECIFIC OBJECTIVE No 1 “Chips for Europe Initiative”|SPECIFIC OBJECTIVE No 1 “Chips for Europe Initiative”|SPECIFIC OBJECTIVE No 1 “Chips for Europe Initiative”|SPECIFIC OBJECTIVE No 1 “Chips for Europe Initiative”|SPECIFIC OBJECTIVE No 1 “Chips for Europe Initiative”|SPECIFIC OBJECTIVE No 1 “Chips for Europe Initiative”|SPECIFIC OBJECTIVE No 1 “Chips for Europe Initiative”|
|- Output|Number of legal<br>entities involved in<br>actions||<br>154.241|<br>198.938|<br>179.800|<br>96.679|<br>96.383||726.041|726.041|
|- Output|Number of design tools<br>developed/integrated||<br>76.811|<br>99.070|<br>89.539|<br>48.145|<br>47.998||361.563|361.563|
|- Output|Amount co-invested in<br>design capacities and<br>pilot lines||<br>117.984|<br>152.174|<br>137.534|<br>73.953|<br>73.726||555.370|555.370|
|- Output|Number of users<br>accessing design<br>capacities and pilot<br>lines||<br>95.818|<br>123.584|<br>111.695|<br>60.059|<br>59.875||451.030|451.030|

75 Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.).

### EN 84 EN

|- Output|Number of businesses<br>using services of<br>competence centres|Col3|65.080|Col5|83.939|Col7|75.864|Col9|40.792|Col11|40.667|Col13|Col14|306.343|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|- Output|Number of persons<br>receiving training||<br>43.914|<br>43.914|<br>56.639|<br>56.639|<br>51.191|<br>51.191|<br>27.525|<br>27.525|<br>27.441|<br>27.441||206.710|
|- Output|Amount of investment<br>in the EU by<br>semiconductor<br>companies||<br>120.654|<br>120.654|<br>155.618|<br>155.618|<br>140.648|<br>140.648|<br>75.627|<br>75.627|<br>75.395|<br>75.395||567.942|
|- Output|Amount of investment<br>in the EU by<br>semiconductor<br>companies||<br>34.000|<br>34.000|<br>39.500|<br>39.500|<br>34.500|<br>34.500|<br>8.500|<br>8.500|<br>8.500|<br>8.500||125.000|
|Subtotal for specific objective No 1|Subtotal for specific objective No 1|Subtotal for specific objective No 1||708.502||909.463||820.770||431.280||429.985||**3,300.000**|
|SPECIFIC OBJECTIVE No 2 “Security of supply”|SPECIFIC OBJECTIVE No 2 “Security of supply”|SPECIFIC OBJECTIVE No 2 “Security of supply”|SPECIFIC OBJECTIVE No 2 “Security of supply”|SPECIFIC OBJECTIVE No 2 “Security of supply”|SPECIFIC OBJECTIVE No 2 “Security of supply”|SPECIFIC OBJECTIVE No 2 “Security of supply”|SPECIFIC OBJECTIVE No 2 “Security of supply”|SPECIFIC OBJECTIVE No 2 “Security of supply”|SPECIFIC OBJECTIVE No 2 “Security of supply”|SPECIFIC OBJECTIVE No 2 “Security of supply”|SPECIFIC OBJECTIVE No 2 “Security of supply”|SPECIFIC OBJECTIVE No 2 “Security of supply”|SPECIFIC OBJECTIVE No 2 “Security of supply”|SPECIFIC OBJECTIVE No 2 “Security of supply”|
|- Output|Number of applications<br>for IPF/OEF assessed|||0.500||0.500||0.500||0.500||0.500||**2.500**|
|Subtotal for specific objective No 2|Subtotal for specific objective No 2|Subtotal for specific objective No 2||0.500||0.500||0.500||0.500||0.500||**2.500**|
|SPECIFIC OBJECTIVE No 3 “Preparedness and Monitoring”|SPECIFIC OBJECTIVE No 3 “Preparedness and Monitoring”|SPECIFIC OBJECTIVE No 3 “Preparedness and Monitoring”|SPECIFIC OBJECTIVE No 3 “Preparedness and Monitoring”|SPECIFIC OBJECTIVE No 3 “Preparedness and Monitoring”|SPECIFIC OBJECTIVE No 3 “Preparedness and Monitoring”|SPECIFIC OBJECTIVE No 3 “Preparedness and Monitoring”|SPECIFIC OBJECTIVE No 3 “Preparedness and Monitoring”|SPECIFIC OBJECTIVE No 3 “Preparedness and Monitoring”|SPECIFIC OBJECTIVE No 3 “Preparedness and Monitoring”|SPECIFIC OBJECTIVE No 3 “Preparedness and Monitoring”|SPECIFIC OBJECTIVE No 3 “Preparedness and Monitoring”|SPECIFIC OBJECTIVE No 3 “Preparedness and Monitoring”|SPECIFIC OBJECTIVE No 3 “Preparedness and Monitoring”|SPECIFIC OBJECTIVE No 3 “Preparedness and Monitoring”|
|- Output|Number of<br>organisations for which<br>supply chain data is<br>gathered|||0.625||0.625||0.625||0.625||0.625||**3.125**|
|Subtotal for specific objective No 3|Subtotal for specific objective No 3|Subtotal for specific objective No 3||0.625||0.625||0.625||0.625||0.625||**3.125**|
|**TOTALS**|**TOTALS**|**TOTALS**||**709.627**||**910.588**||**821.895**||**432.405**||**431.110**||**3,305.625**|

