ITRE-Draft Report: European Chips Act

BDI Position on ITRE-Draft Report: European Chips Act

German industry’s recommendations

January 18th 2023

Introduction

In this paper, the German industry refers to the Draft Report on the proposal for a regulation of the European Parliament and of the Council Establishing a framework of measures for strengthening Europe's semiconductor ecosystem (Chips Act) (COM(2022)0046 – C9-0039/2022 – 2022/0032(COD)) of the Committee on Industry, Research and Energy (ITRE) by the Rapporteur Dan Nica, published the 21st September 2022.

In the context of this paper, the German industry evaluates the amendments proposed in the draft: We divide this evaluation into three categories: Firstly, we mention the amendments that represent a valuable contribution to the EU Chips Act. Secondly, we refer to the amendments where the German industry demands changes. Based on the Amendments presented in the Draft Report, the German industry proposes concrete changes to the Amendments. These changes to the Amendments are marked in bold and purple. In the third part of this paper, we refer to the articles in the EU Chips Act that were not adapted in an amendment to the Draft Report, but in which amendments should be made. In addition to presenting the position of the German industry, we also propose amendments to the articles of the EU Chips Act, marked in bold and purple. An explanation of the position of the German industry is indicated by arrows →

Amendments, which are a valuable contribution:

The German industry expressly welcomes Amendments 1, 2, 5, 7, 9, 10, 12, 15, 16, 17, 27, 67, 68, 80, 83, 84, 85, 90, 94, 95, 105, 106, 113 and 115. The incorporation of these proposals into the EU Chips Act would represent added value so that it also proves to be an effective means of strengthening the European semiconductor industry.

The German industry particularly welcomes the involvement of industry through the Alliance consultations with the Commission and the European Semiconductor Board. Against the background of the severe shortage of skilled workers, we appreciate the intention to increase investment in human potential through STEM education. This includes facilitating the connection of semiconductor manufacturing companies with technical students from BSc to PhD levels across the Union. The certification of trusted, secure and green chips based on international standards is also viewed positively by the industry. Finally, we also welcome the issue of a new funding strategy.

Amendments for which German industry demands changes:

Amendment 1 (on Recital 6a (new) of the EU Chips Act):

The legislative framework should maintain a balance between the interests of the Member States, of industry, the semiconductor value chain, and all of the Union’s societies. While ensuring the principle of transparency and reciprocity, industry should be involved more closely, but not only, through the Alliance on Processors and Semiconductor Technologies (Alliance). The Alliance is a pan-European structure that consists of semiconductor manufacturers operating in the Union, equipment manufacturers, raw material and chemical product suppliers, end-users of semiconductors, industry associations as well as any organisation with relevant existing or planned activities in the area of processor and semiconductor technologies, including end-user companies, distributors associations, and research and technology organisations. The industry, within the framework of the Alliance, shall be given an institutionalised voice with voting rights The Commission will inform the European Semiconductor Board of the results of its consultations of the Alliance.

Amendment 3 (on Recital 7a (new) of the EU Chips Act):

In order to build upon the commitment of meeting workforce needs across the semiconductors supply chain, as outlined in the Second Ministerial Meeting in Paris-Saclay declaration on 16 May 2022, the Commission is to set up an exchange programme for researchers in semiconductors engineering, partnering up with higher education institutions in the like-minded countries and in Europe. The programme may be constituted under the auspices of the Chips for Europe Initiative.

➔ German industry demands a definition of who the relevant "like-minded" countries and/or partners are, which is evaluated on a regular basis.

Amendment 4 (on Recital 8a (new) of the EU Chips Act):

Europe must maintain its lead with regard to chip research, development and innovation and design capabilities by focusing on the promotion of research, development, innovation and design and ecosystem partners, together with a focus on manufacturing. together with a focus on the whole semiconductor ecosystem, including the promotion of front- and back-end processes and the full value chain, including chemicals. Design capacities shall take into account the needs of innovation in the European end-user industry.

