eu chips act 2.0: a strategic pivot for semiconductor supremacy?

2025-05-09 general

Brussels, Friday, 9 May 2025.
the eu is doubling down on its semiconductor ambitions with a ‘chips act 2.0’. this initiative seeks to bolster europe’s chip manufacturing and diminish reliance on foreign suppliers. the eu’s initial target was to control 20% of the global chip market by 2030. however, the european court of auditors predicts the eu will only reach 11.7%. industry groups are advocating for a quadrupling of the eu’s chip budget to €20 billion. can europe redefine its semiconductor landscape?

ambitious goals, uncertain outcomes

The original EU Chips Act, approved in 2023, aimed to double the EU’s global semiconductor market share to 20% by 2030 [3]. This was to be achieved via €43 billion in public and private investments [3][2]. However, the European Court of Auditors (ECA) projects that the EU will likely only reach 11.7% market share by 2030 at the current rate [1][2]. This shortfall has spurred calls for a revised strategy and increased funding to revitalize the European semiconductor industry [1].

industry calls for increased investment

The International Semiconductor Industry Association (SEMI) is urging the EU to increase its chip sector subsidies fourfold to €20 billion [4][5]. SEMI argues that a dedicated EU budget would foster a fairer competitive landscape across the region, as individual member states currently prioritize their own national industries [1][4][5]. This additional funding would also support investments in advanced AI chips and quantum computing technologies, areas where Europe lags [1][4].

strategic focus and collaboration

Industry experts suggest the EU should build its strategy around its existing strengths, such as ASML’s EUV lithography and Zeiss’s optical systems [1][2]. Nine EU member states have already formed a ‘Semiconductor Coalition’ to enhance chip self-sufficiency through collaborative projects [1][2]. This coalition will focus on advanced process technologies below 2 nanometers, third-generation semiconductor materials, and AI chip architectures [1][2]. The goal is to increase local production of key products, such as automotive chips, to over 50% [1][2].

potential impact on key players

The EU’s push for semiconductor independence could significantly impact global equipment providers like ASML [GPT]. ASML’s dominance in EUV lithography makes it a crucial partner for any advanced chip manufacturing efforts in Europe [1]. Increased EU-based chip production could drive demand for ASML’s equipment, potentially boosting its stock value. Conversely, if the EU prioritizes local equipment suppliers, it could pose challenges for ASML’s market share in the long term [alert! ‘this is speculative and depends on policy details’]. However, Infineon warned that a 25% tariff imposed by the U.S. on automobiles will affect its performance [8].

domestic alternatives gain traction

As the EU and other regions strive for semiconductor autonomy, China is accelerating its domestic production of lithography equipment and materials [6]. Shanghai Microelectronics has reportedly completed validation of its 28nm lithography technology, with over 60% of components now produced domestically [6]. Government policies, including tax breaks for domestic equipment and investment in local startups, are further incentivizing this trend [6]. This could lead to increased competition in the global lithography market, potentially impacting the long-term prospects of established players [6].

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eu chips semiconductor act