Source: EURLEX
Language: en
Format: md

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

**Interinstitutional File:**

**2022/0032(COD)**

**Brussels, 25 November 2022**
**(OR. en)**

**14668/22**

**COMPET 885**
**IND 466**
**RC 57**
**RECH 595**
**TELECOM 454**
**FIN 1212**
**CADREFIN 197**
**CODEC 1730**

**NOTE**

From: Permanent Representatives Committee (Part 1)

To: Council

No. prev. doc.: 14454/22

No. Cion doc.: 6170/22 + ADD 1

Subject: Regulation establishing a framework of measures for strengthening
Europe's semiconductor ecosystem (Chips Act)

_- General approach_

**I.** **INTRODUCTION**

1. On 8 February 2022, the Commission submitted to the European Parliament and to the

Council a proposal for a Regulation establishing a framework of measures for strengthening

Europe’s semiconductor ecosystem (Chips Act) **[1]** . It is not accompanied by a formal impact

assessment.

**1** 6170/22 + ADD 1.

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# COMPET.2 EN

2. The aim of the proposed Regulation is to strengthen the European semiconductor ecosystem,

to increase the EU’s security of supply of semiconductors and to develop new markets for

cutting-edge European technologies. The initiative is intended to cover the whole value chain

from design to manufacturing capacities. It aims in particular at limiting the risks of future

shortages or tensions in the supply of semiconductors in Europe and at containing the

consequences where necessary, thus contributing to European industrial resilience. And it

seeks to structure a European approach to this issue, which should contribute to strengthening

the internal market.

3. In order to achieve these objectives, the proposal is built on three pillars:

‒
Pillar 1: setting up the Chips for Europe Initiative to support technology capacity

building and large-scale innovation across the EU to enable the development and

deployment of cutting-edge and next generation semiconductor and quantum

technologies that will strengthen the EU’s capabilities and competences in advanced

design, systems integration and component production; more specifically, the Chips for

Europe Initiative includes five operational objectives related to: the development of

pilot lines, to test and experiment innovative process technology and design concepts;

the development of a design platform, to facilitate access to design resources; support to

quantum chips; the set-up of competence centres and the strengthening of skills, to

increase access and talent across the Union; and a Chips Fund, to support start-ups and

the scaling-up of SMEs;

‒
Pillar 2: creating a framework to ensure security of supply by attracting increased

investment and production capacity in semiconductor manufacturing as well as in

packaging and advanced testing and assembly through first-of-a-kind integrated

production facilities and EU open foundries;

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‒
Pillar 3: establishing a mechanism for coordinating surveillance and crisis response

between Member States and the Commission to strengthen collaboration with and

between Member States, monitor the supply of semiconductors, estimate demand,

anticipate shortages, trigger the activation of a crisis phase and deploy a dedicated

toolbox.

4. The Commission proposed to base the Regulation on Articles 114, 173(3), 182(1) and 183

TFEU, relating to approximation of laws, industry, and research and technological

development. However, in the course of the examination of the Commission’s proposal in the

Council’s preparatory bodies, it was concluded that Articles 182(1) and 183 TFEU are not

suitable as a legal basis.

5. The proposal for a Chips Act is accompanied by a proposal for a Council Regulation

amending Regulation (EU) 2021/2085 establishing the Joint Undertakings under Horizon

Europe (the so-called “Single Basic Act”), as regards the Chips Joint Undertaking **[2]**, to

implement most of the actions foreseen under the Chips for Europe Initiative.

6. The European Parliament’s Committee on Industry, Research and Energy (ITRE) appointed

Mr Dan NICA (S&D, RO) as rapporteur on the Chips Act proposal. The ITRE Committee is

expected to vote on its amendments to the Commission’s proposal and adopt the mandate for

negotiations in January 2023, with the negotiating mandate expected to be voted at Plenary in

February 2023.

7. The European Economic and Social Committee adopted its opinion on the proposal for a

Chips Act on 15 June 2022 **[3]** . The opinion requested from the European Committee of the

Regions was adopted on 12 October 2022 **[4]** .

**2** 6171/22.
**3** 10439/22.
**4** 14222/22.

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**II.** **WORK WITHIN THE COUNCIL**

8. The Council (Competitiveness), at its meeting of 24 February 2022, heard a presentation from

the Commission on the content and aim of the proposed Chips Act. It took note of the

progress achieved and held a policy debate on the Commission’s proposal at its meeting on

9 June 2022.

9. The Working Party on Competitiveness and Growth (Industry) started examining the proposal

under the French Presidency in February 2022 with a presentation of the proposal by the

Commission. A detailed examination of the Commission’s proposal and of a first compromise

text, prepared by the French Presidency, ensued at ten Working Party meetings.

10. The work continued during the Czech Presidency, on the basis of revised compromise texts

prepared by the Czech Presidency, at Working Party meetings on 8 and 15 July, on 5, 12, 19

and 26 September, on 6, 10, 19 and 24 October, and on 9 November 2022.

11. While delegations generally welcomed the proposal and supported its objectives, their views

differed on how to best achieve those objectives. Therefore the Presidency, while retaining the

idea, content and basic structure of the proposed legal act, amended several provisions of the

Commission’s proposal in its successive revised compromise texts to take account of

delegations’ requests during the discussions at Working Party level, to improve the proposal’s

clarity and feasibility, and to provide legal certainty.

This concerned in particular the following issues:

‒ the definition of “first-of-a-kind” semiconductor manufacturing facility, to clarify

that the qualifying element could be innovation in many different dimensions;

‒
the formulation of the general and operational objectives and the content of the Chips

for Europe Initiative, as well as the specification of research and innovation activities

and of capacity building activities;

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‒
the harmonising component of the Chips Act and the objective of improving the

functioning of the internal market;

‒
the establishment of a European network of competence centres in semiconductors,

integration technologies and system design;

‒
the requirements to be met by Integrated Production Facilities and Open EU Foundries,

notably as regards positive spill-over effects on the Union’s semiconductor value chain;

‒
the role of Member States, through the European Semiconductor Board, in the decision

on the status of Integrated Production Facility or Open EU Foundry, including in the

case of a repeal;

‒
the possibility to derogate from environmental procedures in the planning, construction

and operation of Integrated Production Facilities or Open EU Foundries considered to

be of “overriding public interest”;

‒
the design of mandatory information requests during a crisis stage, to be carried out

by the Commission, including safeguards to ensure their proportionality and security

interests;

‒
the scope and implementation of the emergency toolbox, as regards the list of critical

sectors and the instrumentss of priority rated orders and common purchasing, and the

provision of a Council implementing act to trigger a crisis stage;

‒
the enforcement of information and notification obligations and of the compliance

with priority rated orders through fines and penalties.

12. The Permanent Representatives Committee, at its meeting on 4 November 2022, discussed the

funding and financial architecture of the Chips Act as well as the provisions on the proposed

European Chips Infrastructure Consortium (ECIC) and provided guidance on the way forward

regarding these issues.

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While Member States generally agreed that the Horizon Europe programme and the Digital

Europe programme are the most suitable programmes to implement the Chips Act and that the

financial level of ambition of the Chips Act should remain commensurate to the Commission

proposal, delegations rejected the recourse to decommitments under Horizon Europe. At the

same time, the Presidency noted a slight majority of Member States in favour of keeping the

ECIC in the proposal, but with further clarifications on the process notably with a view to its

openness.

13. The Presidency therefore prepared a further revised compromise text **[5]** which no longer

included the recourse to decommitments under Horizon Europe, in order to respect the

existing interinstitutional agreement on the Multiannual Financial Framework as regards

decommitments, with a resulting reduction in the overall funding from the Digital Europe

programme by the corresponding amount of EUR 400 million. In return, the Presidency

suggested to approve the draft Council statement set out in ADD 1 to this note.

Moreover, the delegations’ requests to specify clearly which operational objectives are

financed by which part of the programme were taken up by the Presidency in the revised text.

In addition, the Presidency proposed further clarifications on the voluntary nature of

establishing an ECIC, on its openness to different legal forms of cooperation and other

participants, and on its rules for the selection of proposals for funding that should not be based

on a specific legal form of cooperation. The Public Authorities Board of the Chips Joint

Undertaking should be able to verify the openness of an ECIC and request remedial measures

to be taken where necessary.

14. The Permanent Representatives Committee, at its meeting on 23 November 2022, examined

this compromise text and agreed to reverse the change proposed in the last compromise

proposal as regards the wording in recital (12) relating to the network of competence centres

on semiconductors. It also agreed to add a new recital (15a) to further stress the importance

of distinguishing research and innovation from capacity-building activities.

**5** 14454/22.

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All Member States were able to support the compromise text, as amended. The Chair

concluded that this text, as amended, is a solid basis for reaching a general approach at the

Council (Competitiveness) on 1 December 2022.

The Permanent Representatives Committee also recommended to the Council to approve the

statement set out in ADD 1 to this note.

15. The final compromise text is set out in the ANNEX to this note. It reflects the continuous

efforts of the Presidency and Member States to find the right balance between the different

interests and objectives. Changes compared to the previous Presidency text (doc. 14454/22)

are indicated in **bold underlined** for additions and in ~~strikethrough~~ for deletions.

The new elements in recitals (15a) and (16) and in Article 7 will need to be mirrored in the

Council Regulation amending Regulation (EU) 2021/2085 establishing the Joint Undertakings

under Horizon Europe, as regards the Chips Joint Undertaking.

**III. CONCLUSION**

16. The Council is invited to:

‒
agree to reach a general approach on the Commission’s proposal on the basis of the

compromise text set out in the ANNEX;

‒
approve the statement set out in ADD 1 to this note which will be annexed to the

Council minutes.

