Subsidizing Semiconductor Production for a Strategically Autonomous European Union

June 21, 2022

The Russian attack on Ukraine has magnified this issue due to the close economic ties and geographic proximity between the EU and both countries. While ensuring production capability in a crisis is primarily the task of enterprises themselves, a supply disruption can also have tremendous consequences for an entire economy and therefore justify state interventions. The EU has reacted to these circumstances with its concept of Open Strategic Autonomy and the initiative for an EU Chips Act. This concept of autonomy should entail the incorporation of the benefits of an open economy and the aspiration of the EU to co-determine the global framework in a favourable way. But it also calls for more market interventions. However, these require an economic and political justification and close monitoring. The measures should be discussed with international partners in order to prevent retaliation measures or international subsidy races.