Europe has built a serious semiconductor policy for the first time, but it is not on course to achieve the original ambition of doubling its share of global semiconductor production to 20% by 2030. The European Court of Auditors says that target is highly unlikely; a Commission forecast cited by the auditors puts Europe’s share at 11.7% in 2030, up from 9.8% in 2022. The plan has created research infrastructure, investment incentives and a framework for crisis response. It has not yet closed Europe’s structural gap with Taiwan, South Korea, the United States or China, especially in high-volume leading-edge logic.
What Europe was trying to achieve
The 2023 European Chips Act bundled several different goals into one politically memorable target. It aimed to:
- Increase Europe’s share of the global semiconductor value chain.
- Attract wafer fabs and projects for assembly, testing and packaging.
- Strengthen European chip design, research, pilot lines and skills.
- Reduce vulnerability after pandemic-era shortages.
- Protect automotive, energy, telecoms, aerospace, defence and industrial supply.
- Create monitoring and emergency-response mechanisms for future disruptions.
“20%” should not be read as meaning that one-fifth of every chip used in Europe would be made in Europe. It combines a broad value-chain and production ambition, and the measurement has problems. The auditors found a mismatch between revenue-based value-chain calculations and the narrower idea of advanced manufacturing. Market share, European-company revenue, physical capacity in Europe, control of critical technology and resilience during a crisis are different outcomes.
The regulation entered into force in September 2023. Its three pillars were the Chips for Europe research and innovation initiative; incentives for manufacturing, assembly, testing and packaging; and supply-chain monitoring and crisis coordination.
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The reality check: a large ambition with limited direct control
The European Court of Auditors found that the Act gave EU semiconductor policy new impetus, but that implementation was too slow, objectives were not consistently measurable and the 20% target was highly unlikely to be achieved. The Commission forecast cited in the audit rises only from 9.8% of the global semiconductor value chain in 2022 to 11.7% in 2030. The auditors also said Europe’s capacity would need to increase roughly fourfold to meet the original ambition at the current pace.
About €86 billion in expected funding and investment is associated with the strategy through 2030. That is not a single Brussels cheque: only about €4.5 billion, roughly 5%, is directly managed by the European Commission. The rest relies on member-state aid, private capital and financial leverage. The Chips for Europe Initiative itself has up to €3.3 billion from Horizon Europe and Digital Europe, €1.65 billion from each programme.
The scale is modest beside the industry’s capital requirements. The auditors cited roughly €405 billion in investment budgets by major global chipmakers during 2020–2023, with TSMC, Samsung and Intel accounting for about 60%. An ASML position paper estimated that a 20% European share could require about $264 billion (€251 billion) in capital expenditure through 2030. That is an industry estimate, not an EU budget commitment, but it shows why headline European totals do not automatically translate into fabs.
Sources: European Court of Auditors facts and findings, ECA detailed report and the Commission budget explanation.
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What the first Chips Act has achieved
Calling the policy a failure would miss tangible results. It created an EU-level framework that did not previously exist, directed money toward pilot lines and competence centres, and made semiconductor supply a standing industrial-policy priority. It also helped mobilise national subsidies and private investment around new manufacturing proposals.
Those achievements are enabling conditions rather than proof of competitive success. A project can be announced, approved for state aid, financially closed, under construction, equipped, qualified or in volume production; these stages are not interchangeable. Europe’s scorecard remains strongest on policy coordination and research infrastructure, not on demonstrated high-volume capacity.
Why leading-edge fabs are so difficult to build in Europe
Capital and utilization
A modern fab costs tens of billions of euros, takes years to construct and qualify, and must run at high utilization to earn acceptable returns. A technically impressive facility without committed customers can remain commercially weak. Technology can also move during construction, leaving a new plant competing with a newer process elsewhere.
Industrial economics
Electricity, permitting, construction, labour and financing costs all affect location. Semiconductor manufacturing depends on a dense local network of chemicals, equipment, specialist suppliers, packaging, design tools and experienced engineers. Europe has many pieces of that network, but not the same concentration of consumer-electronics and data-centre demand that supports the largest Asian and US investments.
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Member states can offer aid faster than EU institutions, but national subsidy races may fragment the internal market and favour countries with deeper fiscal capacity. The EU cannot direct global companies to allocate capital or guarantee that a subsidised foreign-owned plant will transfer strategic control to Europe.
