The European Chips Act

Article 26, Priority-rated orders.

1. Where the crisis stage is activated pursuant to Article 23, the Commission may require integrated production facilities and open EU foundries to accept and prioritise an order of crisis-relevant products (priority-rated order). Such an obligation shall take precedence over any performance obligation under private or public law.

2. Where applicable, the obligation under paragraph 1 can be imposed to other semiconductor undertakings which have accepted such possibility in the context of receiving public support.

3. When a semiconductor undertaking established in the Union is subject to a third-country priority-rated order measure, it shall inform the Commission. If that obligation has a significant impact on the operation of certain critical sectors, the Commission may require that undertaking, where necessary and proportionate, to accept and prioritise orders of crisis relevant products in accordance with paragraphs 5, 6 and 7.

4. Priority-rated orders shall be restricted to beneficiaries who are users of semiconductors from critical sectors or undertakings supplying critical sectors whose activities are disrupted or at risk of disruption and who, having implemented appropriate risk mitigation measures, were unable to avoid and to mitigate the impact of the shortage. The Commission may request a beneficiary to submit appropriate evidence thereof.

5. The obligations under paragraphs 1, 2 and 3 of this Article shall be enacted as a last resort measure by the Commission via decision. The Commission shall take that decision after consulting the European Semiconductor Board and in accordance with all applicable Union legal obligations, having regard to the circumstances of the case, including the principles of necessity and proportionality.

The decision shall, in particular, have regard for the legitimate aims of the undertaking concerned and the cost, effort and technical adjustments required for any change in production sequence. In its decision, the Commission shall state the legal basis of the priority-rated order, fix the time-limit within which the order is to be performed, and, where applicable, specify the product and quantity, and, where applicable, state the penalties provided for in Article 33 for non-compliance with such an obligation. The priority-rated order shall be placed at fair and reasonable price.

6. Before issuing priority-rated orders in accordance with paragraph 1, the Commission shall give the envisaged recipient of a priority-rated order the opportunity to be heard on the feasibility and details of the order. The Commission shall not issue the priority-rated order when:

(a) the undertaking is unable to perform the priority-rated order on account of insufficient production capability or production capacity, or on technical grounds, even under preferential treatment of the order;

(b) acceptance of the order would place an unreasonable economic burden and entail particular hardship for the undertaking, including substantial risks relating to business continuity.

7. Where an undertaking is required to accept and prioritise a priority-rated order, it shall not be liable for any breach of contractual obligations that is required to comply with the priority-rated orders. The liability shall be excluded only to the extent the violation of contractual obligations was necessary for compliance with the mandated prioritisation.

8. The Commission shall adopt an implementing act laying down the practical and operational arrangements for the functioning of priority-rated orders. That implementing act shall be adopted in accordance with the examination procedure referred to in Article 38(2).