### EN 85 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:

EUR million (to three decimal places)

|HEADING 7<br>of the multiannual<br>financial framework|Col2|Col3|Col4|Col5|Col6|Col7|Col8|Col9|
|---|---|---|---|---|---|---|---|---|
|Human resources|||1.125|1.125|1.125|1.125|1.125|**5.625 **|
|Other administrative<br>expenditure|||||||||
|**Subtotal HEADING 7** <br>**of the multiannual**<br>**financial framework**|||1.125|1.125|1.125|1.125|1.125|**5.625 **|

|776<br>Outside HEADING<br>of the multiannual<br>financial framework|Col2|Col3|Col4|Col5|Col6|Col7|Col8|Col9|
|---|---|---|---|---|---|---|---|---|
|Human resources|||||||||
|Other expenditure <br>of an administrative<br>nature|||||||||
|**Subtotal** <br>**outside HEADING 7** <br>**of the multiannual**<br>**financial framework**|||||||||

As this is a new initiative, there are no staff from the DG who are already assigned to management of
the action and who could therefore be redeployed within the DG. The human resources required
should therefore be met with an additional allocation which should be granted to the managing DG
under the annual allocation procedure and in the light of budgetary constraints.

76 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 86 EN

3.2.3.1. 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:

The table below is the additional staff for the Chips JU as a result of the proposed Regulation.