Amendment 8 (on Recital 11a (new) of the EU Chips Act):

Attracting investments is indispensable to the creation of a competitive European semiconductor ecosystem and more ways to attract investment the following should be considered, after having examined the possibilities for improving the location factors for the semiconductor industry. First, opportunities to improve the sustainability of the semiconductor industry should be considered. The Union’s and the Member States’ budget allocation towards decreasing the environmental impact of industry with a view to a more ambitious reduction of carbon emissions (such as by means of Fit for 55, Recovery and Resilience Facility and Repower EU) has to be checked. Semiconductor devices and manufacturing processes offer huge opportunities for decreasing the environmental, and, in particular, the carbon, impact of industries. Second, investing in talent should be considered, with a view to bridging the gap between industry, research and education, as the availability of talent is critical to attracting semiconductor investments. A ‘borderless’ network of Competence Centres can promote such interests locally and strong partnerships with the pilot lines must therefore be stimulated.

Amendment 13 (on Recital 19 of the EU Chips Act):

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

Amendment 19 (on Recital 39a (new) of the EU Chips Act):

The structural efforts to map the supply chain will stimulate upfront coordination along the supply chain to prevent, rather than manage crises. The mapping of the supply chain shall include a network of suppliers, manufacturers and end-user for a dialogue within the semiconductor industry. The database created as a result of the mapping is intended to be useful for the Member States to better understand the semiconductors value chain, for investment screening export restrictions etc. National or European competent authorities will pay particular attention to SMEs to minimise administrative burden resulting from the request and will privilege digital solutions for obtaining such information.

Amendment 23 (on Recital 53 of the EU Chips Act):

➔ German industry demands a deletion of Recital 53. German industry is clearly against common purchasing in the event of an economic crisis affecting the semiconductor industry.

➔ The German industry proposes that the Commission creates a platform for dialogue between all stakeholders, but the coordination of supply chains during a crisis remains in the hands of the companies. The role of the Commission should be limited to long-term mapping of the entire supply chain and to the identification of weak points.

➔ In the case that Recital 53 should remain in the EU Chips Act, the German industry commands urgently the proposed changes.

➔ Intervention by the Commission is only acceptable in the case of the defence of the Union or the maintenance of public health.

When the crisis stage is activated, two or more Member States could mandate the Commission to aggregate demand and act on their behalf for their public procurement in the public interest, in accordance with existing Union rules and procedures, leveraging its purchasing power. The mandate could authorise the Commission to enter into agreements concerning the purchase of crisis-relevant products for the critical sectors, concerning the national defence of the member states or public health, identified in the scope of the implementing act triggering the crisis stage. The legitimacy of maintaining the crisis stage shall be regularly reviewed on the basis of specific crisis stage criteria. The Commission should assess for each request the utility, necessity and proportionality in consultation with the Board and the Alliance. Where it intends to not follow the request, it should inform the concerned Member States and the Board and give its reasons. Furthermore, the participating Member States and the affected companies 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.

Amendment 27 (on Article 1 – paragraph 1 – point c of the EU Chips Act):

setting up a coordination mechanism between the Member States, the Commission and the actors in the semiconductor value chain to create a dialogue with all stakeholders for the mapping. , Creating a network of suppliers, manufacturers and end-user within the Alliance for mapping the semiconductor value chain and for monitoring the supply of semiconductors and crisis prevention and response to semiconductor shortages with a view to ensuring the internal market’s resilience and enabling the Union to play a stronger role at the global level.

Amendment 28 (on Article 2 – paragraph 1 – point 2 a of the EU Chips Act (new)):

‘quantum chip’ means a device that processes information at the level of individual quantum systems, with a varying component integration level on a single chip depending on the quantum platform used. deployed in computing machines, either as stand-alone quantum computers or accelerators for supercomputers, or in networks, where it can provide entirely new services like ultra-secure communications or ultra-precise time stamps; The quantum chips can be deployed in computing machines, either as stand-alone quantum computers or as accelerators for supercomputers, or in networks, where they can offer completely new services such as ultra-secure communication or ultraprecise time stamps. In addition, sensing or imaging applications, e.g. in industry or medicine, are conceivable, again as stand-alone chips or as components in larger systems.

