A handful of factories located in Taiwan now produce the most advanced chips on the planet. They power artificial intelligence data centers, smartphones, telecommunications networks, Western weapons systems and a growing share of the global economy.
This industrial concentration has become one of the main strategic concerns of the great powers. Washington fears excessive dependence on Taiwan, when Beijing seeks to build a national industry capable of resisting American sanctions. Brussels, long convinced that globalization would guarantee access to critical technologies, is in turn discovering the limits of this approach.
The semiconductor crisis of 2020, then the explosion of artificial intelligence, have profoundly changed European perception. Chips are no longer considered simple electronic components. They have become strategic infrastructures, just like energy, telecommunications networks or critical resources.
It is in this context that the European Commission is preparing a Chips Act 2.0. Behind the factory announcements, the state aid and the billions of euros of investment lies the ambition to reposition Europe in the industry which will condition part of the growth, military power and digital sovereignty of the coming decades. The question now is whether this ambition can be translated into industrial reality.
The new global geography of technological power
Until now, semiconductor globalization has been presented as a model of economic efficiency. The United States designed the most advanced chips. Taiwan and South Korea made them. Japan provided some of the critical materials. Europe held some specialized positions in industrial equipment and components.
This organization has enabled a continued reduction in costs and an acceleration of innovation, but it has also created an unprecedented dependency. Today, most of the advanced chips used in artificial intelligence infrastructures are manufactured by TSMC in Taiwan, when the design software is mainly American, the most advanced memories come from South Korea and a significant part of strategic materials are produced in Asia.
The war in Ukraine demonstrated the consequences of poorly anticipated energy dependence. Sino-American tensions have led Western governments to wonder about another vulnerability: what would happen if access to the most advanced semiconductors was suddenly interrupted?
This question largely explains the return of industrial policies observed simultaneously in the United States, China, Japan, South Korea and now in Europe.
Europe has champions, but not control of the value chain
The European observation is paradoxical, the continent has several unique industrial assets in the world, in particular with ASML which holds a quasi-monopoly position in EUV lithography equipment essential for the manufacture of the most advanced chips. Without its machines, neither TSMC, nor Samsung, nor Intel could produce the processors that power artificial intelligence today.
Europe can also rely on groups like STMicroelectronics, Infineon, NXP or Soitec, which occupy major positions in power semiconductors, automotive components, advanced materials or industrial applications.
This reality sometimes leads certain European politicians to consider that Europe is already a semiconductor power. However, the reality is more nuanced, the segments which today capture most of the economic value mainly concern artificial intelligence processors, computing architectures, electronic design software, advanced memories, cloud infrastructures and new generation packaging, but these markets are dominated by American or Asian players.
The example of NVIDIA sums up the situation, the company has become one of the most valuable companies in the world without itself possessing industrial capabilities comparable to those of TSMC. Its power comes from mastery of hardware architectures, software and the ecosystem that accompanies them.
It is precisely in these layers with high added value that Europe appears most fragile today.
The Chips Act marks the return of European industrial policy
The European regulation on semiconductors constitutes a major break in the recent economic history of the Union. For the first time in a long time, the European Union openly assumes an industrial policy intended to strengthen sectors considered strategic. State aid is mobilized, administrative procedures are accelerated, and public financing is used to attract industrial capacities considered essential to the economic sovereignty of the continent.
The first results are starting to appear, in Dresden, TSMC has agreed to set up its first European factory with Bosch, Infineon and NXP. In Crolles, STMicroelectronics and GlobalFoundries are developing a new generation of production capabilities. In Italy, STMicroelectronics is investing in silicon carbide, a technology expected to play a central role in electric vehicles and energy infrastructure.
According to the European Commission, the projects already approved represent more than 31 billion euros of public and private investments.
A piece of a larger industrial project
The European objective of 20% of world production constitutes a political indicator. However, it does not say much about the real place that Europe will occupy tomorrow in the global technological hierarchy.
The real question is not how many chips will be produced on the continent, but which links in the value chain Europe will actually control. The United States dominates compute architectures, software, hyperscalers and much of the artificial intelligence ecosystem. Taiwan has mastered advanced manufacturing. China is investing massively to build an integrated sector from components to applications.
For Europe, semiconductors no longer constitute an isolated industrial sector. They become one of the components of a broader strategy aimed at rebuilding the technological infrastructures which will condition the competitiveness of the continent over the coming decades.
The Chips Act 2.0 is thus part of a political sequence which also includes AI Factories, investments in data centers, cloud infrastructures, the development of European artificial intelligence models, industrial data initiatives, high performance computing, quantum and defense technologies.
These topics are often discussed separately. However, they come under the same industrial equation. Semiconductors power computing centers. The computing centers train the models. Models exploit data. Artificial intelligence applications create the demand that justifies infrastructure investments.
The risk for Europe is therefore twofold, the first would be to fight the previous battle rather than the next by concentrating its efforts on production capacities alone. The second would be to treat each issue as an autonomous policy while they now constitute different layers of the same technological system.
The question raised by the Chips Act thus goes far beyond the semiconductor industry. It refers to Europe’s capacity to coordinate all the investments necessary to bring about a complete artificial intelligence value chain, from the chip to new generation industrial applications, particularly in robotics, automation and physical AI.
Basically, the European ambition is no longer just to produce more chips, but to regain a capacity for action in the technologies which will structure the next phase of the world economy.
