Semiconductors in Europe: Reclaiming a Critical Frontier

The unassuming semiconductor, a tiny sliver of silicon, underpins virtually every aspect of modern life – from the smartphones in our pockets and the cars we drive, to critical infrastructure, artificial intelligence, and advanced defense systems. Its strategic importance has never been more apparent, thrust into the geopolitical spotlight by recent global supply chain disruptions and escalating technological rivalries. While Europe boasts a rich history of innovation in microelectronics, its current position in the global semiconductor landscape is one of relative dependence, particularly in leading-edge manufacturing. However, a powerful resurgence is underway, driven by a clear understanding of the economic, strategic, and resilience imperative to reclaim a significant role in this critical frontier.

Historical Context and Current Landscape of Semiconductors in Europe

Europe’s journey in semiconductors began with pioneering contributions, notably in the field of lithography through companies like ASML, a global leader indispensable to advanced chip manufacturing. Yet, over several decades, the bulk of semiconductor manufacturing capacity shifted towards Asia, attracted by lower costs and burgeoning consumer electronics markets. Europe’s focus evolved to niche strengths: automotive semiconductors (Infineon, NXP, STMicroelectronics), industrial applications, power electronics, and a robust design ecosystem. While these areas represent significant technological prowess and market share, the continent largely lost its footing in the capital-intensive, high-volume production of cutting-edge logic chips – the brains of modern digital devices. This reliance on non-European supply chains for advanced chips became a glaring vulnerability during the COVID-19 pandemic, as chip shortages brought key European industries, such as automotive, to a standstill.

Drivers for European Semiconductor Revival

The impetus for Europe’s renewed semiconductor ambition is multifaceted and deeply strategic.

1. Geopolitical Tensions & Supply Chain Resilience: The most immediate and potent driver is the desire for enhanced supply chain resilience. The pandemic exposed the fragility of highly globalized and concentrated supply chains, while escalating geopolitical tensions, particularly the US-China tech rivalry, underscored the risks of technological dependence. Europe recognizes that ensuring a secure and reliable supply of semiconductors is paramount to protecting its industries and economic stability. Reducing reliance on single points of failure is no longer just an economic consideration but a strategic imperative.
2. Economic Competitiveness: Semiconductors are the bedrock of future economic growth. Industries like artificial intelligence, the Internet of Things (IoT), 5G and future 6G networks, quantum computing, and advanced automotive technologies are all utterly dependent on advanced chip capabilities. By strengthening its domestic semiconductor industry, Europe aims to protect and foster innovation, ensuring its industries remain globally competitive and can lead in emerging technological fields.
3. Strategic Autonomy: Beyond economic competitiveness, the control over semiconductor technology translates directly into strategic autonomy. Access to cutting-edge chips is crucial for national defense, cybersecurity, healthcare innovation, and the fundamental operation of digital infrastructure. A robust domestic semiconductor ecosystem contributes directly to Europe’s ability to act independently and secure its critical interests.
4. Green Transition: The drive towards a sustainable future also heavily relies on semiconductors. Power semiconductors, for instance, are vital components in renewable energy systems, electric vehicles, and energy-efficient industrial applications. Investing in these areas aligns with Europe’s ambitious green transition goals.

Key Players and Major Funding in the European Semiconductor Landscape

Europe’s semiconductor ecosystem, while not dominating leading-edge logic chip manufacturing, hosts several globally significant companies that are crucial to the industry’s revival efforts, alongside substantial public and private investments.

Top European Semiconductor Companies:

1. ASML Holding N.V. (Netherlands): Undisputedly the most critical player in the global semiconductor supply chain, ASML is the world’s leading manufacturer of lithography systems, the highly complex machines essential for producing microchips. Their Extreme Ultraviolet (EUV) lithography technology is indispensable for manufacturing the most advanced chips. In 2023, ASML reported net sales of €27.6 billion.
2. Infineon Technologies AG (Germany): A powerhouse in power semiconductors and microcontrollers, Infineon is a key supplier to the automotive, industrial, and consumer electronics sectors. Their products are vital for energy efficiency, electromobility, and IoT applications. Infineon achieved revenues of approximately €16.3 billion in its 2023 fiscal year.
3. STMicroelectronics N.V. (Switzerland/France): As a global semiconductor leader, STMicroelectronics designs, manufactures, and markets a broad range of products, with a strong focus on automotive, industrial, and consumer applications. They are particularly strong in microcontrollers, sensors, and power management ICs. In 2023, STMicroelectronics’ net revenues reached $17.29 billion.
4. NXP Semiconductors N.V. (Netherlands): NXP is a leading provider of secure connectivity solutions for embedded applications, with strong market positions in automotive, industrial & IoT, mobile, and communication infrastructure. Their chips are integral to smart cars, smart homes, and secure transactions. NXP reported full-year 2023 revenue of $13.28 billion.
5. Robert Bosch GmbH (Germany): While a diversified technology and services company, Bosch is a significant player in the automotive semiconductor space, particularly in MEMS sensors and power semiconductors, which are crucial for advanced driver-assistance systems and electric vehicles. Bosch has also invested significantly in its own chip manufacturing facilities. In 2023, the Bosch Group generated total sales revenue of €91.6 billion, with a significant portion related to its Mobility sector which heavily utilizes semiconductors.

