The EU’ $50 Billion Chips Act , Can Brussels Catch Up to the US and Asia in the Semiconductor Arms Race?

44% of the world’s semiconductors were produced in Europe in 1990. The continent was truly at the center of the world’s chip production since the factories were running, the engineers were trained, and the supply chains passed through Dutch lithography equipment and German precision manufacturing. That percentage had dropped to 8% thirty years later. The scale and speed of investment in Taiwan, South Korea, and eventually China simply outpaced the factories, which did not vanish overnight. Meanwhile, European industrial policy shifted its focus elsewhere, and businesses that could have contested for leadership in advanced chip manufacturing gradually gave up ground without fully realizing what was being lost. The cost of such retreat became suddenly apparent due to the pandemic and the supply chain problem it caused, something that politicians had been able to overlook for thirty years.

The institutional solution to that reckoning is the EU Chips Act, which went into effect in September 2023. It is the biggest industrial policy intervention the European Union has made in the technology industry in a generation, with €43 billion in public expenditure, or roughly $50 billion, and plans to stimulate over €80 billion in combined public and private funding.

By 2030, the stated objective is to double Europe’s share of the global semiconductor market from its current 8% to 20%. This will lessen the continent’s reliance on Asian producers for the chips that power its automobiles, military hardware, medical equipment, and the artificial intelligence infrastructure that every European government is concurrently attempting to develop. The goal is genuine. The question of whether the method and the objective are matched is one that commentators continually bringing up, albeit more bluntly.

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Based on evaluations by independent semiconductor researchers and the European Court of Auditors, the honest response is most likely not. Press releases and political speeches frequently mention the 20% target, but the estimate that appears more frequently in analytical reports is closer to 11.7%. This figure represents significant progress from the EU’s current position, but it falls well short of the headline goal and would still leave Europe heavily dependent on foreign supply for cutting-edge chips.

The discrepancy between what the Chips Act can realistically accomplish and what its designers have openly pledged to is unsettling, and it begs the question of whether the policy is being developed around what Europe needs or around what European governments can legitimately declare at summits without immediately arousing suspicion.

The EU is attempting to shut down competition, but it is not stagnating. TSMC, Samsung, and Intel all announced significant U.S. fabrication facilities in response to the United States’ own CHIPS and Science Act, which committed over $50 billion exclusively to semiconductor manufacturing subsidies. With factories in Hsinchu and Tainan with process nodes that no European manufacturer currently operates at scale, Taiwan’s TSMC continues to be the leading force in advanced chip manufacturing by a margin that is difficult to quantify in percentage terms.

It is simply ahead of everyone else in the production of the most advanced logic chips. Memory is dominated by Samsung and SK Hynix in South Korea. China is investing at a rate that reflects true strategic urgency in spite of export limitations. With a policy framework that has been in place for less than three years, Europe is about to enter a race whose leaders have been gaining speed for thirty years.

Genuinely and convincingly, the Chips Act has stopped the discussion and forced a continental recognition that reliance on semiconductor supply chains is a strategic vulnerability rather than a necessary expense of globalization. Investments are shifting. One of the first indications that the policy was producing a genuine industrial response was Intel’s pledge to construct a sizable fabrication plant in Magdeburg, Germany.

Despite the project’s delays and cost negotiations, which demonstrated how challenging it is to duplicate the talent ecosystem and supply chain that enable semiconductor manufacturing to operate at the frontier. Even though its machines are sold all over the world and its competitive position benefits Europe’s knowledge economy more directly than its production capacity, ASML, the Dutch company whose extreme ultraviolet lithography machines are the single most important piece of equipment in advanced chip production—and which enjoys a global monopoly on EUV technology—remains a true European advantage.

Even if the 20% target was missed, it’s probable that it was always partially aspirational—a framing technique meant to convey dedication rather than an exact engineering target. Given the public monies involved, such reading is arguably more kind than the policy merits, but it is also more truthful about how industrial policy actually operates at the political level. Instead of continuously importing the current chip design, the more pertinent question would be whether Europe can establish enough research infrastructure to be competitive in the next generation of chip design and generate enough capacity to dependably supply its own automotive and defense sectors.

The Chips Act is more likely to be deemed effective on those more specific but attainable grounds. There is a sense that Brussels is more aware of the issue it is trying to solve than it is of how quickly that issue needs to be resolved, as evidenced by the building schedules, the difficulties in finding talent, and the bureaucratic pace of distribution.