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**ANNEX**

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) 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 **[6]**,

Having regard to the opinion of the Committee of the Regions **[7]**,

Acting in accordance with the ordinary legislative procedure,

**6** OJ C,, p. .
**7** OJ C,, p. .

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# ANNEX COMPET.2 EN

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. As semiconductors are central to the digital economy, they are

powerful enablers for the sustainability transition, contributing thus to the Green Deal

objectives. 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. Member States are primarily responsible for sustaining a strong

industrial, competitive, sustainable base in the Union promoting innovation across a full range

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 with a view to increasing robustness to counter disruptions.

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(4) It is necessary to take measures to build capacity and strengthen the Union’s semiconductor

ecosystem 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 ecosystem, reducing dependence

on a limited number of third country companies and geographies, and strengthening its

capacity to design and produce advanced semiconductors. 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.

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(5) Due to the ubiquity of semiconductors, the recent shortages have either directly or indirectly

adversely affected businesses across the Union and induced strong economic repercussions.

The economic and societal impact has lead to an increased consciousness of the public and of

economic operators and a resulting pressure for Member States to address the strategic

dependencies as regards semiconductors. At the same time, the semiconductor sector is

characterised by interdependencies across the value chain, where no single geography

dominates all steps of the value chain. This cross-border nature is further emphasised by the

nature of semiconductor products as an enabler for downstream industries. While

semiconductor manufacturing may be concentrated in some regions, user industries are spread

out across the Union. Against this background, the security of supply of semiconductors and

resilience of the semiconductor ecosystem can be best addressed through Union harmonising

legislation based on Article 114 of the Treaty. A single coherent regulatory framework

harmonising certain conditions for operators to carry out specific projects that contribute to

the security of supply and resilience of the semiconductor ecosystem in the Union is

necessary. Additionally, a coordinated mechanism for monitoring and crisis response should

be established to address shortages of supply and prevent obstacles to the unity of the internal

market, avoiding differences in response among Member States.

(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 implementation 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.

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(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 of the supply and the resilience of the

semiconductor ecosystem. 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 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

semiconductors requires action to be taken collaboratively at Union level.

[(10) deleted]

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(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.

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(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

operational objectives. First, to reinforce Europe’s design capacity, the Initiative should

support actions to build a virtual design 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 and research and technology organisations to provide virtual

prototype solutions based on co-development of technology. Second, to provide the basis for

strengthening the security of supply and the semiconductor ecosystem in the Union, the

Initiative should support enhancement of existing and development of new advanced pilot

lines to enable development and deployment of cutting-edge and next generation

semiconductor technologies. The pilot lines should provide for the industry a facility to test,

experiment and validate semiconductor technologies and system design concepts, while

reducing environmental impacts as much as possible. Investments from the Union, alongside

with Member States and 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

accelerate the innovative development of quantum chips and associated semiconductor

technologies, including those based on semiconductor material or integrated with photonics,

conducive to the development of the 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 chips produced by the pilot lines.

Fourth, in order to promote the use of semiconductor technologies, to provide access to design

and pilot line facilities, and to address skills gaps across the Union, the Initiative should

support the establishment of a ~~pan-European n~~ etwork of competence centres on

semiconductors **in each Member State**, by enhancing existing or creating new facilities.

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Access to publicly funded infrastructure, such as pilot and testing facilities, and to the

network of competence centres, should be open to a wide range of users and must be granted

on a transparent and non-discriminatory 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 **[8]**, 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.

**8** 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).

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(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 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.

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(14a) 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 **[9]** .

(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 the Horizon Europe Framework programme established by Regulation (EU)

2021/695 of the European Parliament and of the Council **[10]** (Horizon Europe) and the Digital

Europe programme established by Regulation (EU) 2021/694 of the European Parliament and

of the Council **[11]** 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.

**9** […].
**10** 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).
**11** 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).

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# ANNEX COMPET.2 EN

**(15a) In order to allow synergies between the Union and Member States' programmes, the**

**work programmes of the Chips Joint Undertaking under the Initiative should in**

**accordance with Articles 17(2)(k) and 137(aa) of Council Regulation (EU) 2021/2085**

**establishing the Joint Undertakings under Horizon Europe** **[12]** **, as amended, clearly**

**differentiate actions to support research and innovation in semiconductors from those**

**aiming at developing parts of the supply chain, so as to ensure the appropriate**

**participation of public and private entities.**

**12** **Council Regulation (EU) 2021/2085 of 19 November 2021 establishing the Joint**
**Undertakings under Horizon Europe and repealing Regulations (EC) No 219/2007, (EU)**
**No 557/2014, (EU) No 558/2014, (EU) No 559/2014, (EU) No 560/2014, (EU) No 561/2014**
**and (EU) No 642/2014 (OJ L 427, 30.11.2021, p. 17).**

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(16) With a view to facilitating the implementation of specific actions of the Initiative, such as the

design platform or pilot lines, it is necessary to provide as an option a new legal instrument,

the European Chips Infrastructure Consortium (ECIC). The ECIC should have legal

personality. This means that when applying for specific actions to be funded by the Initiative,

the ECIC itself, and not individual entities forming the ECIC, can be the applicant.

Nevertheless, pursuant to Article XX of Council Regulation (EU) 2021/2085 establishing the

Joint Undertakings under Horizon Europe ~~**[13]**~~ ~~,~~ as amended, the Work Programme calls for

proposals under the Chips for Europe Inititative should be open to different legal forms of

cooperation and other participants, and the selection of proposals for funding should not be

based on a specific legal form of cooperation. The main aim of the ECIC should be to

encourage effective and structural collaboration between legal entities, including Research

and Technology Organisations, industry and Member States. The ECIC should involve the

participation of at least three members. These can be Member States, public or private legal

entities from at least three Member States, or a combination thereof. By having legal

personality, an ECIC would have sufficient autonomy to lay down its membership,

governance, funding, budget, the modalities by which the respective financial contributions

from the members are called upon, and coordination, management of intellectual property and

working methods. The members of the ECIC should be able to have full flexibility in

determining the applicable law, statutory seat and voting rights.

~~**13**~~ ~~Council Regulation (EU) 2021/2085 of 19 November 2021 establishing the Joint~~
~~Undertakings under Horizon Europe and repealing Regulations (EC) No 219/2007, (EU) No~~
~~557/2014, (EU) No 558/2014, (EU) No 559/2014, (EU) No 560/2014, (EU) No 561/2014 and~~
~~(EU) No 642/2014 (OJ L 427, 30.11.2021, p. 17).~~

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The selection of public and private legal entities implementing the work plan of the ECIC

should be fair, transparent and open. To ensure fair and equal access to participation, an ECIC

should be open to new members, which can be Member States, public or private legal entities,

over its lifetime. Member States in particular should be able to join an ECIC at any time either

as full members or observers, whereas other public or private legal entitites should be able to

join at any time on fair and reasonable terms specified in the Statutes. The Public Authorities

Board of the Joint Undertaking should be able to verify the openness of an ECIC and request

for certain remedial measures to be taken where necessary. The setting up of an ECIC should

not involve the actual setting up of a new Union body. 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 specific actions of the Initiative. The

Commission should not be directly a party in the Consortium.

(16a) An ECIC whose membership does not include private entities should be recognised as an

international body within the meaning of Articles 143, point (g) and 151(1), point (b) of

Council Directive 2006/112/EC **[14]** and as an international organisation within the meaning of

Article 12(1), point (b), of Council Directive 2008/118/EC **[15]** . An ECIC which includes private

entities among its members may not be recognised as such international body and

international organisation.

[(17) moved to recital (14a)]

**14** Council Directive 2006/112/EC of 28 November 2006 on the common system of value added

–
tax (OJ L 347, 11.12.2006, p. 1 118).
**15** Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements

–
for excise duty and repealing Directive 92/12/EEC (OJ L 9, 14.1.2009, p. 12 30).

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(17a) To facilitate access to technical expertise and ensure dissemination of knowledge across the

Union, as well as support to diverse skills initiatives, a network of competence centres should

be established. Competence centres will provide services to the semiconductor stakeholders,

including start-ups and SMEs. Examples include facilitating access to pilot lines and to the

design platform, providing training and skills development, support to finding investors,

making use of existing local competencies or reaching out to the relevant verticals. The

services should be provided on an open, transparent and non-discriminatory basis. Each

competence centre should connect and be part of the European network of competence centres

in semiconductors and should act as an access point to other nodes of the network. In this

regard, synergies with existing similar structures, such as European Digital Innovation Hubs

(EDIHs), should be maximised. For example, Member States could designate an existing

EDIH focused on semiconductors as a competence centre for the purposes of this Regulation,

as long as the prohibition of double financing is not breached.

(18) In order to encourage the establishment of the necessary manufacturing and related design

capabilities, and thereby strengthen the resilience of the semiconductor ecosystem and ensure

the security of supply in the Union, public support may be appropriate, provided that this does

not lead to distortions in the internal market. In that respect, it is necessary to harmonise

certain conditions for operators to carry out specific projects at Union level that contribute to

achieving the objectives of this Regulation and distinguish between two types of facilities,

namely: Integrated Production Facilities and Open EU Foundries. The distinguishing factor

for qualification as either type of facility should be the business model. Open EU Foundries

offer production capacity to other undertakings. Integrated Production Facilities produce for

their own commercial purposes and may integrate other steps of the supply chain in addition

to manufacturing into their business model, such as designing and selling the products.

14668/22 TP/cb 21

# ANNEX COMPET.2 EN

(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 the resilience of the semiconductor ecosystem in the internal market.

The qualifying factor for “first-of-a-kind” is to bring an innovative element to the internal

market regarding the manufacturing processes or the final product which can be based on new

or existing technology nodes. Relevant innovation elements could be with regard to

technology node or substrate material, or approaches that lead to improvements in computing

power or other performance attributes, energy efficiency, level of security, safety or

reliability, as well as integration of new functionalities, such as AI, memory capacity or other.

