The Commission’s review of the EU Chips Act appears designed to give the EU executive full discretion to exclude US chipmaker Nvidia from the bloc’s advanced AI chip projects.

US chipmaker Nvidia, the dominant designer of AI chips for data centres – particularly its Graphics Processing Units (GPUs) – is a company the EU would have difficulty excluding if it hopes to address its lag in AI compute infrastructure.

Nevertheless, the recently presented EU Chips Act review includes language that could potentially push Nvidia out of certain EU strategic semiconductor projects.

The legislative proposal states that “strategic projects,” such as designing AI chips for EU compute infrastructures or building an advanced European foundry for AI chip production, should be carried out by “domestic undertakings.”

The legal definition of “domestic undertakings,” however, is notably broad. It encompasses foreign companies from countries associated with the EU through international agreements, and foreign companies whose countries of establishment are signatories to the World Trade Organisation’s procurement rules, a group that includes around 50 countries, such as Taiwan, the United States, and Hong Kong.

Nevertheless, the same article on strategic projects also states that “participation in strategic projects shall be limited to Union entities.” The term “Union entities” is undefined in the proposal or its annexes.

To further complicate matters, an additional provision allows for “derogation”, enabling the Commission to permit the participation of non-Union entities provided they qualify as “domestic undertakings” under the earlier definition.

This ambiguous framing seems to de facto allow foreign companies to participate in EU semiconductor strategic projects.

Currently, it would be impossible for the EU to build an advanced foundry in Europe without the participation of the Taiwanese AI chip manufacturer TSMC. It would also be counterproductive to ban US Nvidia chips from the EU’s AI compute infrastructure.

Still, the vague wording grants the Commission the power to exclude any foreign company from specific projects if they are deemed too sensitive.

The Commission did not reply to Euractiv‘s questions by the time of publication.

Negotiations over the Chips Act review have not yet begun. An agreement on the law between the European Parliament and the Council of the EU is expected sometime between mid-2027 and 2028.

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Source: Euractiv.com