The European Union is moving to restore the competitiveness of its regional semiconductor industry through a revision of the Chips Act. The move comes as calls grow to strengthen Europe's technological sovereignty amid rising geopolitical risks stemming from the concentration of advanced semiconductor supply chains in Taiwan and the rest of Asia.
According to Bloomberg on the 28th (local time), the European Commission plans to unveil the revised semiconductor law, 'Chips Act 2.0,' on the 3rd of next month. The new bill contains provisions that would force chip manufacturers to break existing contracts and give priority to orders from publicly funded production facilities during a semiconductor supply crisis.
The EU introduced the Chips Act in 2023. Although it provided subsidies to support the construction of semiconductor production facilities (fabs), many assessments say it failed to achieve clear results. U.S. chipmaker Intel withdrew its large-scale factory construction plan in Germany, and the EU's share of global semiconductor production still falls short of 10%. More than 90% of high-performance chip supply is concentrated in Taiwan, home to TSMC. Should China's military threats against Taiwan become reality, the supply of key components for smartphones, artificial intelligence (AI) data centers, automobiles, and medical devices could be cut off.
Nexperia, a Dutch semiconductor company acquired by China's Wingtech, also became a problem. When the Dutch government imposed controls over concerns about technology leakage to China, the Chinese government retaliated by banning exports of Chinese-made products, causing semiconductor supply to plunge and dealing a blow to European automakers.
Accordingly, the EU plans to introduce a demand consolidation strategy through the revised bill to enhance the viability of Europe's semiconductor industry. The plan is to bundle semiconductor demand from major industries such as automobiles, telecommunications, and defense to create economies of scale, thereby inducing production investment within the region. Joint procurement is also being considered as a key policy tool.
Private companies are also moving to secure independent semiconductor capabilities. Arthur Mensch, CEO of Mistral AI, a leading European startup, formalized the possibility of developing its own AI chips, saying in an interview with CNBC, "At some point we will have to have our own chips." This is interpreted as a sign of his intention to build independent AI infrastructure over the long term, although the company currently relies on Nvidia chips.