Integration of different processes leading to efficiency gains or packaging and assembly

automation are also examples of innovation. With regard to environmental gains, innovation

elements include the reduction in a quantifiable way of the amount of energy, water or

chemicals used, or increasing recyclability of materials. The above innovation elements may

apply to both mature technology nodes or cutting edge ones. Such innovation should not yet

substantively be present or committed to be built within the Union. For example, similar

innovation in research and development or small-scale production would not necessarily

exclude subsequent qualifying as “first-of-a-kind”.

(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.

14668/22 TP/cb 22

# ANNEX COMPET.2 EN

(21) In order to qualify as Integrated Production Facilities or Open EU Foundries, the

establishment, operation or production of the facility should have positive spill-over effects on

the Union’s semiconductor value chain, leading to a positive impact on the security of supply

and the resilience of the semiconductor ecosystem in the Union, increasing qualified

workforce and contributing to the Union’s green and digital transition. Various activities

aimed at creating positive spill-over effects may be considered for the purpose of qualifying

as Integrated Production Facilities or Open EU Foundries. Examples include giving access to

manufacturing facilities against a market fee; giving Process Design Kits to smaller design

companies or to the design platform; disseminating results from their R&D activities;

engaging in research collaboration with European universities and research institutes;

cooperating with national authorities or educational and vocational institutions to contribute to

skills development; contributing to Union-wide research projects; or offering dedicated

support opportunities for start-ups and SMEs. The impact on several Member States,

including with regard to cohesion objectives, should be considered as one of the indicators of

a clear positive impact of 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.

14668/22 TP/cb 23

# ANNEX COMPET.2 EN

(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 invest in the Union in continued innovation with a view to achieving

concrete advances in semiconductor technology or preparing next-generation technologies. In

light of this, Integrated Production Facilities and Open EU Foundries should be able to test

and experiment new developments through preferential access to the pilot lines set up by the

Chips for Europe Initiative through fast-tracked applications for their services, without

prejudice to effective access by others.

(24) To allow for a uniform and transparent procedure to attain the status as an Integrated

Production Facility and Open EU Foundry, the decision to grant this status should be adopted

by the Commission following the application by an individual undertaking or a consortium of

several undertakings. The status should be open for both the installation of a new

semiconductor manufacturing facility and the significant scale-up or innovative

transformation of an existing semiconductor manufacturing facility. 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.

14668/22 TP/cb 24

# ANNEX COMPET.2 EN

(24a) In light of the rights 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 requirements set out in this Regulation. If this is no longer the

case, the Commission should have the right to re-examine and if necessary repeal the status

and, accordingly, the rights attached to this status. Any decision on the repeal of the status

should be taken only after consultation of the European Semiconductor Board on the basis of

reasons. Correspondingly, the undertaking operating an Integrated Production Facility or

Open EU Foundry should have the possibility to proactively request a review of the duration

of the status or implementation plans where unforeseen external circumstances, such as

serious disturbances with a direct economic impact on the recognised facility, could have an

impact on its ability to comply with the criteria. To account for the fact that most rights are

granted in the period of establishment, facilities should remain subject to the obligation to

comply with priority rated orders even in case of a repeal of the status for the time remaining

until the status would have expired.

(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 Union 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 measures 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.

14668/22 TP/cb 25

# ANNEX COMPET.2 EN

(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 may appoint an authority which will facilitate and coordinate the permit granting

processes and which may 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 **[16]** and Directive 2000/60/EC of the European Parliament and Council **[17]**, 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 chips 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 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, with due

involvement of stakeholders. In particular, they should discuss and identify the relevant

sectors and products in need of such certification.

**16** Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of
wild fauna and flora.
**17** 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.

14668/22 TP/cb 26

# ANNEX COMPET.2 EN

(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 the semiconductor value chain and effectively tackling possible market

disruptions in a proportionate manner.

(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 and to

enhance the understanding of the dynamics of the semiconductor value chains by integration

of information. The Commission, in consultation with the European Semiconductor Board,

should monitor the semiconductor value chain focusing on early warning indicators in such a

way that it would not represent an excessive administrative burden for undertakings.

(30a) In order to minimise the burden for undertakings responding to the monitoring and to ensure

that the acquired information can be compiled in a meaningful way, the Commission should

provide for standardised means for any information collection. These means should be

secured and ensure that any collected information is treated confidentially.

[(31) deleted]

[(32) deleted]

(33) In order to enable these activities, the national competent authorities of Member States should

establish a contact list of all relevant undertakings operating along the semiconductor supply

chain with a seat on their national territory, which should allow to identify appropriate

respondents of voluntary information requests, while it is not required that this list is

exhaustive. The contact list should be handled in full respect of applicable confidentiality

rules.

14668/22 TP/cb 27

# ANNEX COMPET.2 EN

[(34) deleted]

[(35) deleted]

[(36) deleted]

(37) In order to forecast and prepare for future disruptions of the different stages of the

semiconductor value chain in the Union and of trade within the Union, the Commission

should, in cooperation with the European Semiconductor Board, identify early warning

indicators in the Union risk assessment. Such indicators could include atypical increases in

lead time, 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. Monitoring activities by the Commission should focus on 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, in

cooperation with the Commission, should identify those key market actors in their territory.

14668/22 TP/cb 28

# ANNEX COMPET.2 EN

(39) Under Article 4 of Regulation (EU) 2019/452 establishing a framework for the screening of

foreign direct investments into the Union **[18]**, 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 **[19]**, including semiconductors.

(40) Member States should specifically consider the integrity of the activities carried out by key

markets actors. Such issues could be brought to the attention of the European Semiconductor

Board by the Member State concerned.

(40a) To enable anticipation of potential shortages, national competent authorities should alert the

Commission if they become aware of a risk of serious disruption in the supply of

semiconductors. In order to ensure a coordinated approach, the Commission should, where it

learns of a risk of serious disruption in the supply of semiconductors, including through

information from international partners, convene an extraordinary meeting of the European

Semiconductor Board to discuss the severity of the disruptions and whether it may be

appropriate, necessary and proportionate for Member States to carry out coordinated joint

procurement as a preventive measure, as well as to enter into dialogue with stakeholders, with

a view to identifying and preparing preventive measures. The European Semiconductor Board

and the Commission should, within this dialogue, take into account the views of economic

actors and stakeholders of the semiconductor value chain. 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 with international obligations and

without prejudice to procedural requirements.

**18** 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).
**19** 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).

14668/22 TP/cb 29

# ANNEX COMPET.2 EN

(41) To that end, where the Commission becomes aware of a risk of serious disruption in the

supply of semiconductors, it should carry out an assessment of such risks. If this assessment

produces concrete, serious and reliable evidence of serious disruptions to the supply of

semiconductors or serious obstacles to trade in semiconductors within the Union leading to

significant shortages which prevent the supply, repair and maintenance of essential products

used by critical sectors, for instance medical and diagnostic equipment, the Commission

should be able to present to the Council a proposal to activate the crisis stage. 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 and the feedback of economic actors and

stakeholders of the semiconductor value chain, and should be able to present a proposal to the

Council to prolong the crisis stage. Similarly, the Commission should assess an early

termination of the crisis stage and initiate such procedure where appropriate, after consulting

the European Semiconductor Board.

(41a) Due to the politically sensitive nature of the crisis stage activation and of the potential

measures that may be taken in response thereof, including the significant impact which such

measures might have on private undertakings in the Union, the power to adopt an

implementing act as regards activating, prolonging and terminating the crisis stage in a

semiconductor crisis should be conferred on the Council.

[(42) deleted]

[(43) deleted]

14668/22 TP/cb 30

# ANNEX COMPET.2 EN

(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) 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 to ensure that effective measures to secure the supply of

semiconductors to affected critical sectors can be taken. Appropriate, effective and

proportionate measures should be identified and implemented when the crisis stage is

activated, without prejudice to possible continued international engagement with relevant

partners with the view to mitigating the evolving crisis situation. In addition, the European

Semiconductor Board may advise on the necessity of introducing protective measures

pursuant to Regulation (EU) 2015/479 of the European Parliament and of the Council **[20]** . The

use of all 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 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.

**20** 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).

14668/22 TP/cb 31

# ANNEX COMPET.2 EN

(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 to Directive (EU) No …/… of the European

Parliament and of the Council on the resilience of critical entities **[21]**, in the version in force

on …. For the purposes of this Regulation, defence and security should be additionally

considered as critical sectors. Priority rated orders and common purchasing should only be

enacted for 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.

**21** Directive (EU) No …/… of the European Parliament and of the Council of … on the
resilience of critical entities (OJ L ..., ..., p. ...).

14668/22 TP/cb 32

# ANNEX COMPET.2 EN

(47) The purpose of requests for information from undertakings along the semiconductor supply

chain established in the Union in the crisis stage is to enable precise assessments of the

semiconductor crisis or to identify and prepare potential mitigation or emergency measures at

Union or national level. Such information may include production capability, production

capacity and current primary disruptions and bottlenecks. 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; or reasons that prevent the filling of production capacity. Such

information should be limited to what is necessary to assess the nature of the semiconductor

crisis or potential mitigation or emergency measures at national or Union level. Information

requests should not entail the supply of information the disclosure of which is contrary to the

Member States’ national security interests. The concrete information to be asked should be

developed in cooperation with the European Semiconductor Board, on the basis of prior

advice from a representative number of relevant undertakings through voluntary consultation.

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, intentionally or through gross

negligence, fail to comply or provide incorrect information. Any information acquired should

be used only for the purposes of this Regulation and be subject to confidentiality rules. To

ensure full involvement of the Member States where the undertaking has its production site,

the Commission should forward without delay a copy of the information request to the

national competent authority and, if the national competent authority so requests, share the

acquired information through secure means.