_Estimate to be expressed in full time equivalent units_

|Col1|Col2|Col3|Col4|Col5|2021|2022|2023|2024|2025|2026|2027|2028|2029|2030|2031|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|||||** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|
|Other budget lines (specify): JU staff (TA)|Other budget lines (specify): JU staff (TA)|Other budget lines (specify): JU staff (TA)|Other budget lines (specify): JU staff (TA)|Other budget lines (specify): JU staff (TA)|||3|5|8|8|8|8|5|4|2|
|||||** External staff (in Full Time Equivalent unit: FTE)**77|** External staff (in Full Time Equivalent unit: FTE)**77|** External staff (in Full Time Equivalent unit: FTE)**77|** External staff (in Full Time Equivalent unit: FTE)**77|** External staff (in Full Time Equivalent unit: FTE)**77|** External staff (in Full Time Equivalent unit: FTE)**77|** External staff (in Full Time Equivalent unit: FTE)**77|** External staff (in Full Time Equivalent unit: FTE)**77|** External staff (in Full Time Equivalent unit: FTE)**77|** External staff (in Full Time Equivalent unit: FTE)**77|** External staff (in Full Time Equivalent unit: FTE)**77|** External staff (in Full Time Equivalent unit: FTE)**77|
|Other budget lines (specify): JU staff (CA)|Other budget lines (specify): JU staff (CA)|Other budget lines (specify): JU staff (CA)|Other budget lines (specify): JU staff (CA)|Other budget lines (specify): JU staff (CA)|||3|7|10|10|10|10|10|10|4|
|Other budget lines (specify): JU staff (END)|Other budget lines (specify): JU staff (END)|Other budget lines (specify): JU staff (END)|Other budget lines (specify): JU staff (END)|Other budget lines (specify): JU staff (END)|||0|0|1|1|1|1|0|0|0|
|TOTAL|TOTAL|TOTAL|TOTAL|TOTAL|||6|12|19|19|19|19|15|14|6|

**XX** is the policy area or budget title concerned.

As this is a new initiative, there are no staff from the DG who are already assigned to management of the action and who could therefore be redeployed within the
DG. The human resources required should therefore be met with an additional allocation which should be granted to the managing DG under the annual allocation
procedure and in the light of budgetary constraints.

The table below is the total staff for the Chips JU as a result of the proposed Regulation.

77 AC= Contract Staff; AL = Local Staff; END= Seconded National Expert; INT = agency staff; JPD= Junior Professionals in Delegations.

### EN 87 EN

_Estimate to be expressed in full time equivalent units_

|Col1|Col2|Col3|Col4|Col5|2021|2022|2023|2024|2025|2026|2027|2028|2029|2030|2031|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|||||** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|
|Other budget lines (specify): JU staff (TA)|Other budget lines (specify): JU staff (TA)|Other budget lines (specify): JU staff (TA)|Other budget lines (specify): JU staff (TA)|Other budget lines (specify): JU staff (TA)|14|14|14|17|19|22|22|22|22|13|10|
|||||** External staff (in Full Time Equivalent unit: FTE)**78|** External staff (in Full Time Equivalent unit: FTE)**78|** External staff (in Full Time Equivalent unit: FTE)**78|** External staff (in Full Time Equivalent unit: FTE)**78|** External staff (in Full Time Equivalent unit: FTE)**78|** External staff (in Full Time Equivalent unit: FTE)**78|** External staff (in Full Time Equivalent unit: FTE)**78|** External staff (in Full Time Equivalent unit: FTE)**78|** External staff (in Full Time Equivalent unit: FTE)**78|** External staff (in Full Time Equivalent unit: FTE)**78|** External staff (in Full Time Equivalent unit: FTE)**78|** External staff (in Full Time Equivalent unit: FTE)**78|
|Other budget lines (specify): JU staff (CA)|Other budget lines (specify): JU staff (CA)|Other budget lines (specify): JU staff (CA)|Other budget lines (specify): JU staff (CA)|Other budget lines (specify): JU staff (CA)|16|16|16|19|23|26|26|26|26|26|26|
|Other budget lines (specify): JU staff (END)|Other budget lines (specify): JU staff (END)|Other budget lines (specify): JU staff (END)|Other budget lines (specify): JU staff (END)|Other budget lines (specify): JU staff (END)|0|0|0|1|1|2|2|2|2|0|0|
|TOTAL|TOTAL|TOTAL|TOTAL|TOTAL|30|30|30|37|43|50|50|50|50|39|36|

Additional Commission staff as a result of the proposed Regulation consists of 5 FTEs Officials and 4 FTEs Contractual Agents for every year of the period 20232027.

