By Toby Sterling

AMSTERDAM (Reuters) – The European Commission should expand plans to boost its computer chip sector to include “basic and legacy” semiconductors, where much of the region’s strengths lie, the head of industry group ESIA said on Friday.

The Commission is discussing a possible follow-up to the European Chips Act, which was rolled out in April 2023 as a €43 billion ($46.96 billion) subsidy plan to increase Europe’s share of the global chip market to 20% by 2030.

The Commission’s incoming technology chief Henna Virkkunen promised in hearings in the European Parliament last week to focus on horizon technologies such as quantum computing in a follow-up to the 2023 legislation, which is now being debated.

Rene Schroeder, who took over as head of the European Semiconductor Industry Association last week, said that Europe’s

the chip industry supports Virkkunen’s view but also sees the need to strengthen parts of the existing chip ecosystem.

“We urge the commission to come up with a Chips Act 2.0 … that covers both legacy and basic semiconductors,” Schroeder told Reuters in a telephone interview.

European chip makers such as ESIA members Infineon, NXP and STMicroelectronics hold leading positions in existing generations of chip manufacturing technology and continue to make advances in microcontrollers, power semiconductors and sensors. Europe’s automotive and industrial companies, in turn, rely on these lands.

Schroeder said ESIA is keen to work closely with the new commission on a road map to ensure investments in research are matched with business needs and can eventually be scaled up.

The new commission, which is focused on security, competitiveness and growth, is expected to use a wider range of policy tools to promote the chip industry. Shortages during the coronavirus pandemic and technological rivalry between the US and China increased appreciation of its strategic importance.

Last July, the commission launched a broad industry inquiry into “legacy” chips, seeking views on how they are used in supply chains and weighing the competitive threat posed by a major expansion of manufacturing capacity by Chinese companies.

Schroeder said his group advocates a mix of incentives and partnerships with countries such as the United States, Japan and South Korea “rather than a defensive strategy that relies on restrictive and protectionist measures.”

(Reporting by Toby Sterling; Editing by Susan Fenton)