14668/22 TP/cb 33

# ANNEX COMPET.2 EN

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) As an instrument of last resort to ensure that critical sectors can continue to operate in a time

of crisis and only when necessary and proportionate for this purpose, Integrated Production

Facilities and Open EU Foundries could be obliged by the Commission to accept and

prioritise orders of crisis-relevant products, which are either deployed directly by critical

sectors or used in order to produce devices used by critical sectors. Potential beneficiaries of

priority rated orders should be entities from critical sectors or undertakings supplying to

critical sectors whose activities are disrupted or at risk of disruption on account of the

shortage. To ensure that priority rated orders are used only when necessary, they should be

restricted to beneficiaries who were unable to avoid, for instance through their procurement

practices, and to mitigate the impact of the shortage through other means, such as using

existing stockpiles. This obligation may also be extended to other undertakings with respect to

their semiconductor facilities for which they have accepted such possibility in the context of

receiving public support, if such public support was aimed at fostering the ability to increase

production capacity. The decision on a priority rated order should be taken in accordance with

all applicable Union legal obligations, having regard to the circumstances of the case. The

priority rating obligation should take precedence over any performance obligation under

private or public law while it should have regard for the legitimate aims of the undertakings

and the cost and effort required for any change in production sequence. Undertakings may be

subject to penalties if they fail to comply with the obligation for priority rated orders.

14668/22 TP/cb 34

# ANNEX COMPET.2 EN

(49) The undertaking concerned should be obliged to accept and prioritise a priority rated order.

With a view to ensuring that priority rated orders align to the capacities and the production

portfolio of the facility, the Commission should provide the facility concerned with the

opportunity to be heard on the feasibility and details of the priority rated order. The

Commission should not issue the priority rated order where the facility is unable to fulfil the

order even if prioritised, be it due to insufficient production capability or production capacity,

or if the product is not supplied or the service is not performed by the facility or because this

would place an unreasonable economic burden and entail particular hardship on the facility.

(49a) To ensure a transparent and clear framework for the implementation of priority rated orders,

the Commission should be empowered to adopt an implementing act laying down the

practical and operational arrangements. That implementing act should contain safeguards to

ensure that priority rated orders are implemented in compliance with the principles of

neccessity and proportionality, such as a mechanism that takes into account existing orders

and a mechanism to ensure that volumes of priority rated orders do not exceed what is

necessary.

(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.

14668/22 TP/cb 35

# ANNEX COMPET.2 EN

(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 **[22]**, 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.

**22** 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).

14668/22 TP/cb 36

# ANNEX COMPET.2 EN

(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, which are either deployed directly by

critical sectors or used in order to produce devices used by 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. The procedural details should be set out in an

agreement between the Commission and the participating Member States, which may include

the number of contracts to be concluded and the conditions of the common purchasing, such

as prices, delivery timeframes, quantities and opt-in or opt-out clauses. The common

purchasing may result in the signature of one contract covering the needs of all Member

States or several contracts each covering the needs of one or more Member States.

Furthermore, the participating Member States should be entitled to appoint representatives to

provide guidance and advice during the procurement procedures and in the negotiation of the

purchasing agreements. The deployment and use of purchased products should remain within

the remit of the participating Member States.

(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.

14668/22 TP/cb 37

# ANNEX COMPET.2 EN

(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; providing

advice to the Commission in the assessment of information for Integrated Production

Facilities and Open EU Foundries; discussing and preparing the identification of specific

sectors and technologies with potential high social or environmental impact and therefore in

need of certification for green, trusted and secure products and addressing coordinated

monitoring and crisis response. Furthermore, the European Semiconductor Board should

provide advice and recommendations regarding the implementation 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.

14668/22 TP/cb 38

# ANNEX COMPET.2 EN

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

Member State 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. To receive important advice on the activities of the European Semiconductor Board

and allow appropriate participation of stakeholders, the Chair may establish sub-groups and

should be entitled to invite experts and observers to take part in the meetings on an ad hoc

basis or to invite stakeholders, notably 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 Chair 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 Chair should

ensure participation by other Union institutions and bodies as observers in meetings of the

European Semiconductor Board where relevant and appropriate in relation to the monitoring

and crisis response mechanism established 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 the European

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

14668/22 TP/cb 39

# ANNEX COMPET.2 EN

(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 to protect in

particular intellectual property rights and sensitive business information or trade secrets. Any

information acquired in the application as Integrated Production Facility or Open EU

Foundry, in the context of information requests or notification obligations under this

Regulation should be used only for the purposes of this Regulation and should be covered by

the obligation of professional secrecy in accordance with Article 339 of the Treaty, as well as

internal Commission rules on the secure handling of data, notably Commission Decision

2015/443 of 13 March 2015 on Security in the Commission **[23]** . 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 ensure the confidentiality of information obtained in carrying out their

tasks and activities. This should also apply to the European Semiconductor Board and the

Semiconductor Committee 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.

**23** OJ L 72, 17.3.2015, p. 41–52.

14668/22 TP/cb 40

# ANNEX COMPET.2 EN

(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 for non

compliance with information requests and notification obligations under this Regulation

should be laid down, taking into account the different levels of gravity of the non-compliance

between both obligations and with different ceilings for SMEs. Furthermore, periodic penalty

payments should be laid down for non-compliance with the obligation to accept and perform

priority rated orders, which should be proportionate and reflect the price levels on the market

during the last 90 days, with different ceilings for SMEs. Limitation periods should apply for

the impositions of fines and periodic penalty payments, in addition to limitation periods for

the enforcement of penalties. In addition, the Commission should give the concerned

undertaking or representative organisations of undertakings the right to be heard.

[(61) deleted]

(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, so that the objectives of the Initiative are achieved. Furthermore, implementing

powers should be conferred on the Commission as regards laying down the practical and

operational arrangements for the functioning of priority rated orders, 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 **[24]** of the European Parliament and of the Council.

**24** 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).

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(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.

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HAVE ADOPTED THIS REGULATION:

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

_Article 1_

_Subject matter and objectives_

1. This Regulation establishes a framework for strengthening the semiconductor ecosystem 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 and the resilience of

the semiconductor ecosystem 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.

2. The first objective of this Regulation 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 with a view to increasing robustness to counter disruptions.

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_Article 2_

_Definitions_

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

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

(a) a material, either elemental or compound, 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’;

(2a) ‘quantum chip’ means a device that processes information at the level of individual

quantum systems, with a varying level of component integration on chip depending on

the quantum platform used, including platforms for quantum computing,

communication, sensing or metrology;

(3) ‘technology node’ means a specific semiconductor manufacturing process and its design

rules;

(4) ‘semiconductor supply chain’ means the system of activities, organisations, actors,

technology, information, resources and services involved in the production of

semiconductors, including raw and processed materials, manufacturing equipment,

design, including related software development, fabrication, assembly, testing and

packaging;

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(5) ‘semiconductor value chain’ means the set of activities in relation to a semiconductor

product from its conception to its end use, including raw and processed materials,

manufacturing equipment, research, development and innovation, design, fabrication,

testing, assembly and packaging to embedding and integration in end products, as well

as end-of-life processes, such as reuse, disassembly and recycling;

(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, validate and calibrate a product or system with the model

assumptions;

[(7) deleted]

(8) ‘small and medium-sized enterprises’ or ‘SMEs’ means small and medium-sized

enterprises as defined in Article 2 of the Annex to Commission Recommendation

2003/361/EC **[25]** ;

                                (9) ‘middle capitalisation company’ or ‘mid cap’ means an enterprise that is not a SME and

that employs a maximum of 3 000 persons, where the headcount of staff is calculated in

accordance with Articles 3 to 6 of the Annex to Recommendation 2003/361/EC;

(9a) ‘small mid-cap’ means an entity that is not an SME and that has up to 499 employees,

where the headcount of staff is calculated in accordance with Articles 3 to 6 of the

Annex to Recommendation 2003/361/EC;

**25** Commission Recommendation of 6 May 2003 concerning the definition of micro, small and
medium-sized enterprises (OJ L 124, 20.5.2003, p. 36).

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(10) ‘first-of-a-kind facility’ means a semiconductor manufacturing facility which provides

innovation with regard to the manufacturing process or final product that is not yet

substantively present or committed to be built within the Union. This includes, but is

not limited to, innovation that concerns improvements in computing power or in the

level of security, safety or reliability, energy and environmental performance, the

technology node or substrate material, or in the implementation of production processes

that lead to efficiency gains;

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

and semiconductor technologies that go beyond the state of the art in offering

significant improvements in computing power or in the level of security, safety or

reliability, energy and environmental performance, the technology node or substrate

material, or in the implementation of production processes that lead to efficiency gains;

            (11a) ‘cutting edge semiconductor technologies’ means the state of the art of innovation in

chips and semiconductor technologies when the projects are carried out;

(11b) ‘semiconductor manufacturing’ refers to any of the stages of production and processing

of semiconductor wafers, including substrate materials, front-end and back-end,

necessary to deliver a finished semiconductor product;

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

(13) ‘back-end’ means the packaging, assembly and test of the semiconductor product;

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

semiconductors are incorporated;

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

reliable functioning of which is essential for the supply of semiconductors;

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(16) ‘critical sector’ means any sector referred to in the Annex to Directive (EU) No …/… of

the European Parliament and of the Council on the resilience of critical entities, in the

version in force on …, as well as the defence and security sectors;

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

materials required to produce semiconductors or intermediate products, that are affected

by a semiconductor crisis and relevant to ensure crucial functions of a critical sector;

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

facility under optimal resources;

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

## **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.

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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 1.25 billion respectively. This funding shall

be implemented in accordance with Regulation (EU) No 2021/695 and Regulation (EU) No

2021/694.

_Article 4_

_Objectives of the Initiative_

1. The general objective of the Initiative is to support large-scale technological capacity building

and related research and innovation activities throughout the Union’s semiconductor value

chain to enable development and deployment of cutting-edge and next generation

semiconductor and quantum technologies that will reinforce advanced design, systems

integration and chip production capabilities in the Union. It shall also contribute to the

achievement of the green and digital transitions, in particular by reducing the climate impact

of electronic systems, improving the sustainability of next generation chips and strengthening

the circular economy processes, and by addressing “security by design” that defends against

cybersecurity threats.

