Legal provisions of COM(2022)46 - Framework of measures for strengthening Europe's semiconductor ecosystem (Chips Act)

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dossier COM(2022)46 - Framework of measures for strengthening Europe's semiconductor ecosystem (Chips Act).
document COM(2022)46 EN
date September 13, 2023


Chapter I

General Provisions

Contents

Article 1 - Subject matter

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

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

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

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

Article 2 - Definitions

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

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

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

(b)a component consisting of a series of layers of semiconducting, insulating and conducting materials defined according to a predetermined pattern, and intended to perform well-defined electronic or photonic functions or both;

(2) ‘chip’ means an electronic device comprising various functional elements on a single piece of semiconductor material, typically taking the form of memory, logic, processor and analogue devices, also referred to as ‘integrated circuit’;

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

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

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

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

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

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

(9) ‘middle capitalisation company’ or ‘mid-cap’ means an enterprise that is not a SME and that employs a maximum of 1 500 persons, where the headcount of staff is calculated in accordance with Articles 3 to 6 of the Annex to Recommendation 2003/361/EC;

(10) ‘first-of-a-kind facility’ means an industrial facility capable of semiconductor manufacturing, including front-end or back-end, or both, that is not substantively already present or committed to be built within the Union, for instance with regard to the technology node, substrate material, such as silicon carbide and gallium nitride, and other product innovation that can offer better performance, process innovation or energy and environmental performance;

(11) ‘next generation chips’ and ‘next generation semiconductor technologies’ means chips and semiconductor technologies that go beyond the state of the art in offering significant improvements in computing power or energy efficiency as well as other significant energy and environmental gains;

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

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

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

(15) ‘key market actors’ means undertakings in the Union semiconductor sector, the reliable functioning of which is essential for the semiconductor supply chain;

(16) ‘critical sector’ means any sector referred to in the Annex of the Commission proposal for a Directive of the European Parliament and of the Council on the resilience of critical entities, the defence sector and other activities that are relevant for public safety and security;

(17) ‘crisis-relevant product’ means semiconductors, intermediate products and raw materials required to produce semiconductors or intermediate products, that are affected by the semiconductor crisis or of strategic importance to remedy the semiconductor crisis or economic effects thereof;

(18) ‘production capability’ means the potential output of a semiconductor manufacturing facility under optimal resources, typically the amount of wafers of a certain size that can be processed in a given time;

(19) ‘production capacity’ means the output of a semiconductor manufacturing facility, typically the amount of wafers of a certain size that is usually processed in a given time.

Chapter II

Chips for Europe Initiative

Section 1

General Provisions

 Article 3
Establishment of the Initiative

1. The Initiative is established for the duration of the Multiannual Financial Framework 2021-2027.

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

Article 4 - Objectives of the Initiative

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Article 5 - Components of the Initiative

1. The Initiative shall have the following five components:

(a)design capacities for integrated semiconductor technologies;

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

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

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

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

Article 6
Synergies with Union programmes

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

Article 7 - European Chips Infrastructure Consortium

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

2. The ECIC shall

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

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

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

(d)appoint the coordinator.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Article 8 - European network of competence centres in semiconductors

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

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

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

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

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

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

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

3. Member States shall designate candidate competence centres in accordance with its national procedures, administrative and institutional structures through an open and competitive process. The Commission shall, by means of implementing acts, set the procedure for establishing competence centres, including selection criteria, and further tasks and functions of the centres with respect to the implementation of the actions under the Initiative, the procedure for establishing the network as well to adopt decisions on the selection of entities forming the network. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 33(2).

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

Article 9 - Implementation

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

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

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

Chapter III

Security of Supply

Article 10 - Integrated Production Facilities

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

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

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

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

(c)it guarantees not to be subject to the extraterritorial application of public service obligations of third countries in a way that may undermine the undertaking’s ability to comply with the obligations set out in Article 21(1) and commits to inform the Commission when such obligation arises;

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

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

Article 11 - Open EU Foundries

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

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

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

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

(c)it guarantees not to be subject to the extraterritorial application of public service obligations of third countries in a way that may undermine the undertaking’s ability to comply with the obligations set out in Article 21(1) and commits to inform the Commission when such obligation arises;

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

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

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

Article 12 - Application and recognition

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

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

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

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

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

(d)provision of an appropriate supporting document proving the readiness of the Member State or Member States where the applicant intends to establish its facility to facilitate the set-up of such a facility.