|Col1|Col2|Col3|Col4|Col5|2021|2022|2023|2024|2025|2026|2027|
|---|---|---|---|---|---|---|---|---|---|---|---|
|||||** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|
|20 01 02 01 (Headquarters and Commission’s Representation<br>Offices)|20 01 02 01 (Headquarters and Commission’s Representation<br>Offices)|20 01 02 01 (Headquarters and Commission’s Representation<br>Offices)|20 01 02 01 (Headquarters and Commission’s Representation<br>Offices)|20 01 02 01 (Headquarters and Commission’s Representation<br>Offices)|||5|5|5|5|5|
|||||** External staff (in Full Time Equivalent unit: FTE)**79 <br>|** External staff (in Full Time Equivalent unit: FTE)**79 <br>|** External staff (in Full Time Equivalent unit: FTE)**79 <br>|** External staff (in Full Time Equivalent unit: FTE)**79 <br>|** External staff (in Full Time Equivalent unit: FTE)**79 <br>|** External staff (in Full Time Equivalent unit: FTE)**79 <br>|** External staff (in Full Time Equivalent unit: FTE)**79 <br>|** External staff (in Full Time Equivalent unit: FTE)**79 <br>|
|Other budget lines (specify): Commission staff (CA)|Other budget lines (specify): Commission staff (CA)|Other budget lines (specify): Commission staff (CA)|Other budget lines (specify): Commission staff (CA)|Other budget lines (specify): Commission staff (CA)|||4|4|4|4|4|
|TOTAL|TOTAL|TOTAL|TOTAL|TOTAL|||9|9|9|9|9|

78 AC= Contract Staff; AL = Local Staff; END= Seconded National Expert; INT = agency staff; JPD= Junior Professionals in Delegations.
79 AC= Contract Staff; AL = Local Staff; END= Seconded National Expert; INT = agency staff; JPD= Junior Professionals in Delegations.

### EN 88 EN

As this is a new initiative, there are no staff from the DG who are already assigned to management of the action and who could therefore be redeployed within the
DG. The human resources required should therefore be met with an additional allocation which should be granted to the managing DG under the annual allocation
procedure and in the light of budgetary constraints.

Description of tasks to be carried out:

|Officials and temporary staff|Officials:<br>- Supervision of the Chips Joint Undertaking<br>- Supervision of the correct implementation of the obligations set by the Regulation<br>for private companies and Member States<br>- Preparation and drafting of implementing and delegated acts, in compliance with<br>this Regulation<br>- Conducting investigations, audits and other analysis, including data analytics<br>- Administrative support to the European Semiconductor Board and organisation of<br>meetings, preparation of opinions and other support to the European<br>Semiconductor Board<br>Temporary agents are staff of the joint undertaking:<br>- See article 19 of the Council Regulation (EU) 2021/2085 establishing the Joint<br>Undertakings under Horizon Europe|
|---|---|
|External staff|External staff at the European Commission:<br>- <br>Supervision of the Chips Joint Undertaking<br>- <br>Conducting investigations, audits and other analysis<br>- <br>Administrative support to the European Semiconductor Board and organisation of<br>meetings, preparation of opinions and other support to the European<br>Semiconductor Board<br>External staff at the joint undertaking:<br>- <br>See article 19 of the Council Regulation (EU) 2021/2085 establishing the Joint<br>Undertakings under Horizon Europe|

### EN 89 EN

_3.2.4._ _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).

