EU Chips Act 2.0: From emergency response to strategic industry development

The next European Chips Act must evolve from an emergency response into a strategic industrial policy that makes Europe competitive, indispensable and resilient within the global semiconductor ecosystem. It should be guided by realistic, market-driven objectives and strengthen the entire semiconductor value chain. 

Geopolitical tensions over semiconductor technologies and critical inputs have increased and threats of supply disruptions persist, as the Nexperia case illustrates. Projects under the existing Chips Act have advanced unevenly, funding is still fragmented and business conditions in Europe remain challenging for critical parts of the semiconductor value chain. Other regions – especially the US, Japan, South Korea and China – now combine vast incentives with clear industrial strategies. 

Europe needs a bold Chips Act 2.0 that fully aligns EU and Member States’ efforts to make Europe an attractive destination for global semiconductor investments and meet expected demand. Industry strongly supports Member States’ call for an ambitious revision of the Chips Act to revitalise Europe’s semiconductor ecosystem. The Semiconductor Declaration’s three strategic priorities – prosperity, indispensability, resilience – provide a solid foundation for this renewed ambition.

Europe’s objective cannot be self-sufficiency but must be indispensability: becoming a global leader that the world relies on for critical technologies, skills and innovation. Europe should invest where it already holds a competitive edge or can realistically catch up. For this, a centralized EU financing instrument for strategic semiconductor projects is essential to boost the EU’s future competitiveness and security. Where direct competition with global market leaders is not viable, the EU should build reliable partnerships globally to secure access to key semiconductor technologies and supplies. 

To achieve prosperity, indispensability and resilience, the next Chips Act should be guided by five priorities: 

Smart investment and speed: Pool EU, national and private funding to mobilise €200 billion for semiconductor investments by 2035, whilst cutting approval times for strategic European projects to under seven months. Establish a central EU semiconductor budget line of at least €20bn under the European Competitiveness Fund to ensure critical mass and coordination.

Demand creation and scale: Shift from a supply-driven approach to a long-term strategy that addresses actual market demand for semiconductors and builds on Europe’s existing strengths in the microelectronics ecosystem. By 2030, launch five semiconductor alliances linking chip makers with key sectors to stimulate demand, investment and innovation in coordination with downstream industries such as industrials, automotive, energy, defence, healthcare, telecoms, data centres, and AI applications, including industrial and edge AI. 

Global indispensability: Focus investment and support on areas where Europe can lead – for example, semiconductor manufacturing equipment, innovation at mature node sizes, chiplets, photonics and advanced materials – whilst expanding partnerships with trusted economies and investing strategically in underdeveloped yet promising areas to leap ahead (e.g., quantum chips).

Skills and framework conditions: Make Europe an attractive destination for semiconductor investments. Introduce coordinated, EU-wide tax incentives, train and attract the people needed to fill Europe’s semiconductor workforce gap, and ensure fast-track permitting, affordable energy and infrastructure. 

Sustainability: Make energy-efficient chips and circular manufacturing Europe’s hallmark contribution to the global industry. 

Success should be measured not in global market share, but in Europe’s relevance to the world, its ability to innovate, attract investment, meet demand, shape standards and lead in technology deployment. With clear objectives that reflect the needs of both the semiconductor ecosystem and downstream sectors, a second-generation Chips Act can turn Europe’s semiconductor policy from a defensive subsidy scheme into a forward-looking industrial strategy that drives competitiveness and resilience across value chains. 

Europe has the ideas, expertise and industrial potential, but lacks focus, scale and speed. DIGITALEUROPE’s European AI and Tech Declaration shows that with strong public-private partnerships, Europe can lead globally in critical technologies like semiconductors. The next Chips Act must replace aspiration with execution – coordinating investment, tightening governance and linking innovation directly to industrial demand.