The European Commission will propose a draft legislation for the regulation of microchips in early February, European Commission president Ursula von der Leyen said today.

The move comes as the EU's need for chips is set to double in the next decade.

"Most of supplies come from a handful of producers outside Europe. This is a dependency and uncertainty we simply cannot afford," von der Leyen told a virtual session of the World Economic Forum in a videolink speech today.

"By 2030, 20% of the world's microchips production should bein Europe," she said.

The proposal, known as the European Chips Act, will aim to adapt state aid rules, improve tools to anticipate shortages andcrisis and strengthen research capacity in the bloc.

Ursula von der Leyen also today warned Russia that its trade with the European Union was "far more important" than the other way around, as Europe readied a response to a possible attack on Ukraine.

The warning came as the West and Russia escalated rhetoric over Ukraine, as tens of thousands of Russian troops massed on the Ukrainian border.

"If the situation deteriorates, if there are any further attacks on the territorial integrity of Ukraine, we will respond with massive economic and financial sanctions," von der Leyen told a virtual session of the World Economic Forum.

"The European Union is by far Russia's biggest trading partner and by far the largest investor. And yes, this trading relationship is important to us. But it is far more important to Russia," she said.

"We hope an attack won't happen. But if it does, we are prepared."

The situation is fanning fears that the relatively low-level conflict in Ukraine, part of which Russia annexed in 2014 and where Russia-backed forces continue to exchange fire with Ukrainian troops, could blow up into a far bigger confrontation.

The European Union has not publicly said what economic sanctions it would impose in retaliation for a further Russian invasion.

But it has made clear it would work in lockstep with the US to exact some form of harsh punishment on Moscow if Russian troops rolled into Ukraine.