|From line|Col2|Amount<br>(EUR<br>million)|To Line|
|---|---|---|---|
|01 02 03 01|European Innovation Council|300.000|earmarked|
|01 02 02 30|Cluster Civil Security for Society|150.000|01 02 02 42|
|01 02 02 40|Cluster Digital, Industry and Space|400.000|01 02 02 42|
|01 02 02 40|Cluster Digital, Industry and Space|400.000|02 04 06 11|
|01 02 02 42|Horizon Europe Programme— Key Digital<br>Technologies joint undertaking|500.000|earmarked|
|01 02 02 50|Cluster Climate, Energy and mobility|300.000|01 02 02 42|
|_Subtotal HE_|_Horizon Europe Programme_|_2,050.000_||
|02 03 01|Connecting Europe Facility (CEF)— Transport|250.000|02 04 06 11|
|02 03 03 01|Connecting Europe Facility (CEF)— Digital|150.000|02 04 06 11|
|_Subtotal CEF_|_Connecting Europe Facility (CEF)_|_400.000_||
|02 04 01 10|Digital Europe programme - Cybersecurity|60.000|02 04 06 11|
|02 04 01 11|Digital Europe programme - European Cybersecurity<br>Industrial, Technology and Research Competence Centre|60.000|02 04 06 11|
|02 04 02 11|Digital Europe programme - High-Performance<br>Computing joint undertaking (EuroHPC)|150.000|02 04 06 11|
|02 04 03|Digital Europe programme - Artificial intelligence|220.000|02 04 06 11|
|02 04 04|Digital Europe programme - Skills|60.000|02 04 06 11|
|02 04 05|Digital Europe programme - Deployment|50.000|02 04 06 11|
|_Subtotal DEP_|_Digital Europe programme_|_600.000_||
||**Total**|**3,050.000**||

 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.

Explain what is required, specifying the headings and budget lines concerned, the corresponding amounts, and the
instruments proposed to be used.

### EN 1

|Col1|Col2|million)|Col4|
|---|---|---|---|
|-|Unallocated margin Heading 1|**250.000**|02 04 06 11|

 requires a revision of the MFF.

Explain what is required, specifying the headings and budget lines concerned and the corresponding amounts.

EUR million (to three decimal places)

_3.2.5._ _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)

|Col1|2021|2022|2023|2024|2025|2026|2027|Total|
|---|---|---|---|---|---|---|---|---|
|Participating States|||489.307|700.182|629.865|270.996|260.801|**2,351.152**|
|TOTAL appropriations<br>co-financed|||489.307|700.182|629.865|270.996|260.801|**2,351.152**|

Participating States are expected to contribute an amount to the additional operational expenditure that is
commensurate to the Union contribution.

Members other than the Union are not expected to contribute to the additional administrative costs of the
JU.

### EN 2

**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<br>available for<br>the current<br>financial year|80<br>Impact of the proposal/initiative|Col4|Col5|Col6|Col7|Col8|Col9|
|---|---|---|---|---|---|---|---|---|
|Budget revenue line:|Appropriations<br>available for<br>the current<br>financial year|Year <br>**N**|Year <br>**N+1**|Year <br>**N+2**|Year <br>**N+3**|Enter as many years as necessary to show<br>the duration of the impact (see point 1.6)|Enter as many years as necessary to show<br>the duration of the impact (see point 1.6)|Enter as many years as necessary to show<br>the duration of the impact (see point 1.6)|
|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).

[…]

#### **ANNEX** **to the LEGISLATIVE FINANCIAL STATEMENT**

Name of the proposal/initiative:

1 NUMBER and COST of HUMAN RESOURCES CONSIDERED NECESSARY

2.COST of OTHER ADMINISTRATIVE EXPENDITURE

3 TOTAL ADMINISTRATIVE COSTS

4 METHODS of CALCULATION USED for ESTIMATING COSTS

80 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 3

4.1 Human resources

4.2 Other administrative expenditure

### EN 4

**1** **C** **OST OF HUMAN RESOURCES CONSIDERED NECESSARY**

 The proposal/initiative does not require the use of human resources

 The proposal/initiative requires the use of human resources, as explained below:

EUR million (to three decimal places)

