Silicon Sovereignty. The European Chips Act and integration through crisis.

Abstract

During the COVID-19 pandemic the European Union (EU) suffered great shortages in semiconductors, more commonly known as chips, affecting a multitude of economic sectors and causing delays in many products. Such a technological crisis was unprecedented, and the EU’s economy suffered accordingly. The European Chips Act (ECA) of 2023 contained a multitude of regulatory measures aimed at mitigating problems surrounding the end-to-end supply chain of semiconductors. The Act seems to indicate a form of European integration in industrial policy, which traditionally has always been avoided within the EU due to a preferred focus on liberal values and a free market economy. However, the European Commission is not granted with full authority in semiconductor policy and proves to be heavily dependent on Member State action. The ECA is therefore a compelling example of incomplete integration. This thesis aims to uncover the decisive factors behind this significant, yet limited, change of regulatory direction for the EU and shall add to the literature on European integration through crisis. By applying a synthetic model of liberal intergovernmentalism and neofunctionalism this thesis poses that the factors transnational interdependence (TI) and supranational capacity (SC) ultimately decide how crisis in the EU translates into integration. It does so by applying the qualitative research method of Causal Process Tracing (CPT) and analysing official EU, Member State and industry documents created during the legislative process towards the ECA. The findings suggest that a high degree of TI in the European chips industry generated demand for integration and formed a permissive condition for action on EU level. On the other hand, limited SC prevented a central and autonomous role for the Commission as the Act ended up with a bottom-up approach. Nonetheless, these capacities proved not to be rigid, and during the legislative process the Commission strategically extended its regulatory limitations.