The Missing Strategy in Europe’s Chip Ambitions
European semiconductor technology suppliers hold market-leading—sometimes monopolistic—positions at various points in the global semiconductor value chain. Europe is home to competitive suppliers of semiconductor manufacturing equipment, chemicals, sensors, automotive chips, and power semiconductors, to name just a few. Because of the steep barriers to entry and close customer–supplier relationships, these are not easy markets to enter and successfully compete as a new company. The world depends on semiconductor technologies from European companies, and just as Europe depends on front- and back-end manufacturing in Asia, Asian fabrication plants (fabs) depend on manufacturing equipment and chemicals from European suppliers. Furthermore, manufacturers of electric vehicles all over the world depend on chips from Europe. The list goes on. Semiconductors are a strategic asset to Europe, one that provides geopolitical leverage—as other countries depend on access to our technology.
Because semiconductors are at the epicenter of the US–China technology rivalry, it is crucial for the European Union (EU) to have a clear-eyed, well-informed semiconductor strategy rooted in current geopolitical reality. Unfortunately, the EU Chips Act is not a long-term semiconductor strategy with meaningful policy objectives but a collection of ideas and initiatives. This necessitates EU member states filling in the blanks—understand the competitive position of their domestic semiconductor industries; articulate why and to what end they want to support this sector, and what their long-term policy objectives are; and invest in their national administrative resources and brainpower. Doing all of that is a prerequisite to being able to engage in, as well as shape, policy discourse meaningfully at the EU level, vis-à-vis the United States and at the international level.
If EU member state governments fail to enhance and intensify their efforts, there is a very real risk that the European semiconductor industry will lose its prominence in the global semiconductor value chain, and Europe would consequently have lost a strategic asset.