|HEADING 7<br>of the multiannual financial<br>framework|Col2|Year 2021|Col4|Year 2022|Col6|Year 2023|Col8|Year 2024|Col10|Year 2025|Col12|Year 2026|Col14|Year 2027|Col16|TOTAL|Col18|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|**HEADING 7**<br>of the multiannual financial<br>framework|**HEADING 7**<br>of the multiannual financial<br>framework|FTE|Appropriations|FTE|Appropriations|FTE|Appropriations|FTE|Appropriations|FTE|Appropriations|FTE|Appropriations|FTE|Appropriations|FTE|Appropriations|
| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**|
|20 01 02 01 -<br>Headquarters and<br>Representation offices|AD|||||5|0.785|5|0.785|5|0.785|5|0.785|5|0.785||3.925|
|20 01 02 01 -<br>Headquarters and<br>Representation offices|AST|||||||||||||||||
|20 01 02 03 - Union<br>Delegations|AD|||||||||||||||||
|20 01 02 03 - Union<br>Delegations|AST|||||||||||||||||
| **External staff**81| **External staff**81| **External staff**81| **External staff**81| **External staff**81| **External staff**81| **External staff**81| **External staff**81| **External staff**81| **External staff**81| **External staff**81| **External staff**81| **External staff**81| **External staff**81| **External staff**81| **External staff**81| **External staff**81| **External staff**81|
|20 02 01 and 20 02 02<br>– External personnel– <br>Headquarters<br>and<br>Representation offices|AC|||||4|0.340|4|0.340|4|0.340|4|0.340|4|0.340||1.700|
|20 02 01 and 20 02 02<br>– External personnel– <br>Headquarters<br>and<br>Representation offices|END|||||||||||||||||
|20 02 01 and 20 02 02<br>– External personnel– <br>Headquarters<br>and<br>Representation offices|INT|||||||||||||||||
|20 02 03– External<br>personnel<br>- <br>Union<br>Delegations|AC|||||||||||||||||
|20 02 03– External<br>personnel<br>- <br>Union<br>Delegations|AL|||||||||||||||||
|20 02 03– External<br>personnel<br>- <br>Union<br>Delegations|END|||||||||||||||||
|20 02 03– External<br>personnel<br>- <br>Union<br>Delegations|INT|||||||||||||||||
|20 02 03– External<br>personnel<br>- <br>Union<br>Delegations|JPD|||||||||||||||||
|Other HR related<br>budget lines (_specify_)||||||||||||||||||
|**Subtotal HR– **<br>**HEADING 7**||||||**9 **|**1.125**|**9 **|**1.125**|**9 **|**1.125**|**9 **|** 1.125**|**9**|** 1.125**||**5.625**|

The human resources required will be met by staff from the DG who are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional
allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints.

81 AC = Contract Staff; AL = Local Staff; END = Seconded National Expert; INT= agency staff; JPD= Junior Professionals in Delegations.