Amendment 33 (on Article 2 – paragraph 1 – point 10 of the EU Chips Act):

‘first-of-a-kind facility’ means an industrial facility capable of semiconductor manufacturing, including front-end or back-end, or both, or capable of manufacturing materials or equipment specifically used in semiconductor manufacturing or state-of-the-art technology, that is not substantively already present to be built within the Union, providing product innovation, for instance with regard to the technology node, processing of raw and substrate materials, contributing to the security of chips supply in the internal and export markets and that can offer better performance, process innovation or energy and environmental performance or related to measures to increase the level of security, safety and reliability of components;

Amendment 34 (on Article 2 – paragraph 1 – point 10 a (new) of the EU Chips Act):

‘cutting-edge chips’ and ‘cutting-edge semiconductor technologies’ means the most advanced level of innovation in chips and semiconductor technologies with regard to all structure sizes, to all technology nodes and materials;

Amendment 35 (on Article 2 – paragraph 1 – point 16 of the EU Chips Act):

‘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, automotive the health sector and other sectors that are relevant for the public health, safety and security;

Amendment 36 (on Article 2 – paragraph 1 – point 16 a (new) of the EU Chips Act):

‘crisis’ means a serious and unforeseen event which has a severe impact on the Union and substantially endangers or restricts the security, safety and the public health and alters the normal functioning of society and of the economy, or requires measures from the institutional side in order to supply the population with critical necessities

Amendment 37 (on Article 2 – paragraph 1 – point 17 a (new) of the EU Chips Act):

‘serious disruption’ means a situation that might occur in the case of natural disasters or geopolitical constraints, interruptions in global logistics, that could lead to serious shortages in raw material supply or geopolitical constraints

Amendment 38 (on Article 4 – paragraph 1 of the EU Chips Act):

The general objective of the Initiative is to support large-scale technological capacity building and innovation throughout the Union’s semiconductor value chain and to enable development and deployment of cutting edge chips and next generation semiconductor and semiconductor technologies for quantum chips 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. The Initiative is also intended to strengthen the economic, social and territorial cohesion of the Union and at reducing disparities between the levels of development of Member States and of the various regions within the Union creating a clear positive impact on several Member States.

Amendment 42 (on Article 4 – paragraph 2 – point b – point 1 of the EU Chips Act):

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 in all structure sizes and all technology nodes below two nanometres, Fully Depleted Silicon on Insulator (FD-SOI) at 10 nanometres and below, new semiconductors materials and 3D heterogeneous systems integration and advanced packaging, including for low, and medium and large-volume chip production;

Amendment 43 (on Article 4 – paragraph 2 – point b – point 2 of the EU Chips Act):

strengthening technological capabilities in next generation chips production technologies, by integrating research and innovation activities, supporting large scale innovation through access to new or existing pilot lines with openness for all structure sizes, for all technology nodes and for all

materials for experimentation, test, validation and process control of new design concepts integrating key functionalities, such as novel materials, like silicon carbide and gallium nitride, and architectures for power electronics fostering sustainable and renewable energy, energy storage, smart manufacturing, automation and electro mobility, lower energy consumption, cyber security, functional safety, higher levels of computing performance or integrating break through 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;

➔ The pilot lines should strengthen the innovative power of the industry and the investments in the pilot lines should also have an effective benefit for the industry. We therefore call for the design of the pilot lines to be primarily the responsibility of the industry, in order to have the scaling and the specifics of industrial production in mind from the outset and to avoid that costly pilot lines for design and production miss the needs of the semiconductor industry

➔ Therefore, the German industry demands openness to all structure sizes, all technology nodes and all materials in the pilot lines.