The auditors also highlighted global competition, raw-material dependence, energy costs and shortages of skilled workers as risks. These constraints mean that more subsidy alone is not a complete solution.
Europe’s real semiconductor strengths
Europe is not starting from zero. It has important positions in:
- Automotive, industrial and embedded semiconductors.
- Power electronics, including silicon-carbide devices.
- Sensors, microcontrollers and specialist analogue chips.
- Manufacturing equipment, materials and research.
- Pilot lines, packaging expertise and industrial applications.
Companies such as ASML anchor high-value parts of the global equipment chain. But these strengths do not automatically produce leadership in advanced logic processors, AI accelerators, smartphone application processors, memory or high-volume foundry manufacturing. Europe’s industrial demand is concentrated in vehicles, machinery, energy and embedded systems rather than the largest consumer-computing markets.
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The strategic choice is not simply “leading edge or nothing.” Leading-edge capability has geopolitical and technology value, but mature and specialty nodes may deliver more immediate resilience for Europe’s factories. Automotive controllers, power devices, sensors, analogue chips, industrial systems and advanced packaging can be more important to keeping European production running than owning the smallest logic node.
Full semiconductor self-sufficiency is neither realistic nor economically desirable. Supply chains are global and specialised. A credible objective is strategic indispensability: secure access to critical chips, domestic capability in selected technologies, reliable suppliers for defence and infrastructure, control of bottleneck equipment and materials, and the ability to expand output during a crisis.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What Chips Act 2.0 would change
As of 18 August 2026, Chips Act 2.0 is a European Commission proposal, not an enacted replacement law. The Commission’s proposal, published on 3 June 2026, would replace the 2023 framework and broaden it in several ways:
- Support both advanced and mainstream production.
- Strengthen European chip design, packaging and integration.
- Stimulate demand for European chips instead of focusing mainly on supply.
- Improve monitoring and reduce strategic dependence on third countries.
- Support technologies linked to AI, photonics, quantum and neuromorphic computing.
The proposal describes a cloud-based European design platform with expanded libraries and tools, including photonics, quantum and AI/neuromorphic technologies. This demand-and-design emphasis addresses a central weakness of the first act: a fab is not sustainable without customers and products.
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The Commission has identified a possible first EU semiconductor plant combining leading-edge manufacturing with chiplet integration and 2.5D/3D packaging. Its preliminary estimate is €20–40 billion in initial public and private investment, with a further potential €3–4 billion for European fabless design companies. These are estimates for a possible project, not approved spending or a committed plant. See the Commission’s advanced chips project page and its formal proposal.
A better way to measure success
The 20% headline is too narrow and too ambiguous to serve as the only test. Investors, manufacturers and policymakers should track:
| Measure | What to verify |
|---|---|
| Operating capacity | Wafer, packaging and testing output by process and product, not announcements. |
| Commercial viability | Anchor customers, utilization, cost competitiveness and durability after subsidies. |
| Strategic resilience | Reliable supply for automotive, defence, energy and telecoms, including mature and power chips. |
| Technology control | European ownership or control of design, equipment, materials, packaging and intellectual property. |
| Ecosystem depth | Scale-ups, engineers, local suppliers and a path from pilot line to volume production. |
| Public value | Whether aid creates capabilities the market would not otherwise build, rather than merely relocating foreign output. |
A fab located in Europe can improve local supply while remaining foreign-owned, dependent on imported equipment and reliant on non-European intellectual property. Location is valuable, but it is not the same as sovereignty.
What to watch next
The formal evaluation of the original Chips Act is expected by 20 September 2026. It is intended to examine economic, governance and social effects and persistent problems. Chips Act 2.0 must then pass the EU legislative process, so its final scope, funding and timetable can change.
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The decisive evidence will be practical: projects reaching financial close, construction, equipment installation, qualification and volume production; customers signing durable supply agreements; and a credible scale-up route for European fabless companies. Watch whether demand is aggregated across automotive, telecoms, defence and AI buyers, whether energy and permitting disadvantages improve, and whether national aid is coordinated rather than duplicated.
The fairest judgment today is that Europe has made a meaningful strategic intervention, but its political vision was larger than its financing, demand, execution capacity and manufacturing economics. Chips Act 2.0 is a sensible attempt to correct that imbalance. It may produce a stronger, more resilient European semiconductor ecosystem, but it cannot be called a solution until proposed projects become commercially viable capacity.
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