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

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

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

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

Article 13 - Public interest and public support

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

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

Article 14 - National fast-tracking of permit granting procedures

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

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

3. The security of supply of semiconductors may be considered an imperative reason of overriding public interest within the meaning of Article 6(4) and Article 16(1)(c) of Directive 92/43/EEC and of overriding public interest within the meaning of Article 4(7) of Directive 2000/60. Therefore, the planning, construction and operation of Integrated Production Facilities and Open EU Foundries may be considered of overriding public interest, provided that the remaining other conditions set out in these provisions are fulfilled.

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


Chapter IV

Monitoring and Crisis Response

Section 1
Monitoring

Article 15 - Monitoring and alerting

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Article 16 - Union risk assessment and early warning indicators

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

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

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

Article 17 - Key market actors

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

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

(b)the Union or global market share of the key market actor in the market for such services or goods;

(c)the importance of a market actor in maintaining a sufficient level of supply of a service or good in the Union, taking into account the availability of alternative means for the provision of that service or good;

(d)the impact a disruption of supply of the service or good provided by the market actor may have on the Union’s semiconductor supply chain and dependent markets.

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


Section 2
Semiconductor supply Crisis Stage

Article 18 - Activation of the crisis stage

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

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

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

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

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

4. During the crisis stage, the Commission shall, upon request from a Member State or on its own initiative, convene extraordinary meetings of the European Semiconductor Board as necessary. Member States shall work closely with the Commission and coordinate any national measures taken with regard to the semiconductor supply chain within the European Semiconductor Board.

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

Article 19 - Emergency toolbox

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

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

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

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

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

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

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

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

Article 20 - Information gathering

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

2. The request for information shall state its legal basis, be proportionate in terms of the granularity and volume of the data and frequency of access to the data requested, have regard for the legitimate aims of the undertaking and the cost and effort required to make the data available, and set out the time limit within which the information is to be provided. It shall also indicate the penalties provided for in Article 28.

3. The owners of the undertakings or their representatives and, in the case of legal persons, companies or firms, or associations having no legal personality, the persons authorised to represent them by law or by their constitution shall supply the information requested on behalf of the undertaking or the association of undertakings concerned. Lawyers duly authorised to act may supply the information on behalf of their clients. The latter shall remain fully responsible if the information supplied is incomplete, incorrect or misleading.

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

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

Article 21 - Priority rated orders

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

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

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

4. The obligations under paragraph 1, 2 and 3 shall be enacted by the Commission via decision. The decision shall be taken in accordance with all applicable Union legal obligations, having regard to the circumstances of the case, including the principles of necessity and proportionality. The decision shall in particular have regard for the legitimate aims of the undertaking concerned and the cost and effort required for any change in production sequence. In its decision, the Commission shall state the legal basis of the priority rated order, fix the time-limit within which the order is to be performed, and, where applicable, specify the product and quantity, and state the penalties provided for in Article 28 for non-compliance with the obligation. The priority rated order shall be placed at fair and reasonable price.

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

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

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

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

Article 22 - Common purchasing

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

2. The Commission shall, in consultation with the European Semiconductor Board, assess the utility, necessity and proportionality of the request. Where the Commission intends not to follow the request, it shall inform the Member States concerned and the European Semiconductor Board and give reasons for its refusal.

3. The Commission shall draw up a proposal for a framework agreement to be signed by the participating Member States. This framework agreement shall organise in detail the common purchasing referred to in paragraph 1.

4. Procurement under this Regulation shall be carried out by the Commission in accordance with the rules set out in the Financial Regulation for its own procurement. The Commission may have the ability and responsibility, on behalf of all participating Member States, to enter into contracts with economic operators, including individual producers of crisis-relevant products, concerning the purchase of such products or concerning the advance financing of the production or the development of such products in exchange for a priority right to the result.

5. Where the procurement of crisis-relevant products includes financing from the Union budget, specific conditions may be set out in specific agreements with economic operators.

6. The Commission shall carry out the procurement procedures and conclude the contracts with economic operators on behalf of the participating Member States. The Commission shall invite the participating Member States to appoint representatives to take part in the preparation of the procurement procedures. The deployment and use of the purchased products shall remain the responsibility of the participating Member States.

Chapter V

Governance

Section 1

European Semiconductor Board

Article 23 - Establishment and tasks of the European Semiconductor Board

1. The European Semiconductor Board is established.

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

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

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

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

(d)addressing monitoring and crisis response issues;

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

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

4. The European Semiconductor Board shall ensure coordination, cooperation and information exchange, where appropriate, with the relevant crisis response and crisis preparedness structures established under Union law.