Amendment 46, 47, 48 and 49 (on Article 4 – paragraph 2 – point c, on Article 4 – paragraph 2 –point c – point 0 a (new), on Article 4 – paragraph 2 – point c – point 0 b (new), Article 4 –paragraph 2 – point c – point 0 c (new) of the EU Chips Act):

operational objective 3: building advanced technology and engineering capacities for accelerating the innovative development of cutting-edge chips and next generation quantum chips.

developing innovative design libraries for semiconductor-based, superconductor- and photonicsbased qubit platforms building on the well-established fabrication processes of the classical semiconductor industry, complemented by innovative and advanced design libraries and fabrication processes for alternative qubit platforms, such as atoms, diamonds or ions;

reducing the entry-barrier and accelerating the innovation cycles for the development and production of small volumes of quantum components by providing access to new or existing pilot lines, cleanrooms and foundries for prototyping and producing quantum chips integrating quantum circuits and control electronics;

providing capabilities and structures, in particular testing and experimenting facilities for such components, effectively closing the innovation feedback loop between designers, producers and end-users of quantum components;

Amendment 71 (on Article 10 – paragraph 1 of the EU Chips Act):

Integrated Production Facilities are first-of-a-kind semiconductor design and manufacturing facilities, including frontend or back-end and equipment, or both, in the Union that contribute to the security of supply for the internal market, and to the economic competitiveness and cohesion of the Member States.

Amendment 72 (on Article 10 – paragraph 2 – point b of the EU Chips Act):

its establishment and operation have a clear positive impact on the Union’s semiconductor value chain across multiple several Member States with regard to ensuring the security of supply and increasing qualified workforce;

Amendment 74 (on Article 11 – paragraph 1 of the EU Chips Act):

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 securityof supplyfor the internal market, and to the economic competitiveness and cohesion of the Member States

Amendment 89 (on Article 15 – paragraph 5 – point a – point 2 a (new) of the EU Chips Act):

fostering coordination between actors of the semiconductor value chain to facilitate information exchange with a view to identifying and preparing preventive measures as a proposal for the industry;

Amendment 98 (on Article 17 a (new) of the EU Chips Act):

Article 17a (new): Mapping of the semiconductor value chain

1. The Commission shall carry out a continuous mapping exercise of the global semiconductor value chain with the aim of building knowledge and capacity to inform future industrial policy measures and assess the Union’s strengths and weaknesses in the global semiconductor value chain. In particular, it shall:

(a) assess risks that may disrupt, compromise or negatively affect the production and supply of semiconductors;

(b) ensure a good level of understanding of the market, the barriers to entry, and the technology characteristics;

(c) focus on all levels of the value chain, namely inputs, production steps, and products of the semiconductor industry, including end-user industries.

2. The Commission shall create a dedicated structure that is adequately staffed and has the financial resources, for the conduction of the exercise described in paragraph 1 and that supports the national competent authorities on their screening and mapping.

3. The Commission shall use the result of the mapping exercise in order to create an information platform (one-stop shop) with the data base resulted, to be used by Member States.

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

➔ German industry supports the idea of mapping the semiconductor value chain, until the end-user. Thereby, the confidentiality of data must be ensured. The European Commission shall ensure the protection of trade secrets and sensitive commercial information when making requests for information from companies operating along the semiconductor supply chain.

Amendment 100 (on Article 18 – paragraph 2 of the EU Chips Act):

Where an assessment of the Commission provides concrete, serious, and reliable evidence of a semiconductor crisis, the Commission, the European Semiconductor Board and the Alliance may vote for the activation of 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. The Commission shall report on a regular basis to the European Semiconductor Board and the Alliance and justify

the legitimacy of maintaining the crisis stage. 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. A crisis stage can only be declared after consultations between the Commission, the European Semiconductor Board and the Alliance. The declaration of the crisis stage without its prior submission to a committee will not be possible.

Amendment 101 (on Article 18 – paragraph 3 of the EU Chips Act):

Before the expiry of the duration, having been agreed with the European Semiconductor Board and the Alliance, for which the crisis stage was activated, the Commission shall, after consulting the European Semiconductor Board and the Alliance, assess and justify whether the activation of the crisis stage should be terminated or prolonged, on the basis of clearly defined criteria. 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. The legality of the extension shall be regularly reviewed by the Commission, the European Semiconductor Board and the Alliance.

