Commission welcomes international agreement to boost trade in new generation of semiconductors - Main contents

The European Commission has today welcomed the signing of an international agreement which will make it easier to trade in semi-conductors, a key component in many popular goods such as mobile phones, MP3-players, electronic devices in cars and personal organisers.

The MCP Agreement will eliminate customs duties and other charges on multi-chip integrated circuits among the main semiconductor trading nations and territories. Over the last year, the European Commission had assumed a leading role in the negotiations towards the conclusion of this Agreement.

EU Trade Commissioner Peter Mandelson i said: "This agreement puts free trade at the service of European businesses and consumers. It is a show of confidence in the global competitiveness of the EU semiconductor industry, and a signal of our commitment to ensuring that the modern trading environment is in step with technological innovation."

The MCP Agreement will eliminate customs duties and other charges on MCPs among the main semiconductor trading nations and territories. Semiconductor products already generally benefit from free trade under the terms of the WTO Information Technology Agreement of 1996. However as a recent technological development, multi-chip integrated circuits are not covered and still attract various levels of duties world wide.

The MCP Agreement will initially enter into force between the European Community, the United States, Korea and Chinese Taipei on 1 April 2006. Japan already applies zero duties on multi-chip integrated circuits and is expected to join the Agreement later this year. The Agreement is open to the accession of additional Members with a production of semiconductors.

What exactly is an MCP?

MCPs - or multi-chip integrated circuits - allow a multitude of semiconductor integrated chips to be combined into one product. MCPs are frequently used in devices such as mobile phones, personal organisers, MP3-players and electronic devices in cars. They allow manufacturers to combine several integrated circuits for higher product performance while using less space. For example, they can be used to provide permanent storage for software such as telephone directories, or temporary storage for video files.

In 2005, the European-based semiconductor industry reached world-wide sales of multi-chip integrated circuits in excess of €2bn. Multi-chip integrated circuits form an increasingly important part of company portfolios and global sales of multi-chip integrated circuits are expected to grow substantially over the coming years.