In a significant move for the global tech landscape, all 27 EU member states have issued a joint declaration underscoring an “urgent need” for a robust, second-phase EU Chips Act. This collective call highlights Europe’s ambition to reassert its prominence in semiconductor production and design, recognizing that the continent has fallen behind in this critical sector.
As Digital Tech Explorer is dedicated to keeping tech enthusiasts ahead of trends, this development signals a pivotal moment for European digital innovation. The declaration asserts: “To secure and strengthen our global position, the EU must prioritize the semiconductor sector as a strategic industry, on par with aerospace and defence, and treat it as a key target for investment, R&D and innovation, and—if necessary—use the available instruments to protect it and act collectively.”
The urgency is clear. “While global competitors are significantly ramping up public investment, much of the value creation in the semiconductor industry is occurring outside the EU,” the document continues. “This underscores the need for a strengthened, second-phase EU Chips Act that is both ambitious and forward-looking.”
Europe’s Standing in the Global Semiconductor Industry
As TechTalesLeo often explores the dynamics of digital innovation, it’s undeniable that Europe’s influence in chip production has waned. A revealing OECD report on the semiconductor value chain illustrates how Asia, particularly China, Korea, and Taiwan, dominates as the largest exporter of chips, while US-based companies capture the lion’s share of profits.
Europe isn’t entirely absent from the table. Powerhouses like the Dutch company ASML, a leader in manufacturing cutting-edge semiconductor lithography equipment, and Infineon, Europe’s largest chip manufacturer, maintain a strong presence. Even Arm, despite shifts in its ownership and stock exchange listing outside of Europe, originated from the continent. However, a 2020 report from the Semiconductor Industry Association paints a stark picture: the EU accounts for only 9% of global manufacturing capacity—significantly less than Taiwan (22%), South Korea (21%), and Japan (15%). Projections suggest this share could further decline to 8% by 2030, a worrying trend for Europe’s technological autonomy.
As the declaration wisely emphasizes, relying on semiconductors for “enabling necessary societal transitions” necessitates a robust domestic production capability. In an era of potentially fractured global trade and relationships, self-sufficiency in this critical area becomes paramount.
Core Objectives for a Revitalized EU Chips Act
The proposed objectives for a revised EU Chips Act, as outlined in the declaration, aim to reshape Europe’s semiconductor future:
- Prosperity: Cultivating a competitive European semiconductor ecosystem that boosts Europe’s economic and overall welfare, driving value across diverse end-markets.
- Indispensability: Sustaining and advancing Europe’s technological and innovation leadership to secure vital control points within the global semiconductor value chain.
- Resilience: Ensuring a stable and trustworthy supply of semiconductors for Europe’s most critical sectors, particularly during periods of global disruption or geopolitical uncertainty.
Assessing the Original EU Chips Act’s Efficacy
The initial EU Chips Act, still in effect, set an ambitious goal: to increase the EU’s share in the “global market value chain by revenue” to 20% by 2030. However, its realism has been a point of contention. Current forecasts, as highlighted in a report on the EU’s digital transition, project the EU’s share to reach only around 11.4% by 2030. This significant gap is a primary concern, leading the European Court of Auditors in a special report published in April to label the original target as “overly ambitious.”
“We recommend that the Commission carries out an urgent reality check and swiftly begins preparing the next strategy,” the report urged. In response, the EU has initiated a public consultation to gather evidence and review the effectiveness of the existing act, signaling a serious commitment to addressing its shortcomings.
Strategic Pathways for the Next Phase
The foundational declaration, while concise, identifies several key areas for a future iteration of the Chips Act:
- Fostering robust collaboration between industries, supporting emerging tech champions, and streamlining legislative processes.
- Boosting public and private investment and cross-industry cooperation, with a particular focus on quantum computing and AI fields.
- Investing in and supporting the development of a highly skilled workforce for the semiconductor industry.
- Championing the green transition and integrating clean energy solutions into semiconductor manufacturing.
- Strengthening global collaboration while safeguarding European interests.
While these points offer a solid framework, many observers, including us at Digital Tech Explorer, ponder the true financial commitment behind these aspirations. The US, for instance, launched its US CHIPS and Science Act in 2022 under the Biden administration, channeling hundreds of billions into domestic chipmaking and research. This monumental investment has since seen its strategic priorities refined by subsequent administrations, reflecting the dynamic interplay between policy and economic realities.
For example, global economic conditions and ongoing policy discussions regarding subsidies influenced Intel’s initial timeline for its planned “megafab” facility in Magdeburg, Germany. Though eventually reaffirmed, this illustrates the complex landscape of international investment, even as Intel continues to operate significant facilities in Europe, such as in Ireland. Similarly, US administrations have actively engaged with companies like Nvidia and AMD regarding their operations and exports to China, alongside efforts to encourage fabless chip designers to prioritize US-based manufacturing. In parallel, China has implemented its own measures to promote domestic tech adoption and restrict foreign-made components, including advanced AI chips, underscoring the intensified global competition in the semiconductor arena.
As TechTalesLeo observes these developments, the central question for Europe remains: how much financial weight will back this renewed declaration to truly make Europe a formidable player in the future of semiconductors?