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

(a) operational objective 1: building up advanced large-scale design capacities for

integrated semiconductor technologies;

(b) operational objective 2: enhancing existing and developing new advanced pilot lines to

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

technologies;

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(c) operational objective 3: building advanced technology and engineering capacities for

accelerating the innovative development of quantum chips and associated

semiconductor technologies;

(d) operational objective 4: creating a network of competence centres across the Union by

enhancing existing or creating new facilities;

(e) operational objective 5: facilitating access to debt financing and equity in particular for

start-ups, scale-ups, SMEs and small mid-caps in the semiconductor value chain,

through a blending facility under the InvestEU Fund and via the European Innovation

Council (the ‘Chips Fund’).

3. The operational objectives referred to in paragraph 2 may include capacity building activities

and related research and innovation activities. All capacity building activities shall be

financed through the Digital Europe Programme and the related research and innovation

activities shall be funded through the Horizon Europe programme.

_Article 5_

_Content of the Initiative_

1. The Initiative shall:

(a) under operational objective 1:

(1) build up and maintain a virtual design platform, available across the Union,

integrating existing and new design facilities with extended libraries and

Electronic Design Automation (EDA) tools;

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(2) extend the design capabilities by fostering innovative developments, such as

processor architectures based on open-source Instruction Set Architectures (e.g.

RISC-V), architectures that are built by “security by design” and other innovative

architectures, new types of memories, processors, accelerators or low power

chips;

(3) enlarge the semiconductor ecosystem by integrating sectors, such as health,

mobility, energy, telecommunications, security, defence and space, contributing to

the green, digital and innovation agendas of the Union;

(b) under operational objective 2:

(1) strengthen capabilities in next generation chip production technologies, by

integrating research and innovation activities and preparing the development of

future technology nodes, such as leading-edge nodes below two nanometres, Fully

Depleted Silicon on Insulator (FD-SOI) at 10 nanometres and below, new

semiconductors materials or heterogeneous systems integration and advanced

module assembly and packaging for high, medium or low volumes;

(2) support large-scale innovation through access to new or existing pilot lines for

experimentation, test, validation, final device reliability, process control 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, cyber security, functional safety, 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, technological

solutions for increased sustainability and circularity of electronic components and

systems;

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(3) provide support to Integrated Production Facilities and Open EU Foundries

through preferential access to the new pilot lines;

(c) under operational objective 3:

(1) build up innovative design libraries for quantum chips;

(2) support pilot lines for the integration of quantum circuits and control electronics;

(3) develop testing and experimentation facilities for testing and validating advanced

quantum chips produced by the pilot lines;

(d) under operational objective 4:

(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;

(2) address the skills shortage and mismatch by attracting and mobilising new talent

and supporting the emergence of a suitably skilled workforce for strengthening the

semiconductor ecosystem, including by offering suitable training opportunities for

students, for example dual study programmes and student orientation, in addition

to reskilling and upskilling of workers;

(e) under operational objective 5:

(1) improve the leverage effect of the Union budget spending and achieve a higher

multiplier effect in terms of attracting private-sector financing;

(2) provide support to companies facing difficulties in accessing finance, and address

the need to underpin the economic resilience of the Union and its Member States;

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(3) accelerate investment in the field of chip design, semiconductor manufacturing

and integration technologies, and leverage funding from both the public and the

private sectors, while increasing the security of supply and the resilience of the

semiconductor ecosystem for the whole semiconductor value chain.

_Article 5a_

_Implementation, monitoring and reporting_

1. The operational objectives 1 to 4 under the Initiative shall be entrusted to the Chips Joint

Undertaking referred to in Council Regulation XX/XX amending Council Regulation (EU)

2021/2085 and implemented by actions set out in the work programme of the Chips Joint

Undertaking.

[2. deleted]

3. In order to ensure effective implementation, monitoring and evaluation of the Initiative, the

annual activity report of the Chips Joint Undertaking shall include information on matters

related to operational objectives 1 to 4, on the basis of the measurable indicators set out in

Annex II.

4. The Commission shall inform the European Semiconductor Board on progress in the

implementation of operational objective 5 on a regular basis.

_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.

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_Article 7_

_European Chips Infrastructure Consortium_

1. For the purpose of implementing actions and other related tasks of the Initiative that are

implemented through the Chips Joint Undertaking, a legal entity may be established in the

form of a European Chips Infrastructure Consortium (‘ECIC’) under the conditions set out in

this Article. More than one ECIC may be established under the conditions set out in this

Article.

2. An ECIC shall:

(a) have legal personality from the date of entry into force of the Commission decision

referred to in paragraph 6;

(aa) have in each Member State the most extensive legal capacity accorded to legal entities

under the law of that Member State. It may, in particular, acquire, own and dispose of

movable, immovable and intellectual property, conclude contracts and be a party to

legal proceedings;

(b) have a statutory seat, which shall be located on the territory of a Member State;

(c) be set up by at least three members (‘founding members’), which can be Member States,

public or private legal entities from at least three Member States, or a combination

thereof;

(ca) ensure that, following the adoption of a decision setting up an ECIC, other Member

States may join as members at any time. Other public or private legal entities may join

as members at any time on fair and reasonable terms specified in the Statutes. Member

States that do not provide a financial or a non-financial contribution may join the ECIC

as observers without voting rights, by notifying the ECIC;

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(d) have a coordinator.

3. The coordinator of a potential ECIC, on behalf of all the founding members, shall submit an

application to the Commission in writing which shall contain the following:

(a) a request to the Commission to set up an ECIC, including a list of founding members;

(b) the draft Statutes of the ECIC that shall include at least the following elements: duration

and the procedure for the winding-up in accordance with Article 7c; liability regime in

accordance with Article 7a; statutory seat and name; scope; membership, including the

conditions of and the procedure for changes in membership; budget including the

arrangements by which the respective financial and in-kind contributions from its

members will be called upon; ownership of the results; governance, including decision

making process and specific role and, if applicable, voting rights;

(c) a declaration by the host Member State whether it recognises the ECIC as an

international body within the meaning of Articles 143, point (g), and 151(1), point (b),

of Council Directive 2006/112/EC and as international organisation within the meaning

of Article 12(1), point (b), of Council Directive 2008/118/EC, as of its setting up. The

limits and conditions of the exemptions provided for in those provisions shall be laid

down in an agreement between the members of the ECIC.

4. The Commission shall assess the applications on the basis of all of the following criteria:

(a) the appropriate competences, know-how and capabilities of the proposed ECIC’s

founding members on semiconductors and those to be acquired, developed or assigned

to the proposed ECIC;

(b) the foreseen management capacity, staff and resources necessary to carry out its

statutory purpose;

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(c) the operational and legal means to apply the administrative, contractual and financial

management rules laid down at Union level;

(d) the financial viability corresponding to the level of Union funds it will be called upon to

manage and demonstrated, where appropriate, through accounting documents and bank

statements;

(e) the contributions of the members of the ECIC that would be made available to the

ECIC, and related arrangements;

(ea) the openness of the ECIC to new members;

(f) the ability of the ECIC to ensure coverage of the needs of the Union’s semiconductor

value chain.

5. The Commission shall adopt an implementing act based on the criteria set out in paragraph 4

to either recognise the applicant as an ECIC or reject the application, and notify the founding

members. Those implementing acts shall be adopted in accordance with the examination

procedure referred to in Article 33(2).

[6. deleted]

[7. deleted]

8. Any amendment to the Statutes shall be submitted to the Commission by the ECIC within ten

days after their adoption.

8a. The Commission may raise an objection to such amendment within sixty days from the

submission and give reasons why the amendment does not meet the requirements of this

Regulation.

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8b. The amendment shall not take effect before the period for objecting has expired or has been

waived by the Commission or before an objection raised has been lifted.

8c. The application for the amendment shall contain the following:

(a) the text of the amendment proposed or, where appropriate, as adopted, including the

date on which it enters into force;

(b) the amended consolidated version of the Statutes.

9. An 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. The Commission shall send the

ECICs’ annual activity reports to the European Semiconductor Board without undue delay.

10. In case a Member State considers that the ECIC refuses to accept a new member to the

consortium without reasonably justifying such a refusal on the basis of the fair and reasonable

terms specified in the Statutes, it may bring the matter to the attention of the Public

Authorities Board of the Chips Joint Undertaking which shall in accordance with Article XX

of Council Regulation (EU) 2021/2085 establishing the Joint Undertakings under Horizon

Europe, as amended, if necessary, request that the ECIC takes remedial action such as an

amendment to the Statutes.

_Article 7a_

_Liability of the ECIC_

1. An ECIC shall be liable for its debts.

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2. The financial liability of the members for the debts of the ECIC shall be limited to their

respective contributions provided to the ECIC. The members may specify in the Statutes that

they will assume a fixed liability above their respective contributions or unlimited liability.

3. The Union shall not be liable for an ECIC’s debts.

_Article 7b_

_Applicable law and jurisdiction of the ECIC_

1. The setting-up and internal functioning of an ECIC shall be governed:

(a) by Union law, in particular this regulation;

(b) by the law of the State where the ECIC has its statutory seat in the case of matters not,

or only partly, regulated by acts referred to in point (a);

(c) by the Statutes and their implementing rules.

2. Without prejudice to the cases in which the Court of Justice of the European Union has

jurisdiction under the Treaties, the law of the State where the ECIC has its statutory seat shall

determine the competent jurisdiction for the resolution of disputes among the Members in

relation to the ECIC, between the members and the ECIC, and between an ECIC and third

parties.

_Article 7c_

_Winding up of the ECIC_

1. The Statutes shall determine the procedure to be followed for the winding-up of an ECIC

following a decision of its members.

2. The insolvency rules of the State where the ECIC has its statutory seat shall apply in the event

that the ECIC is unable to pay its debts.

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_Article 8_

_European network of competence centres in semiconductors_

1. For the purpose of the Initiative’s operational objective 4, a European network of competence

centres in semiconductors, integration technologies and system design (the ‘network’) shall be

established.