### EN 5 E

|Outside HEADING 7<br>of the multiannual financial<br>framework|Col2|Col3|Year 2021|Col5|Year 2022|Col7|Year 2023|Col9|Year 2024|Col11|Year 2025|Col13|Year 2026|Col15|Year 2027 and<br>subsequent|Col17|TOTAL|Col19|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|**Outside HEADING 7**<br>of the multiannual financial<br>framework|**Outside HEADING 7**<br>of the multiannual financial<br>framework|**Outside HEADING 7**<br>of the multiannual financial<br>framework|FTE|Appropriations|FTE|Appropriations|FTE|Appropriations|FTE|Appropriations|FTE|Appropriations|FTE|Appropriations|FTE|Appropriations|FTE|Appropriations|
| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**| **Establishment plan posts (officials and temporary staff)**|
|01<br>01<br>01<br>01<br>Indirect<br>Research82 <br>01 01 01 11 Direct Research<br>Other (please specify)|01<br>01<br>01<br>01<br>Indirect<br>Research82 <br>01 01 01 11 Direct Research<br>Other (please specify)|AD|||||||||||||||||
|01<br>01<br>01<br>01<br>Indirect<br>Research82 <br>01 01 01 11 Direct Research<br>Other (please specify)|01<br>01<br>01<br>01<br>Indirect<br>Research82 <br>01 01 01 11 Direct Research<br>Other (please specify)|AST|||||||||||||||||
| **External staff**83| **External staff**83| **External staff**83| **External staff**83| **External staff**83| **External staff**83| **External staff**83| **External staff**83| **External staff**83| **External staff**83| **External staff**83| **External staff**83| **External staff**83| **External staff**83| **External staff**83| **External staff**83| **External staff**83| **External staff**83| **External staff**83|
|External staff<br>from<br>operational<br>appropriations<br>(former<br>‘BA’<br>lines).|- at<br>Headquarters|AC|||||||||||||||||
|External staff<br>from<br>operational<br>appropriations<br>(former<br>‘BA’<br>lines).|- at<br>Headquarters|END|||||||||||||||||
|External staff<br>from<br>operational<br>appropriations<br>(former<br>‘BA’<br>lines).|- at<br>Headquarters|INT|||||||||||||||||
|External staff<br>from<br>operational<br>appropriations<br>(former<br>‘BA’<br>lines).|- in Union<br>delegations|AC|||||||||||||||||
|External staff<br>from<br>operational<br>appropriations<br>(former<br>‘BA’<br>lines).|- in Union<br>delegations|AL|||||||||||||||||
|External staff<br>from<br>operational<br>appropriations<br>(former<br>‘BA’<br>lines).|- in Union<br>delegations|END|||||||||||||||||
|External staff<br>from<br>operational<br>appropriations<br>(former<br>‘BA’<br>lines).|- in Union<br>delegations|INT|||||||||||||||||
|External staff<br>from<br>operational<br>appropriations<br>(former<br>‘BA’<br>lines).|- in Union<br>delegations|JPD|||||||||||||||||
|01 01 01 02 Indirect Research<br>01 01 01 12 Direct research<br>Other (please specify)84|01 01 01 02 Indirect Research<br>01 01 01 12 Direct research<br>Other (please specify)84|AC|||||||||||||||||
|01 01 01 02 Indirect Research<br>01 01 01 12 Direct research<br>Other (please specify)84|01 01 01 02 Indirect Research<br>01 01 01 12 Direct research<br>Other (please specify)84|END|||||||||||||||||
|01 01 01 02 Indirect Research<br>01 01 01 12 Direct research<br>Other (please specify)84|01 01 01 02 Indirect Research<br>01 01 01 12 Direct research<br>Other (please specify)84|INT|||||||||||||||||
|Other budget lines HR related<br>(_specify_)|Other budget lines HR related<br>(_specify_)||||||||||||||||||
|**Subtotal HR– Outside**<br>**HEADING 7**|**Subtotal HR– Outside**<br>**HEADING 7**||||||||||||||||||

82 Please choose the relevant budget line, or specify another if necessary; in case more budget lines are concerned, staff should be differentiated by each budget line concerned
83 AC = Contract Staff; AL = Local Staff; END = Seconded National Expert; INT= agency staff; JPD= Junior Professionals in Delegations.

84 Please choose the relevant budget line, or specify another if necessary; in case more budget lines are concerned, staff should be differentiated by each budget line concerned

### EN 6 E

**Total HR (all MFF**

**9** **1.125** **9** **1.125** **9** **1.125** **9** **1.125** **9** **1.125** **5.625**
**Headings)**

The human resources required will be met by staff from the DG who are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with
any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints.

### EN 7 E

**2** **C** **OST OF OTHER ADMINISTRATIVE EXPENDITURE**

 The proposal/initiative does not require the use of administrative appropriations
 The proposal/initiative requires the use of administrative appropriations, as explained below:

_EUR million (to three decimal places)_

|HEADING 7<br>of the multiannual financial framework|Year N85|Year N+1|Year N+2|Year N+3|Year N+4|Year N+5|Year N+7|Total|
|---|---|---|---|---|---|---|---|---|
|**At headquarters or within EU territory:**|||||||||
|20 02 06 01 - Mission and representation expenses|||||||||
|20 02 06 02 - Conference and meeting costs|||||||||
|20 02 06 03 - Committees86|||||||||
|20 02 06 04 Studies and consultations|||||||||
|20 04– IT expenditure (corporate)87|||||||||
|Other budget lines non-HR related (_specify where_<br>_necessary_)|||||||||
|**In Union delegations**|||||||||
|20 02 07 01 - Missions, conferences and representation<br>expenses|||||||||
|20 02 07 02 - Further training of staff|||||||||
|20 03 05– Infrastructure and logistics|||||||||
|Other budget lines non-HR related (_specify where_<br>_necessary_)|||||||||
|**Subtotal Other - HEADING 7**<br>of the multiannual financial framework|||||||||