Amendment 104 (on Article 19 – paragraph 6 of the EU Chips Act):

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

Amendment 105 (on Article 20 – paragraph 1 of the EU Chips Act):

The Commission shall, after consulting the European Semiconductor Board and the Alliance, 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 identifyand assess potential mitigation or emergencymeasures at national or Union level. The Commission shall substantiate the scope, the need and purpose of its requests for sensitive and business confidential data, and shall keep them to the minimum and shall prove that no adequate and authoritative data is available from any other source.

Amendment 115 (on Article 27 – paragraph 2 of the EU Chips Act):

The Commission and Member States may exchange, where necessary, 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.

➔ German industry clearly welcomes the fact that the word "confidential" has been removed from the original article. Original sentence: "The Commission and Member States may exchange, where necessary, confidential information with competent authorities of third countries [...]."

Amendment 116 (on Article 27 a (new) of the EU Chips Act):

Article 27a – Intellectual property rights and technology protection measures

1. Member States shall provide adequate legal protection against the circumvention of any effective technological measures.

2. Member States shall ensure that holders of trade secrets or copyright on works embedded in a semiconductor that is protected by any effective technological measures may make use of the measures, procedures and remedies provided in Directive 2004/48/EC1a and Directive (EU) 2016/9431b of the European Parliament and of the Council against acts unauthorized by the holder in connection with trade secrets or copyrighted works contained in the semiconductor concerned. This shall apply particularly when access to the trade secret or copyrighted work has been obtained by circumventing any effective technological measures.

➔ German industry is in favour of this supplementary article.

1a Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (OJ L 157, 30.4.2004).

1b Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (OJ L 157, 15.6.2016, p. 1).

Articles in the EU Chips Act that should also be adjusted

Recital (45) of the EU Chips Act – export control regime:

➔ The German industry is very critical of the proposed export controls. In view of the complexity and internationality of the supply chains, one should refrain from imposing export controls from the European side in order to prevent creating obstacles and thereby worsen the situation of the supply and value chains.

Amendment proposal: Appropriate, effective and proportionate measures should be identified and implemented when the crisis stage is activated without prejudice to possible continued international engagement with relevant partners with the view to mitigating the evolving crisis situation. Where appropriate, the Commission should request information from undertakings along the semiconductor supply chain. Furthermore, the Commission should be able to, where necessary and proportionate, oblige Integrated Production Facilities and Open EU Foundries to accept and prioritise an order of the production of crisis-relevant products, and to act as a central purchasing body when mandated by Member States. The Commission could limit the measures to certain critical sectors. In addition, the European Semiconductor Board may advise on the necessity of introducing an export control regime pursuant to Regulation (EU) 2015/479 of the European Parliament and of the Council. The European Semiconductor Board may also assess and advise on further appropriate and effective measures. The use of all these emergency measures should be proportionate and restricted to what is necessary to address the significant disturbances at stake insofar as this is in the best interest of the Union. The Commission should regularly inform the European Parliament and the Council of the measures taken and the underlying reasons. The Commission may, after consulting with the Board and the Alliance, issue further guidance on the implementation and use of the emergency measures.

Recital 59 and Article 2 – paragraph 1 point 19 a (new):

➔ For the following two proposals (Recital 59 and Article 2 – paragraph 1 point 19 a (new)), we refer to the draft opinion of the Committee on Legal Affairs for the Committee on Industry, Research and Energy on the proposal for a regulation of the European Parliament and of the Council establishing a framework of measures for strengthening Europe's semiconductor ecosystem (Chips Act) (COM(2022)0046 – C9-0039/2022 – 2022/0032(COD)) by the rapporteur for opinion: Tiemo Wölken of the Associated committee – Rule 57 of the Rules of Procedure,

published on the 4th October 2022. The German industry welcomes the amendments from this draft opinion and adopts the proposals made in the draft opinion, marked in thick black letters.

Recital 59:

Amendment proposal:

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, including trade secrets or content protected by intellectual property rights, obtained in carrying out their tasks. The Commission and the national competent authorities, their officials, servants and other persons working under the supervision of these authorities as well as officials and civil servants of other authorities of the Member States should not disclose information acquired or exchanged by them pursuant to this Regulation and of the kind covered by the obligation of professional secrecy. This should also apply to the European Semiconductor Board and the Semiconductor Committee established in this Regulation. Where appropriate, the Commission should be able to adopt implementing acts to specify the practical arrangements for the treatment of confidential information, including trade secrets or content protected by intellectual property rights, in the context of information gathering.

