EU hopes €43bn plan will fix chip shortages as supply chain crisis bites

The European Union has announced a €43bn ($48bn) plan to overcome its dependency on Asian computer chip makers as governments and businesses around the world battle with a global supply chain crisis that experts believe could persist for much of the year.

With consumers having to wait months for cars, dishwashers and other durables thanks to chip shortages, the bloc's plan marks one of the most significant developments yet seen as a result of the tectonic shifts in the global economy set off by the coronavirus pandemic.

European commission president Ursula von der Leyen said on Tuesday: "Chips are at the centre of the global technological race. They are, of course, also the bedrock of our modern economies.

"The pandemic has also painfully exposed the vulnerability of its supply chains," von der Leyen said. "We have seen that whole production lines came to a standstill. While the demand was increasing, we could not deliver as needed because of the lack of chips."

Von der Leyen said a "chips act" would link research, design and testing and coordinate EU and national investment. The plan pools public and private funds and allows for state aid to get the massive investments off the ground.

The plan still needs the backing of the EU parliament and the member states.

The EU move mirrors Joe Biden's $52bn push to invest in a national chip-producing sector to make sure more production occurs in the United States, and one expert said it highlighted how the pandemic was reshaping the world economy.