85 Year N is the year in which implementation of the proposal/initiative starts. Please replace "N" by the expected first year of implementation (for instance: 2021). The same for
the following years
86 Specify the type of committee and the group to which it belongs.
87 –
The opinion of DG DIGIT IT Investments Team is required (see the Guidelines on Financing of IT, C(2020)6126 final of 10.9.2020, page 7)

### EN 8 E

_EUR million (to three decimal places)_

|Outside HEADING 7<br>of the multiannual financial framework|Year 2021|Year 2022|Year 2023|Year 2024|Year 2025|Year 2026|Year 2027|Total|
|---|---|---|---|---|---|---|---|---|
|Expenditure on technical and administrative assistance<br>(not including external staff) from operational<br>appropriations (former 'BA' lines):|||||||||
|- at Headquarters|||||||||
|- in Union delegations|||||||||
|Other management expenditure for research|||||||||
|Policy IT expenditure on operational programmes88|||||||||
|Corporate IT expenditure on operational programmes89|||||||||
|Other budget lines non-HR related (_specify where_<br>_necessary_)|||||||||
|**Sub-total Other– Outside HEADING 7**<br>of the multiannual financial framework|||||||||
|**Total Other admin expenditure (all MFF**<br>**Headings)**|||||||||

88 –
The opinion of DG DIGIT IT Investments Team is required (see the Guidelines on Financing of IT, C(2020)6126 final of 10.9.2020, page 7)
89 This item includes local administrative systems and contributions to the co-financing of corporate IT systems (see the Guidelines on Financing of IT, C(2020)6126 final of
10.9.2020)

### EN 9 E

**3** **T** **OTAL ADMINISTRATIVE COSTS** **(** **ALL** **H** **EADINGS** **MFF)**

_EUR million (to three decimal places)_

|Summary|Year 2021|Year 2022|Year 2023|Year 2024|Year 2025|Year 2026|Year 2027|Total|
|---|---|---|---|---|---|---|---|---|
|Heading 7 - Human Resources|||1.125|1.125|1.125|1.125|1.125|**5.625**|
|Heading 7– Other administrative expenditure|||||||||
|**Sub-total Heading 7**|||**1.125**|**1.125**|**1.125**|**1.125**|**1.125**|**5.625**|
|Outside Heading 7– Human Resources (Title 1 JU)|||||||||
|Outside Heading 7– Other administrative expenditure<br>(Title 2 JU)|||||||||
|**Sub-total Other Headings**|||||||||
|**TOTAL**<br>**HEADING 7 and Outside HEADING 7**|||**1.125**|**1.125**|**1.125**|**1.125**|**1.125**|**5.625**|

The administrative appropriations required will be met by the appropriations which are already assigned to management of the action and/or which have been redeployed, together if

necessary with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of existing budgetary constraints.

### EN 10 E

**4** **M** **ETHODS OF CALCULATION USED TO ESTIMATE COSTS**

**4.1** **Human resources**

_This part sets out the method of calculation used to estimate the human resources considered necessary_
_(workload assumptions, including specific jobs (Sysper 2 work profiles), staff categories and the corresponding_

_average costs)_

**Outside HEADING 7** of the multiannual financial framework

 Only posts financed from the research budget

 External staff

**4.2** **Other administrative expenditure**

_Give details of the method of calculation used for each budget line_
_and in particular the underlying assumptions (e.g. number of meetings per year, average costs, etc.)_

**HEADING 7** of the multiannual financial framework

**Outside HEADING 7** of the multiannual financial framework

### EN 11 EN