The European semiconductor industry is facing growing geopolitical and economic pressure. The latest report, prepared by the European Union Institute for Security Studies (EUISS) and the French think tank Institut Montaigne, indicates that without decisive action, Europe may find it increasingly difficult to maintain its competitiveness and the security of its chip supplies.
The report’s authors point out that the greatest threats remain China’s export restrictions on critical raw materials used in semiconductor production and the risk of escalation of the conflict over Taiwan, which accounts for a significant proportion of global production of the most advanced integrated circuits. At the same time, concerns are growing over Europe’s dependence on technology from the United States.
The report indicates that a particular challenge could be the possibility of the US extending its export controls to allied countries as well. This would affect, amongst others, the Dutch company ASML, the world leader in the manufacture of semiconductor production equipment.
However, the report emphasises that Europe’s problems do not stem solely from geopolitical tensions. Factors undermining competitiveness include persistently high energy prices, limited access to private capital and the declining health of the semiconductor-using industry.
Brussels is attempting to address these challenges. In June, the European Commission proposed the Chips Act 2.0, which aims to boost semiconductor production in Europe, stimulate demand for domestic chips and reduce strategic dependencies on third countries. The new regulations are also intended to strengthen the resilience of European supply chains.
According to industry representatives, securing access to raw materials will also be of key importance. “Without reliable access to critical raw materials, the European chip ecosystem cannot compete, innovate or grow,” said Laith Altimime, director of SEMI Europe.
The report’s authors assess that Europe currently has no realistic chance of achieving full self-sufficiency. In their view, the most sensible strategy is to develop areas where the EU already has a technological advantage, such as the production of advanced equipment for the semiconductor industry, whilst simultaneously strengthening the resilience of the entire ecosystem.