Article 24 - Structure of the European Semiconductor Board

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

2. Each national single point of contact, referred to in Article 26(3), shall appoint a high-level representative to the European Semiconductor Board. Where relevant as regards the function and expertise, a Member State may have more than one representative in relation to different tasks of the European Semiconductor Board. Each member of the European Semiconductor Board shall have an alternate.

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

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

Article 25 - Operation of the European Semiconductor Board

1. The European Semiconductor Board shall hold ordinary meetings at least once a year. It may hold extraordinary meetings at the request of the Commission or a Member State and as referred to in Article 15 and Article 18.

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

3. The Chair shall convene the meetings and prepare the agenda in accordance with the tasks of the European Semiconductor Board pursuant to this Regulation and with its rules of procedure. The Commission shall provide administrative and analytical support for the activities of the European Semiconductor Board pursuant to Article 23.

4. The Commission may appoint observers to take part in the meetings, as appropriate. The Commission may invite experts with specific expertise, including from relevant stakeholder organisations, with respect to a subject matter on the agenda to take part in the meetings of the European Semiconductor Board on an ad hoc basis. The Commission may facilitate exchanges between the European Semiconductor Board and other Union bodies, offices, agencies and advisory groups. The Commission shall invite a representative from the European Parliament as an observer to the European Semiconductor Board. The Commission shall ensure the participation of relevant other Union institutions and bodies as observers to the European Semiconductor Board with respect to meetings concerning Chapter IV on monitoring and crisis response. Observers and experts shall not have voting rights and shall not participate in the formulation of opinions, recommendations or advice of the European Semiconductor Board and its sub-groups.

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


Section 2

National Competent Authorities

Article 26 - Designation of national competent authorities and single points of contact

1. Each Member State shall designate one or more national competent authorities for the purpose of ensuring the application and implementation of this Regulation at national level.

2. Where Member States designates more than one national competent authority, they shall clearly set out the respective responsibilities of the authorities concerned and ensure that they cooperate effectively and efficiently to fulfil their tasks under this Regulation, including with regard to the designation and activities of the national single point of contact referred to in paragraph 3.

3. Each Member State shall designate one national single point of contact to exercise a liaison function to ensure cross-border cooperation with national competent authorities of other Member States, with the Commission and with the European Semiconductor Board (‘single point of contact’). Where a Member State designates only one competent authority, that competent authority shall also be the single point of contact.

4. Each Member State shall notify the Commission of the designation of the national competent authority and, where applicable, the reasons for designating more than one national competent authority, and the national single point of contact, including their precise tasks and responsibilities under this Regulation, their contact information and any subsequent changes thereto.

5. Member States shall ensure that national competent authorities, including the single point of contact designated, exercise their powers impartially, transparently and in a timely manner and that they are provided with the powers and the adequate technical, financial and human resources to fulfil their tasks under this Regulation.

6. Member States shall ensure that national competent authorities, whenever appropriate, and in accordance with Union and national law, consult and cooperate with other relevant national authorities, as well as with relevant interested parties. The Commission shall facilitate the exchange of experience between national competent authorities.


Chapter VI

Confidentiality and Penalties

Article 27 - Treatment of confidential information

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

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

3. The Commission may adopt implementing acts, as necessary following experience gained in information gathering, to specify the practical arrangements for the treatment of confidential information in the context of exchange of information pursuant to this Regulation. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 33(2).

Article 28 - Penalties and fines

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

(a)impose fines, where a representative organisations of undertakings or an undertaking, intentionally or through gross negligence, supplies incorrect, incomplete or misleading information in response to a request made pursuant to Article 20, or does not supply the information within the prescribed time limit;

(b)impose fines, where an undertaking, intentionally or through gross negligence, does not comply with the obligation to inform the Commission of a third country obligation pursuant to Article 20(5) and Article 21(3);

(c)impose periodic penalty payments, where an undertaking, intentionally or through gross negligence, does not comply with an obligation to prioritise the production of crisis-relevant products pursuant to Article 21.

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

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

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

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

6. The Court of Justice of the European Union shall have unlimited jurisdiction to review decisions whereby the Commission has fixed a fine or a periodic penalty payment. It may cancel, reduce or increase the fine or periodic penalty payment imposed.

Article 29 - Limitation period for the imposition of fines and periodic penalty payments

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

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

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

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

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

3. Any action taken by the Commission or the competent authorities of the Member States for the purposes of ensuring compliance with the provisions of this Regulation shall interrupt the limitation period.

4. The interruption of the limitation period shall apply for all the parties which are held responsible for the participation in the infringement.

5. Each interruption shall start the time running afresh. However, the limitation period shall expire at the latest on the day in which a period equal to twice the limitation period has elapsed without the Commission having imposed a fine or a periodic penalty payment. That period shall be extended by the time during which the limitation period is suspended because the decision of the Commission is the subject of proceedings pending before the Court of Justice of the European Union.