Major Funding and Investments:

The European Chips Act is the central pillar of Europe’s funding strategy, aiming to mobilize €43 billion in public and private investment to reach the 20% global market share target by 2030. Key funding initiatives include:

• “Chips for Europe” Initiative: This allocates substantial public funds to support research, development, and the establishment of advanced pilot production lines. For instance, the Chips Joint Undertaking (Chips JU) announced calls in July 2024 for proposals to support semiconductor research and innovation in photonics, competence centers, and a cloud-based design platform, totaling €325 million in EU funding, with additional financing expected from participating states. A specific €65 million funding call for quantum chip technology development was also announced in September 2024 as part of a broader €200 million initiative.
• National Investments: Member states are complementing EU efforts with significant national subsidies to attract and support semiconductor projects.

• Intel in Germany: One of the most significant announcements saw Intel committing to build a €30 billion chip manufacturing complex in Magdeburg, Germany, with substantial subsidies from the German government. While facing some reported delays, this project remains a cornerstone of Europe’s advanced manufacturing ambitions.
• ams OSRAM in Austria: In February 2025, ams OSRAM AG received approval for a grant under the European Chips Act for its semiconductor manufacturing facility in Premstaetten, Austria. The company plans to invest €567 million by 2030 to expand its clean room and strengthen its development and production site, with up to €227 million in approved funding.
• Air Liquide in Germany: Recognizing the critical need for materials, Air Liquide announced in July 2025 an investment of over €250 million in Germany to build state-of-the-art industrial gas production units for a world-leading chip manufacturer in Dresden, at the heart of “Silicon Saxony.” This substantial investment ensures the supply of essential gases for chip manufacturing.
• STMicroelectronics and GlobalFoundries in France: While specific new public funding amounts under the Chips Act for these collaborations are continually evolving, projects like the joint 300mm fab in Crolles, France, by STMicroelectronics and GlobalFoundries (announced in 2022) are receiving significant support to boost production capacity for key technologies like FD-SOI.

These major investments, coupled with ongoing research funding and talent development programs, underscore Europe’s serious commitment to rebuilding its semiconductor capabilities and reducing its strategic dependencies.

Challenges and Hurdles

Despite the ambitious vision and significant investment, the path to a revitalized European semiconductor industry is fraught with challenges:

• Investment Scale: The immense capital expenditure required for leading-edge fabs (tens of billions of Euros).
• Talent Gap: Shortage of skilled engineers, researchers, and technicians.
• Timeframe: Building new fabs and ecosystems takes many years.
• Global Competition: Intense competition from established players in Asia and the US, who also have significant government support.
• Market Dynamics: Ensuring economic viability and competitive pricing for European-produced chips.
• Technological Complexity: Staying at the forefront of rapidly evolving semiconductor technology.

Outlook and Future Prospects

It is important to acknowledge that Europe is unlikely to fully replicate the scale of manufacturing seen in Asian powerhouses like TSMC or Samsung overnight. Instead, Europe’s pragmatic approach is to leverage its existing strengths and focus on strategic areas where it can achieve leadership and enhance resilience. This includes:

• Niche Leadership: Consolidating and expanding leadership in automotive, industrial, and power semiconductors, where European companies already hold significant market shares.
• Advanced Packaging and Materials: Investing in cutting-edge packaging technologies and securing the supply chain for critical materials, where Europe can build a strong competitive edge.
• Design Expertise and R&D: Fostering its world-class research institutions (like IMEC) and design houses to drive innovation across the value chain.
• Equipment Manufacturing: Maintaining and strengthening the leadership of companies like ASML, which are foundational to the global semiconductor industry.

The long-term vision is to build a more balanced and resilient European semiconductor ecosystem, spanning from materials and equipment to design, manufacturing, and sophisticated applications. While the European Court of Auditors predicts that the Chips Act might only increase Europe’s global market share to 11.7% by 2030, rather than the ambitious 20% target, the direction of travel is clear. The ongoing commitment from governments, industry, and academia will be crucial in translating these ambitions into tangible results.

Conclusion: A Resilient and Strategic Future

Europe’s semiconductor ambition represents a profound strategic shift. It is a recognition that technological sovereignty and economic resilience in the 21st century are inextricably linked to a robust domestic semiconductor industry. While the challenges are significant, the European Chips Act and national investments signal a clear and determined commitment to this goal. By focusing on its existing strengths, fostering innovation, and strategically attracting crucial foreign investment, Europe is positioning itself for a more resilient, strategically autonomous, and competitive future in the digital age. The journey is long and complex, but the imperative for a secure and thriving semiconductor industry in Europe has never been stronger.