Article 2 – paragraph 1 point 19 a (new):

Amendment proposal: (19a) ‘trade secret’ means a trade secret as defined in Directive (EU) 2016/943;

Article 20 – paragraph 2 of the EU Chips Act – Information gathering:

Amendment proposal:

The Commission shall, after consulting the European Semiconductor Board and the Alliance, 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 identifyand assess potential mitigation or emergencymeasures at national or Union level. The Commission should respect the confidentiality of information and data, including trade secrets or content protected by intellectual property rights.

Article 21 of the EU Chips Act– priority rated orders:

➔ The German industry demands that the European Commission considers the production realities of the European semiconductor industry. Semiconductors are products specialised for a specific end-user application. A rapid changeover of production in the event of a crisis to newly prioritised technology nodes and structure sizes is technically not possible in a short period of time, so that a quick crisis response with order commitments is not realizable - for example, it takes three to five years from the concept to the produced chip.

➔ Therefore, the German industry suggests deleting the whole article 21 of the EU Chips Act.

Article 22 of the EU Chips Act – Common purchasing:

➔ Since supply chains in the semiconductor industry are very complex and contain products specialised in one structural size, it should not be state procurement structures but companies that coordinate supply chains in the event of a crisis. Rather, in the event of a crisis, the

European legislator and the member states should ensure that a platform for dialogue between all stakeholders is created. The monitoring of supply chains in the EU should include a network of producers, but above all also of end-user industries and suppliers. The stability of supply chains should remain the responsibility of companies. We recommend that the entire semiconductor ecosystem be made responsible for restructuring and thus stabilising the supply chains - sector-specific strategy boards could be a first starting point for this.

➔ The German industry proposes that the Commission creates a platform for dialogue between all stakeholders, but the coordination of supply chains during a crisis remains in the hands of the companies. The role of the Commission should be limited to longterm mapping of the entire supply chain and to the identification of weak points.

➔ German industry is clearly against common purchasing in the event of an economic crisis affecting the semiconductor industry. Intervention by the Commission is only acceptable in the case of the defence of the Union or the maintenance of public health.

➔ Otherwise, German industry demands a deletion of Article 22.

Article 24 – paragraph 1 of the EU Chips Act – structure of the European Semiconductor Board:

Amendment proposal:

The European Semiconductor Board shall be composed of representatives of the Member States, representatives of the semiconductor industry, appointed by the Alliance on Processors and Semiconductor Technologies, and shall be chaired by a representative of the Commission

Article 27 – Title – Treatment of confidential information of the EU Chips Act:

➔ For the following five proposals (Article 27 – Title, Article 27 – paragraph 1, Article 27 – paragraph 2, Article 27 – paragraph 3 and Article 27 a (new)), we refer to the draft opinion of the Committee on Legal Affairs for the Committee on Industry, Research and Energy on the proposal for a regulation of the European Parliament and of the Council establishing a framework of measures for strengthening Europe's semiconductor ecosystem (Chips Act) (COM(2022)0046 – C9-0039/2022 – 2022/0032(COD)) by the rapporteur for opinion: Tiemo Wölken of the Associated committee – Rule 57 of the Rules of Procedure, published on the 1st December 2022.

Amendment proposal:

Treatment of confidential information including trade secrets or content protected by intellectual property rights

Article 27 – paragraph 1 of the EU Chips Act:

Amendment proposal:

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 trade secrets and other commercially sensitive data and intellectual property rights They shall take appropriate technical and organisational measures to preserve the confidentiality of trade secrets and other commercially sensitive data and to protect intellectual property rights. This obligation shall apply to all representatives of Member States, key market actors, 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).

➔ German industry supports the changes of this paragraph.

Article 27 – paragraph 2 of the EU Chips Act:

Amendment proposal: DELETED

➔ German industry supports the deletion of this paragraph

Article 27 – paragraph 3 of the EU Chips Act:

Amendment proposal:

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, including trade secrets and other commercially sensitive data as well as content protected by intellectual property rights, 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).

