eu chips act: national rifts threaten semiconductor ambitions

2025-05-26 general

brussels, Monday, 26 May 2025.
The EU Chips Act, designed to double Europe’s semiconductor production by 2030, faces challenges as member states pursue their own strategies. Intel’s postponement of a €30 billion fab in Germany highlights the difficulties. A new “Silicon Schengen” coalition aims to unite efforts, but the European Commission now projects the EU will only reach 11.7% of global production by the target year. Can collaboration overcome national interests to achieve chip independence?

Divergent strategies and delayed investments

The EU Chips Act, launched in 2023, aimed to elevate the bloc’s share of global semiconductor production to 20% by 2030 [1]. However, progress is hampered by individual member states charting their own courses [1]. Intel’s decision to postpone its €30 billion fab in Magdeburg, Germany, due to financial constraints and other challenges, exemplifies the difficulties [1]. These setbacks raise concerns about the overall effectiveness of the EU’s strategy and its potential impact on related stock values [alert! ‘explicit stock values not provided in source’].

The ‘silicon schengen’ concept

In response to these challenges, Dutch Economic Affairs Minister Dirk Beljaarts introduced the concept of a ‘Silicon Schengen,’ a coalition designed to foster collaboration among companies, research institutions, and policymakers [1]. Launched in March 2025, this initiative seeks to strengthen the entire semiconductor value chain [1]. The coalition includes Austria, Belgium, Finland, France, Germany, Italy, Poland, Spain, and the Netherlands, with potential expansion to ‘14 or 15’ member states [1]. Beljaarts emphasizes that this coalition is designed to work alongside, not against, the European Commission [1].

Global competition and european positioning

The global semiconductor market is projected to exceed $755 billion in 2025, demonstrating a compound annual growth rate of 12% [6]. Asia Pacific currently accounts for over half of global semiconductor revenues, with TSMC dominating the foundry market [6]. Europe’s efforts to increase its chip production capacity must contend with this established dominance [6]. Finland, for example, launched its ‘Chips from the North’ strategy in 2024, aiming to triple value-add and quadruple hiring in the sector within a decade [1]. These efforts, while promising, face significant global competition [1].

Trade dynamics and geopolitical factors

Geopolitical factors also influence the semiconductor landscape. The European Commission downgraded EU growth forecasts recently, partly due to US tariffs [1]. Furthermore, potential 50% tariffs on all EU imports proposed by Donald Trump add another layer of uncertainty [5]. These trade tensions could further complicate the EU’s efforts to bolster its semiconductor industry and impact investor confidence [5]. Securing the silicon chain requires navigating complex international relationships and potential trade barriers [6].

Globalfoundries expansion and subsidy hopes

Amidst these challenges, some companies are still pursuing expansion within Europe. Globalfoundries plans a significant expansion of its chip factory in Dresden, Germany, aiming to double production capacity to 1.5 million wafer starts annually by 2030 [4]. The expansion is driven by growing demand from Europe’s automotive and industrial sectors for energy-efficient chips [4]. Globalfoundries hopes to secure subsidies under a potential ‘Chips Act 2.0,’ after missing out in the first round [4]. Approval is contingent on state aid clearance from the European Commission [4].

Bronnen

chips act european union