Europe´s micro- and nano-electronics industry has grown 5 percent annually since 2000, even in the financial downturn. But the sector´s level of investment and returns lag those of other regions.
The Commission wants to encourage funding for European research to make chips faster, smarter and cheaper and would prioritize research "clusters" in specific locations.
That could help to ensure innovations can be converted into commercial technology and help companies ramp up manufacturing.
The European Commission said 1.5 billion euros in funding would come from the Commission and 3.5 billion from EU member states over the next seven years. The funding would be finalized in July and available from this year.
Last year companies and research institutes developing chips in Europe proposed a 100 billion euro investment up to 2020 to increase their global revenues from nanoelectronics by 200 billion euros per year. ($1 = 0.7751 euros)