➔ German industry supports the changes of this paragraph

Article 27 a (new) of the draft opinion of the Committee on Legal Affairs:

➔ German industry opposes Article 27a according to the JURI Report and favours a non-exception.

➔ With the establishment of the new Article 27a (according to the JURI Report), i.e. the transfer of data to third countries, the question arises for German industry as to what confidential information the EU wants to pass on within the Union. We would like to point out that the data provided bycompanies within the framework of the third pillar mayonlybe used for the analysis of the EU Commission for the prevention of a crisis.

➔ The transfer of personal data must be carried out in accordance with the rules of the third country where safeguards equivalent to the German DSGVO apply. The Data Act also sets this out for commercial data and for personal data. This can be used as a guide.

International access to and transfer of confidential information

1. The transfer of or access to confidential information, including trade secrets and other commercially sensitive data as well as content protected by intellectual property rights, within the scope of this Regulation held in the Union to third countries shall only be allowed where a bilateral or multilateral agreement regarding protection of that confidential information and enforcement of those intellectual property rights is in force and effectively complied with between the requesting entity in a third country and the Union, or between the requesting entity in a third country and a Member State.

➔ Article 27a (1) should not be included. Confidential information, including trade secrets and other commercially sensitive data as well as content protected by intellectual property rights, may only be passed on within the existing legal framework.

2. The Commission and Member States shall take all reasonable technical, legal and organisational measures, including contractual arrangements, in order to prevent international transfer or governmental access to confidential information, including trade secrets and other commercially sensitive data as well as content protected by intellectual property rights, where such transfer or access would be in contravention of Union law, the national law of the relevant Member State, or where it may impinge on

national security or defence interests of the Union or its Member States, without prejudice to paragraph 1

➔ We support this article if paragraph 1 is established.

3. Where confidential information, including trade secrets and other commercially sensitive data as well as content protected by intellectual property rights, is shared with competent authorities of a third country, such information shall be transferred from a single contact point in the Commission, and be transferred to a single designated contact point in the third country. The designated provider of the data shall keep a detailed log of all information transmitted to the third country.

➔ The German industry refuses the transfer of the mentioned data to third countries. We support this article if paragraph 1 is established.

4. The European Semiconductor Board shall advise and assist the Commission in developing guidelines on the assessment of whether the conditions laid down in paragraph 1 are met, in particular as regards the technical, legal and organisational measures put in place in order to protect confidential information, trade secrets and other commercially sensitive data as well as intellectual property rights and ensure their effective enforcement.

➔ We support this article if paragraph 1 is established. German industry also calls for the inclusion of the Alliance as an addition.

5. Where the conditions laid down in paragraph 1 are met, the entity transferring information or providing access thereto shall provide the minimum amount of information needed in order to fulfil the request. The information shall be protected by reasonable technical, legal and organisational measures, including storage in a secure physical environment, separation from other databases, and physical intrusion controls. Once the information is no longer required, it shall be deleted.

➔ We support the addition in case the previous paragraphs are included. The amount of information disclosed must be agreed with the respective company and the Alliance of semiconductors.

6. If an entity outside of the Union has received confidential information, including trade secrets and other commercially sensitive data as well as content protected by intellectual property rights, but has violated the rules set out in this Regulation or the accompanying guidelines on the technical, legal and organisational measures to protect this information, all further transfer of information to this entity shall be suspended.

➔ In the event that this point is included in the article, we are in favour of it.

Article 28 c) of the EU Chips Act – Penalties and fines:

Amendment proposal: 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.

Imprint

Federation of German Industries (BDI) Breite Straße 29, 10178 Berlin, Germany www.bdi.eu T: +49 30 2028-0

Lobby register number: R000534

Editorial

Dr. Sophia Helmrich Senior Manager Digitalisation and Innovation T: +49 30 2028-1402 s.helmrich@bdi.eu

Anna Luise Schütz Intern Digitalisation and Innovation T: +49 30 2028-1762 a.schuetz@bdi.eu

BDI number of documents: D1711