The European Union is preparing to invest €525 million in startups designing microchips as it seeks to narrow its technology gap with the United States and China. The package focuses on helping young companies turn chip designs into products intended for commercial use.

Radio Free Europe/Radio Liberty reported the announcement on Wednesday, November 4. European Commission Executive Vice-President Henna Virkkunen said Europe needed stronger homegrown design capabilities to improve its standing in the global semiconductor industry.

The European Commission and EU member states are due to provide €440 million of the total through grants. The remaining €85 million is intended for the European Chips Design Platform, which will offer access to specialist software, pre-designed chip components, technical expertise and manufacturing capacity.

European businesses currently account for less than 1% of global revenue in the microchip design segment, according to the Commission. EU officials expect support for designers to stimulate demand for European production facilities and reinforce the wider semiconductor supply chain as artificial intelligence drives chip demand.