2. Competence centres shall perform all or some of the following activities to the benefit of the

Union industry, in particular SMEs and mid-caps, as well as Research and Technology

Organisations, universities and the public sector:

(a) providing access to design services and design tools under the Initiative’s operational

objective 1, as well as to the pilot lines supported under the Initiative’s operational

objective 2;

(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 available resources of the network, as well as encouraging an increase in the number

of students and the quality of education in relevant fields of studies at European

universities;

(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;

(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;

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(e) developing and managing specific training actions on semiconductor technologies and

on their applications to support the development of the talent pool in the Union.

3. Member States shall designate candidate competence centres in accordance with their national

procedures, administrative and institutional structures through an open and competitive

process. The Work Programme of the Chips Joint Undertaking shall set the procedure for

establishing competence centres, including selection criteria, and further tasks and functions

of the centres with respect to the implementation of the actions under the Initiative, as well as

the procedure for establishing the network. The Chips Joint Undertaking shall decide on the

selection of the competence centres forming the network and on the establishment of the

network. Member States and the Commission shall maximise synergies with existing

competence centres established under other EU initiatives such as the European Digital

Innovation Hubs.

[4. deleted]

_[Article 9]_

_[transferred to Article 5a]_

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## **C HAPTER III** **S ECURITY OF S UPPLY AND R ESILIENCE**

_Article 10_

_Integrated Production Facilities_

1. Integrated Production Facilities are first-of-a-kind semiconductor manufacturing facilities in

the Union whose production capacity is used for their own purposes and that contribute to the

security of supply and the resilience of the semiconductor ecosystem in the Union.

2. An Integrated Production Facility shall qualify as a first-of-a-kind facility when submitting its

application in accordance with Article 12(1).

[(a) deleted]

2a. An Integrated Production Facility shall meet the following requirements:

(b) its establishment, operation or production have positive spill-over effects on the Union’s

semiconductor value chain, beyond the undertaking or the Member State concerned,

leading to a positive impact on the security of supply and the resilience of the

semiconductor ecosystem, increasing qualified workforce and contributing to the

Union’s digital and green transition;

(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;

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(d) it invests in the Union in continued innovation with a view to achieving concrete

advances in semiconductor technology or preparing next-generation technologies.

3. For the purpose of investing in continued innovation according to paragraph 2, point (d), the

Integrated Production Facility shall have preferential access to the pilot lines set up under

Article 5(1), point (b). Any such preferential access shall neither exclude nor prevent 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 manufacturing facilities in the Union

that offer production capacity to unrelated undertakings and thereby contribute to the security

of supply and the resilience of the semiconductor ecosystem in the Union.

2. An Open EU Foundry shall qualify as a first-of-a-kind facility when submitting its application

in accordance with Article 12(1).

[(a) deleted]

2a. An Open EU Foundry shall meet the following requirements:

(b) its establishment, operation or production have positive spill-over effects on the Union’s

semiconductor value chain, beyond the undertaking or the Member State concerned,

leading to a positive impact on the security of supply and the resilience of the

semiconductor ecosystem, increasing qualified workforce and contributing to the

Union’s digital and green transition, taking into account in particular the extent to which

it offers production capacity to undertakings not related to the facility, if there is

sufficient demand;

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(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 invests in the Union in continued innovation with a view to achieving concrete

advances in semiconductor technology or preparing next-generation technologies.

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 continued innovation according to paragraph 2, point (d), the

Open EU Foundry shall have preferential access to the pilot lines set up under Article 5(1),

point (b). Any such preferential access shall neither exclude nor prevent effective access to

the pilot lines by other interested undertakings.

_Article 12_

_Status procedure_

1. Any undertaking or any consortium of undertakings may submit an application to the

Commission to grant a project the status of Integrated Production Facility or Open EU

Foundry.

2. The Commission shall, taking into account the views of the European Semiconductor Board,

assess the application through a fair and transparent process based on the following elements:

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

commitment to the requirements set out in Article 10(2a) or in Article 11(2a);

(b) a business plan evaluating the financial viability of the project, taking into account its

entire lifetime, including information on any planned public support;

(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 support the

set-up of such a facility.

2a. The Commission shall decide on the application. This decision shall determine the duration of

the status based on the predicted lifetime of the project. The Commission shall adopt its

decision and notify the applicant within six months after receipt of the complete application.

Where the Commission considers that information provided by the application is incomplete,

it shall give the applicant the opportunity to submit the additional information required to

complete the application without undue delay.

3. The Commission shall monitor the progress achieved in the establishment and operation of

the Integrated Production Facilities and the Open EU Foundries and inform the European

Semiconductor Board on a regular basis.

Where the Commission finds that a facility no longer fulfils the requirements set out in

Articles 10(2a) or 11(2a) respectively, it shall give the operator of the facility the opportunity

to comment and to propose appropriate measures.

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3a. The operator of the facility may request the Commission to review the duration of the status

or to modify its implementation plans with regard to compliance with the requirements under

Articles 10(2a) or 11(2a) respectively, where it considers it duly justified on account of

unforeseen external circumstances. On the basis of the review, the Commission may revise

the duration of the status granted in accordance with paragraph 2a or accept the modification

of the implementation plans.

4. Where the recognition was based on an application containing incorrect information, or

where, despite completing the procedure in paragraph 3, the facility does not fulfil the

requirements set out in Articles 10(2a) or 11(2a) respectively, the Commission may repeal the

decision recognising the status of an Integrated Production Facility or an Open EU Foundry.

Before taking such a decision, the Commission shall consult the European Semiconductor

Board after providing it with the reasons for such a repeal.

5. Facilities which are no longer Integrated Production Facilities or Open EU Foundries shall

lose all rights linked to the recognition of this status arising from this Regulation. However,

facilities which are no longer Integrated Production Facilities or Open EU Foundries shall

remain subject to the obligation set out in Article 21(1) for a period equivalent to that which

was initially foreseen when the status was granted in accordance with paragraph 2a, or, where

the status was reviewed, the revised duration in accordance with paragraph 3a.

_Article 13_

_Union interest and public support_

1. Integrated Production Facilities and Open EU Foundries shall, by contributing to the security

of supply of semiconductors and the resilience of the semiconductor ecosystem in the Union,

be considered to be in the Union interest.

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2. In order to contribute to the security of supply and the resilience of the semiconductor

ecosystem in the Union, Member States may, without prejudice to Articles 107 and 108 of the

Treaty, apply support measures and provide for administrative support to Integrated

Production Facilities and Open EU Foundries in accordance with Article 14.

_Article 14_

_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 in full

respect of the Member States’ law and procedures.

2. Integrated Production Facilities and Open EU Foundries shall be allocated the status of the

highest national significance possible, where such distinction exists, 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 and the resilience of the semiconductor ecosystem

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 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.

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4. For each Integrated Production Facility and Open EU Foundry, each Member State concerned

may designate an authority responsible for facilitating and coordinating administrative

applications related to planning, construction and operation. Each designated authority may

appoint a coordinator who shall serve as the single point of contact for the Integrated

Production Facility or Open EU Foundry. 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 designated authorities may 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_

1. For the purpose of this Regulation, monitoring of the semiconductor value chain shall consist

of the following activities:

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

(b) monitoring by Member States of the integrity of activities carried out by the key market

actors identified pursuant to Article 17.

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The Commission, after consulting the European Semiconductor Board, shall define the

frequency of the monitoring on the basis of the needs of the semiconductor value chain.

The Commission shall coordinate the activities related to monitoring of the semiconductor

value chain, based on information collected through the Commission’s services, national

competent authorities or other sources, such as international partners.

1a. The Commission shall provide for standardised and secure means for the information

collection and processing for the purpose of paragraph 1(a), with due regard to minimising the

administrative burden on SMEs.

1b. For the purpose of paragraph 1c, national competent authorities shall set up and maintain a list

of contacts including all relevant undertakings operating along the semiconductor supply

chain established in their national territory. The Commission shall provide for a standardised

format for the list of contacts with a view to ensuring interoperability.

1c. On the basis of the means provided under paragaph 1a, the Commission shall launch

voluntary requests for the purpose of carrying out monitoring activities in accordance with

paragraph 1(a). The Commission shall provide for secure means for the data transmission.

1e. On the basis of the information collected through the activities under paragraph 1, the

Commission shall provide a report of the aggregated findings. The Commission shall provide

the report to the European Semiconductor Board.

1f. Any acquired information shall be handled in accordance with Article 27.

[2. deleted]

[3. deleted]

[4. deleted]

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# ANNEX COMPET.2 EN

[5. deleted]

[6. deleted]

[7. deleted]

_Article 16_

_Early warning indicators_

1. The Commission shall develop a list of early warning indicators in cooperation with the

European Semiconductor Board with a view to identifying factors that may disrupt,

compromise or negatively affect the supply of or trade in semiconductors within the Union.

The list shall be made public.

1a. Monitoring of the early warning indicators shall be carried out through voluntary information

requests, in accordance with the procedure set out in Article 15(1a) and (1c).

2. The Commission, in cooperation with the European Semiconductor Board, shall review the

list of early warning indicators on a regular basis, at least every two years.

[3. deleted]

_Article 17_

_Key market actors_

1. Member States, in cooperation with the Commission, shall identify key market actors along

the semiconductor supply chains established in their national territory, taking into account the

following elements:

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(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. Member States shall monitor the integrity of the activities carried out by key market actors,

reporting on major events that may hinder the regular operations of these activities.

## **S ECTION 2** **A LERTING AND C RISIS**

_Article 17a_

_Alerting and preventive action_

1. Where a national competent authority becomes aware of a risk of serious disruption in the

supply of semiconductors, it shall alert the Commission without undue delay.

