The European Commission has today announced plans for a new chipmaking "ecosystem", to keep the EU competitive and self-sufficient after a global semiconductor shortage showed the hazards of relying on Asian and US suppliers.

The US last year announced its "CHIPS for America Act" aimed at boosting its ability to compete with Chinese technology.

"Digital is the make-or-break issue," Commission President Ursula von der Leyen said in a policy speech at the European Parliament in Strasbourg today.

"We will present a new European Chips Act. The aim is to jointly create a state-of-the-art European chip ecosystem, including production," the Commission President said.

"That ensures our security of supply and will develop new markets for ground-breaking European tech," she added.

Industry Commissioner Thierry Breton said chips were more than just key components for automakers, smartphone makers and video gamers.

"The race for the most advanced chips is a race about technological and industrial leadership," he wrote in a blog post.

Breton said a European Chips Act would encompass research, production capacity and international cooperation, and that the bloc should look into setting up a dedicated European Semiconductor Fund.

A shortage of semiconductors has posed one of the biggest risks to the EU's rebound from the effects of the Covid-19 pandemic. The Commission last year unveiled plans to invest a fifth of its €750 billion Covid-19 recovery fund in digital projects.

Von der Leyen lamented the EU's reliance on Asian-made chips and its diminished share in the supply chain, from design to manufacturing capacity.

However, hurdles to building up Europe's chip capability include getting access to rare earth minerals outside the bloc and reluctance by companies to make hefty investments unless they can run the plants at full capacity to boost returns.

In response to the announcement, Eamonn Sinnott, General Manager of Intel Ireland said Intel has plans to invest billions of euros in new leading edge semiconductor manufacturing capacity in Europe.

"Today's announcement of an EU Chip Act to foster a vibrant, cutting-edge and future-proof semiconductor ecosystem in Europe is a welcome step and aligned with our shared ambitions to reinvigorate the sector in the EU," he said.