The European Union has backed a €45bn ($46.6bn) plan to super-charge EU chip production, but analysts worry that it will take too long to bring the new chips to production.

“It is not an unthinkable scenario that by the time these new fabs come on stream, our economies are in the midst of a global recession, and we suddenly have a glut of supply, weak demand and price drops across the board,” Josep Bori, research director at research firm GlobalData, tells Verdict.

EU ministers will meet to approve the package on December 1 and the European Parliament needs to debate it next year before it can become law, according to Reuters. They hope the proposal will increase the EU’s share of the global chip capacity from 8% to 20% by 2030.

The European Chips Act is the latest effort by the EU to slash its reliance on chips from the US and China. The EU had previously sought to woo the world’s biggest semiconductor manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC), to set up new factories in Europe.

“Our reliance on the Far East has become a burden and a universal barrier,” Tony Hague, CEO of strategic manufacturing outsourcing specialist PP Control & Automation, tells Verdict. “It’s encouraging and refreshing to see some territories taking the initiative with significant new investments.”

Bori, however, fears that changes to the original proposal to allow state subsidies for a broader range of chips, could create a risk of the initiative losing focus.

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“Is the EU Chips Act prioritising supply chain security or semiconductors technology leadership in key areas such as artificial intelligence?” Bori says. “If the former, it makes sense to subsidise the production of less advanced and more commoditised chip production, yet this effort will divert funding off the innovation areas identified by the plan.”

GlobalData is the parent company of Verdict and its sister publications.