2. Upon alert pursuant to paragraph 1, or where the Commission learns of a risk of serious

disruption in the supply of semiconductors, including from international partners, it shall

carry out the following preventive actions:

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

the following actions:

(1) discussing the severity of the disruptions to the supply of semiconductors;

(2) discussing whether it may be appropriate, necessary and proportionate for

Member States to jointly purchase semiconductors, intermediate products or raw

materials as a preventive measure (‘coordinated procurement’);

(3) entering into dialogue with stakeholders with a view to identifying and preparing

preventive measures;

(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.

3. The coordinated procurement that may be carried out following the discussions referred to in

paragraph 2, point (a)(2), shall be carried out by Member States in accordance with the rules

set out in Article 39 of Directive 2014/24/EU of the European Parliament and of the

Council **[26]** .

**26** 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).

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# ANNEX COMPET.2 EN

_Article 18_

_Activation of the crisis stage_

1. Where the Commission becomes aware of a risk of serious disruption in the supply of

semiconductors pursuant to Article 17a(2), it shall assess whether the conditions for activating

the crisis stage are met. Where such assessment provides concrete and reliable evidence of

serious disruptions in the supply of semiconductors or serious obstacles to trade in

semiconductors within the Union leading to significant shortages preventing the supply, repair

and maintenance of essential products used by critical sectors, and following the consultation

of the European Semiconductor Board, the Commission may propose to the Council to

activate the crisis stage.

The Council, acting by qualified majority, may activate the crisis stage by means of a Council

implementing act. The duration of the crisis stage shall be limited and specified in the

implementing act. The Commission shall report on a regular basis to the European

Semiconductor Board, and at least every three months, on the state of the crisis.

[2. deleted]

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 crisis stage

should be prolonged. Where the Commission considers that a prolongation is necessary to

duly address the semiconductor crisis in the Union, the Commission shall propose to the

Council to prolong the crisis stage. The Council, acting by qualified majority, may prolong

the crisis stage by means of a Council implementing act. The duration of the prolongation

shall be limited and specified in the Council implementing act. The Commission may propose

to prolong the crisis stage repeatedly where this is duly justified.

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3a. During the crisis stage, the Commission shall, after consulting the European Semiconductor

Board, assess the appropriateness of an early termination of the crisis stage. If the

Commission considers that an early termination is needed, it shall propose to the Council to

terminate the crisis stage. The Council may terminate the crisis stage by means of a Council

implementing act.

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 inform in a timely

manner about any national measures taken with regard to the semiconductor supply chain

within the European Semiconductor Board.

5. Upon expiry of the period for which the crisis stage is activated or in case of its early

termination pursuant to paragaph 3a, the measures taken in accordance with Articles 20, 21

and 22 shall cease to apply immediately.

## **S ECTION 3** **S HORTAGE R ESPONSE**

_Article 19_

_Emergency toolbox_

1. Where the crisis stage is activated pursuant to Article 18(2) and where necessary in order to

address the semiconductor crisis in the Union, the Commission may 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. deleted]

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3. Where the crisis stage is activated pursuant to Article 18(2) and where appropriate in order to

address the semiconductor crisis in the Union, the European Semiconductor Board may assess

the expected impact of the possible imposition of protective measures, considering 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.

4. The use of the measures referred to in paragraph 1 shall be proportionate and restricted to

what is necessary for addressing serious disruptions affecting critical sectors in the Union and

must be in the best interest of the Union. The use of 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.

_Article 20_

_Information gathering_

1. Where the crisis stage is activated pursuant to Article 18(2), the Commission may request

undertakings operating along the semiconductor supply chain to provide information about

their production capabilities, production capacities and current primary disruptions. The

requested information shall be limited to what is necessary to assess the nature of the

semiconductor crisis or to identify and assess potential mitigation or emergency measures at

national or Union level. The information requests shall not entail the supply of information

the disclosure of which would be contrary to the Member States’ national security interests.

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1a. Before launching a request for information, the Commission shall carry out a voluntary

consultation of a representative number of relevant undertakings with a view to identifying

the appropriate and proportionate content of such a request. The Commission shall develop

the request for information in cooperation with the European Semiconductor Board.

1b. The Commission shall use the secure means provided for in Article 15(1a) to launch the

request for information. For this purpose, national competent authorities shall transmit to the

Commission the list of contacts developed under Article 15(1b). Any acquired information

shall be handled in accordance with Article 27. The Commission shall without delay forward

a copy of the request for information to the national competent authority of the Member State

in whose territory the production site of the addressed undertaking is situated. If the national

competent authority so requires, the Commission shall transmit the information acquired from

the respective undertaking in accordance with Union law.

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.

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4. Should an undertaking supply, intentionally or through gross negligence, 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, except where the undertaking does not supply the requested

information on duly justified grounds.

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 the crisis stage is activated pursuant to Article 18(2), the Commission may oblige

Integrated Production Facilities and Open EU Foundries to accept and prioritise an order of

crisis-relevant products, which are either deployed directly by critical sectors or used in order

to produce devices used by critical sectors (‘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 on other undertakings with respect to

their semiconductor manufacturing facilities for which they 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.

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3a. Priority rated orders shall be restricted to beneficiaries whose activities are disrupted or at risk

of disruption and who were unable to avoid and to mitigate the impact of the shortage through

other means. The Commission may request from a beneficiary to submit appropriate evidence

thereof.

4. The obligations under paragraph 1, 2 and 3 shall be enacted by the Commission via decision.

Before issuing the individual decisions, the Commission shall consult the European

Semiconductor Board on the use of priority rated orders for the concerned critical sector. 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. Before issuing priority rated orders in accordance with paragraph 1, the Commission shall

give the envisaged recipient of a priority rated order the opportunity to be heard on the

feasibility and details of the order. The Commission shall not issue the priority rated order

when:

(a) the undertaking is unable to perform the priority rated order on account of insufficient

production capability or production capacity, even under preferential treatment of the

order;

(b) acceptance of the order would place an unreasonable economic burden and entail

particular hardship for the undertaking.

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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.

7. The Commission shall adopt an implementing act laying down the practical and operational

arrangements for the functioning of priority rated orders. That implementing act shall be

adopted in accordance with the examination procedure referred to in Article 33(2).

_Article 22_

_Common purchasing_

1. Where the crisis stage is activated pursuant to Article 18(2), the Commission may, upon the

request of two or more Member States, act as a central purchasing body on behalf of all

Member States willing to participate (‘participating Member States’) for their public

procurement of crisis-relevant products which are either deployed directly by critical sectors

or used in order to produce devices used by critical sectors (‘common purchasing’).

Participation in the common purchasing is without prejudice to other procurement procedures.

2. The Commission shall assess the utility, necessity and proportionality of the request, taking

into account the views of the European Semiconductor Board. Where the Commission intends

not to follow the request, it shall inform the Member States concerned and the European

Semiconductor Board and give reasons for its refusal.

3. The Commission shall draw up a proposal for an agreement to be signed by the participating

Member States. This agreement shall organise in detail the common purchasing referred to in

paragraph 1 and establish the mandate for the Commission to act on behalf of the participating

Member States.

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4. Procurement under this Regulation shall be carried out by the Commission in accordance with

the rules set out in Regulation (EU, Euratom) 2018/1046 of the European Parliament and of

the Council **[27]** (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 financing of the production or the

development of such products in exchange for a priority right to the result.

5. Where the procurement of crisis-relevant products includes financing from the Union budget,

specific conditions may be set out in specific agreements with economic operators.

6. The Commission shall carry out the procurement procedures and conclude the contracts with

economic operators on behalf of the participating Member States. The Commission shall

invite the participating Member States to appoint representatives to take part in the

preparation of the procurement procedures. The deployment or resale of the purchased

products shall remain the responsibility of the participating Member States.

7. The deployment of common purchasing pursuant to this Article is without prejudice to other

instruments provided in the Financial Regulation.

**27** 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).

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## **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, assistance

and recommendations 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) providing advice to the Commission in the assessment of the applications for Integrated

Production Facilities and Open EU Foundries;

(c) discussing and preparing the identification of specific sectors and technologies with

potential high social or environmental impact and therefore in need of certification as

green, trusted and secure products;

(d) addressing monitoring and crisis response issues;

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(e) providing advice and recommendations regarding the implementation of this

Regulation, facilitating 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.

5. The European Semiconductor Board may hold exchanges with interested third parties to

receive information for its activities to an appropriate extent.

_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.

2. Each Member State shall appoint a high-level representative to the European Semiconductor

Board. Where relevant as regards the function and expertise, a Member State may have more

than one representative in relation to different tasks of the European Semiconductor Board.

Each member of the European Semiconductor Board shall have an alternate. As far as

possible, the European Semiconductor Board shall deliberate by consensus. If consensus

cannot be reached, the European Semiconductor Board shall deliberate by a majority of two

thirds of the Member States. Each Member State shall have only one vote regardless the

number of representatives.

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3. At its first meeting, on a proposal by and in agreement with the Commission, the European

Semiconductor Board shall adopt its rules of procedure.

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 value chain, 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.

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4. The Chair may invite experts with specific expertise to the subject matter, including from

stakeholder organisations, and appoint observers to take part in the meetings, including upon

suggestion from members. The Chair may facilitate exchanges between the European

Semiconductor Board and other Union bodies, offices, agencies, expert and advisory groups.

To that end, the Chair shall invite a representative from the European Parliament as an

observer to the European Semiconductor Board. The Chair shall ensure the participation of

relevant other Union institutions and bodies as observers to the European Semiconductor

Board with respect to meetings concerning Chapter IV on _monitoring and crisis response_ .

4a. 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.

## **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.

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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 or more than one national competent authority, and the national single point of

contact, including their precise tasks and responsibilities under this Regulation, their contact

information and any subsequent changes thereto.

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.

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

_Article 27_

_Treatment of confidential information_

-2. Information acquired in the course of implementing this Regulation shall be used only for the

purposes of this Regulation and shall be protected by the relevant Union and national

legislation.

-1. Information acquired pursuant to Articles 12, 15, 20 and 21(3) shall be subject to professional

secrecy and shall enjoy the protection afforded by the rules applicable to the Union

institutions and the respective national law.