Article 30 - Limitation period for the enforcement of penalties

1. The power of the Commission to enforce decisions taken pursuant to Article 28 shall be subject to a limitation period of three years.

2. Time shall begin to run on the day on which the decision becomes final.

3. The limitation period for the enforcement of fines and periodic penalties payments shall be interrupted:

(a)by notification of a decision varying the original amount of the fine or periodic penalty payment or refusing an application for variation;

(b)by any action of the Commission or of a Member State, acting at the request of the Commission, designed to enforce payment of the fine or periodic penalty payment.

4. Each interruption shall start time running afresh.

5. The limitation period for the enforcement of fines and periodic penalty payments shall be suspended for so long as:

(a)time to pay is allowed;

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

Article 31 - Right to be heard for the imposition of fines or periodic penalty payments

1. Before adopting a decision pursuant to 28, the Commission shall give the undertaking or representative organisations of undertakings concerned the opportunity of being heard on:

(a)preliminary findings of the Commission, including any matter to which the Commission has taken objections;

(b)measures that the Commission may intend to take in view of the preliminary findings pursuant to point (a) of this paragraph.

2. Undertakings and representative organisations of undertakings concerned may submit their observations to the Commission’s preliminary findings within a time limit which shall be fixed by the Commission in its preliminary findings and which may not be less than 14 days.

3. The Commission shall base its decisions only on objections on which undertakings and representative organisations of undertakings concerned have been able to comment.

4. The rights of defence of the undertaking or representative organisations of undertakings concerned shall be fully respected in any proceedings. The undertaking or representative organisations of undertakings concerned shall be entitled to have access to the Commission's file under the terms of a negotiated disclosure, subject to the legitimate interest of undertakings in the protection of their business secrets. The right of access to the file shall not extend to confidential information and internal documents of the Commission or the authorities of the Member States. In particular, the right of access shall not extend to correspondence between the Commission and the authorities of the Member States. Nothing in this paragraph shall prevent the Commission from disclosing and using information necessary to prove an infringement.


Chapter VII

Delegation of Power and Committee Procedure

Article 32 - Exercise of the delegation

1. The power to adopt delegated acts is conferred on the Commission subject to the conditions laid down in this Article.

2. The power to adopt delegated acts referred to in Article 9(2) and (3) shall be conferred on the Commission for an indeterminate period of time from the date of entry into force of the legislative act.

3. The delegation of power referred to in Article 9(2) and (3) may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein it shall not affect the validity of any delegated acts already in force.

4. Before adopting a delegated act the Commission shall consult experts designated by each Member State in accordance with the principles laid down in the Interinstitutional Agreement on Better Law-Making of 13 April 2016.

5. As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council.

6. A delegated act adopted pursuant to Article 9(2) and (3) shall enter into force only if no objection has been expressed by either the European Parliament or the Council within a period of two months of notification of that act to the European Parliament or the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or of the Council.

Article 33 - Committee

1. The Commission shall be assisted by a committee (‘the Semiconductor Committee’). That committee shall be a committee within the meaning of Regulation (EU) No 182/2011.

2. Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.

3. Where reference is made to this paragraph, Article 8 of Regulation (EU) No 182/2011, in conjunction with Article 5 thereof, shall apply.


Chapter VIII

Final Provisions

Article 34 - Amendments to Regulation (EU) 2021/694 establishing the Digital Europe Programme and repealing Decision (EU) 2015/2240

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

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

‘(f) Specific Objective 6 – Semiconductors’;


(2) the following Article 8a is inserted:

‘Article 8a

Specific Objective 6 – Semiconductors

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


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

‘Article 9

Budget

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

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

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

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

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

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

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

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


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

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


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

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


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

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


(7) Article 14 is amended as follows:

Paragraph 1 is replaced by the following

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


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

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


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

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


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

‘Specific Objective 6 – Semiconductors

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


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

‘Specific Objective 6 – Semiconductors

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


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

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

Article 35 - Evaluation and review

1. By three years after the date of application of this Regulation and every four years thereafter, the Commission shall submit a report on the evaluation and review of this Regulation to the European Parliament and to the Council. The reports shall be made public.

2. For the purpose of the evaluation and review, the European Semiconductor Board, the Member States and national competent authorities shall provide the Commission with information on its request.

3. In carrying out the evaluation and review the Commission shall take into account the positions and findings of the European Semiconductor Board, of the European Parliament, of the Council, and of other relevant bodies or sources.

Article 36 - Entry into force

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.