1. The Commission and the national authorities, their officials, servants and other persons

working under the supervision of these authorities shall ensure the confidentiality of

information obtained in carrying out their tasks and activities. This obligation also applies 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).

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2. The Commission and Member States may exchange, where necessary, information acquired

pursuant to Articles 15 and 20 solely in an aggregated form preventing disclosure of any

conclusions on the specific situation of a company in a Member State with competent

authorities of third countries with which they have agreed on bilateral or multilateral

confidentiality arrangements to provide an adequate level of confidentiality. Before the

Commission or Member States engages in the information exchange, they shall notify the

European Semiconductor Board of the information to be shared and the respective

confidentiality arrangement.

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 after

providing an opportunity to be heard pursuant to Article 31:

(a) impose fines, where an undertaking, intentionally or through gross negligence, supplies

incorrect, incomplete or misleading information in response to a request made pursuant

to 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), except where the undertaking does not

supply the requested information on duly justified grounds;

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(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.

The Commission shall inform the European Semiconductor Board on all decisions taken in

accordance with this paragraph.

2. Fines imposed in the cases referred to in paragraph 1, point (a), shall not exceed

EUR 300 000. Fines imposed in the cases referred to in paragraph 1, point (b), shall not

exceed EUR 150 000. If the concerned undertaking is an SME, the fines imposed shall not

exceed EUR 50 000.

3. Periodic penalty payments imposed in the case referred to in paragraph 1, point (c), shall not

exceed 1.5 % of the current daily turnover for each working day of non-compliance with the

obligation pursuant to Article 21 calculated from the date established in the decision in which

the priority rated order was issued. If the concerned undertaking is an SME, the periodic

penality payments imposed shall not exceed 0.5 % of the current daily turnover.

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, including in case of non-compliance with the

priority rated order in accordance with Article 21 whether the undertaking has partially

complied with the priority rated order, 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.

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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

last infringement is committed.

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.

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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.

_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.

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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 Article 28, the Commission shall give the undertaking

concerned the opportunity of being heard on:

(a) preliminary findings of the Commission, including any matter to which the Commission

has taken objections;

(b) measures that the Commission may intend to take in view of the preliminary findings

pursuant to point (a) of this paragraph.

2. Undertakings concerned may submit their observations to the Commission’s preliminary

findings pursuant to point (a) of paragraph 1 within a time limit which shall be fixed by the

Commission in its preliminary findings and which may not be less than 14 days.

3. The Commission shall base its decisions only on objections on which undertakings concerned

have been able to comment.

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4. The rights of defence of the undertaking concerned shall be fully respected in any

proceedings. The undertaking concerned shall be entitled to have access to the Commission's

file under the terms of a negotiated disclosure, subject to the legitimate interest of

undertakings in the protection of their business secrets. The right of access to the file shall not

extend to confidential information and internal documents of the Commission or the

authorities of the Member States. In particular, the right of access shall not extend to

correspondence between the Commission and the authorities of the Member States. Nothing

in this paragraph shall prevent the Commission from disclosing and using information

necessary to prove an infringement.

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## **C HAPTER VII** **C OMMITTEE P ROCEDURE**

_[Article 32]_

_[deleted]_

_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.

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## **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 paragraph 2, points (a) to (d), of Article 4 of Regulation

XX/XX of the European Parliament and of the Council.’;

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(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 8 238 000 000 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 1 250 000 000 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.’

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(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

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(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 Article 5 of Regulation XX/XX.’;

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

‘Specific Objective 6 – Semiconductors

Measurable indicators to monitor the implementation and to report on the progress of the

Specific Objective 6 are provided in Annex II of Regulation XX/XX.’;

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

‘Specific Objective 6 – Semiconductors

Synergies 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.

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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_

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**[Annex I to ANNEX]**

**[deleted]**

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**Annex II to ANNEX**

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.

In relation with operational objective 1:

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

In relation with operational objective 2:

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

the Initiative.

In relation with operational objective 3:

4. The number of users or user communities seeking access to design capacities and pilot lines

under the Initiative.

In relation with operational objective 4:

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 successfully concluded training programmes supported by

the Initiative to acquire advanced skills and training on semiconductor and quantum

technologies.

6a. The number of active competence centres in the EU which are part of the European network

of competence centres in the context of the Initiative.

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In relation with operational objective 5:

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

‘Chips Fund’ activities and the total amount of capital investments made.

8. The amount of investment by companies operating in the EU, including by segment of the

value chain in which they operate.

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**Annex III to ANNEX**

**SYNERGIES WITH UNION PROGRAMMES**

1. Synergies of the Initiative with the Specific Objectives 1 to 5 of the **Digital Europe**

**Programme** shall ensure that:

(a) The targeted thematic focus of the Initiative on semiconductor and quantum

technologies is complementary;

(b) Digital Europe Programme specific objectives 1 to 5 support digital capacity building in

the advanced digital technologies including _**High Performance Computing, Artificial**_

_**Intelligence,**_ and _**cybersecurity**_ ; and, it also supports advanced digital skills;

(c) The Initiative will invest in capacity building to reinforce advanced design, production

and systems integration capabilities in cutting-edge and next-generation _**semiconductor**_

_**and quantum technologies**_ for innovative business development, strengthening

Europe's semiconductor supply and value chains, serving key industrial sectors and

creating new markets.

2. Synergies with the **Horizon Europe** shall ensure that:

(a) although thematic areas addressed by the Initiative and several areas of Horizon Europe

converge, the type of actions to be supported, their expected outputs and their

intervention logic are different and complementary;

(b) Horizon Europe provides extensive support for research, technological development,

demonstration, piloting, proof-of-concept, testing and prototyping, including pre

commercial deployment of innovative digital technologies, in particular through:

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(i) a dedicated budget in the pillar ‘Global Challenges and European Industrial

Competitiveness’ for the cluster ‘Digital, Industry and Space’ to develop enabling

technologies (AI and robotics, Next Generation internet, High Performance

Computing and Big Data, key digital technologies (incl. microelectronics),

combining digital with other technologies);

(ii) support to research infrastructures under the pillar ‘Excellent Science’;

(iii) the integration of digital across all the Global Challenges (health, security, energy

and mobility, climate, etc.); and

(iv) support for scale-up breakthrough innovations under the pillar ‘Innovative

Europe’ (many of which will combine digital and other technologies).

(c) the Initiative is exclusively focusing on building large-scale capacities in semiconductor

and quantum technologies across Europe. It will invest in:

(i) fostering innovation by supporting two closely interlinked technological

capacities that enable designing novel system concepts and their testing and

validation in pilot lines.

(ii) providing targeted support to build training capacity and enhance applied

advanced digital competences and skills to support development and deployment

of semiconductors by technology development and end-user industries; and

(iii) a network of national competence centres, which facilitate access and provide

expertise and innovation services to end-user communities and industries, to

develop new products and applications and to address market failures.

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(d) the technology capacities of the Initiative will be made available to the research and

innovation community, including for actions supported through Horizon Europe;

(e) as the development of novel digital technologies in the area of semiconductors matures

through Horizon Europe, those technologies where possible progressively will be taken

up and deployed by the Initiative;

(f) Horizon Europe programmes for the development of skills and competencies curricula,

including those delivered at the co-location centres of the EIT’s KICs, are

complemented by capacity-building in advanced applied digital skills and competences

in semiconductor and quantum technologies supported by the Initiative;

(g) strong coordination mechanisms for programming and implementation are put in place,

aligning all procedures for both the Horizon Europe Programme and the Initiative to the

extent possible. Their governance structures will involve all Commission concerned

services.

3. Synergies with Union programmes under shared management, including **the ERDF, ESF+,**

**the European Agricultural Fund for Rural Development and the European Maritime,**

**Fisheries and Aquaculture Fund**, shall ensure the development and strengthening of

regional and local innovation ecosystems, industrial transformation, as well as the digital

transformation of society and of public administrations. This includes support for the digital

transformation of industry and the take-up of results, as well as the rolling out of novel

technologies and innovative solutions. The Initiative will complement and support the trans

national networking and mapping of capacities it will support and make them accessible to

SMEs and end-user industries in all Union regions.

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4. Synergies with th **e Connecting Europe Facility** shall ensure that:

(a) the Initiative focuses on large-scale digital capacity and infrastructure building in the

areas of semiconductors aiming at the wide uptake and deployment across Europe of

critical existing or tested innovative digital solutions within a Union framework in areas

of public interest or market failure. The Initiative is mainly to be implemented through

coordinated and strategic investments with Member States, in building digital capacities

in semiconductor technologies to be shared across Europe and in Union-wide actions.

This is particularly relevant in electrification and autonomous driving, and should

benefit and facilitate the development of more competitive end-use industries,

particularly in the mobility and transport sectors;

(b) the capacities and infrastructures of the Initiative are to be made available to testing of

innovative new technologies and solutions that can be taken up in the mobility and

transport industries. The Connecting Europe Facility is to support the roll-out and

deployment of innovative new technologies and solutions in the field of mobility and

transport as well as in other domains;

(c) coordination mechanisms are to be established, in particular through appropriate

governance structures.

5. Synergies with **InvestEU Programme** shall ensure that:

(a) support through market-based financing, including pursuing policy objectives under the

Initiative is provided under Regulation (EU) 2021/523; such market-based financing

might be combined with the grant support;

(b) a blending facility under the InvestEU Fund is supported by financing provided by the

Horizon Europe Programme or the Digital Europe Programme in the form of financial

instruments within blending operations.

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6. Synergies with **Erasmus+** shall ensure that:

(a) the Initiative supports the development and acquisition of the advanced digital skills

needed for the development and deployment of cutting-edge semiconductor

technologies in cooperation with relevant industries;

(b) the advanced skills part of Erasmus+ complements the interventions of the Initiative,

addressing the acquisition of skills in all domains and at all levels through mobility

experiences.

7. Synergies with other Union programmes and initiatives on competencies and skills shall be

ensured.

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