Europe excels at chips research. Can it turn innovation into industry?

Semiconductors have become a strategic resource for the European economy. However, successive supply chain disruptions and geopolitical tensions have highlighted just how dependent Europe remains on countries outside the EU for access to these components. To address this challenge, the EU adopted the European Chips Act in 2023, setting the ambitious target of reaching 20% of the global semiconductor market by 2030.

Three years on, the results suggest that the strategy needs to be reassessed. Europe has succeeded in mobilising investment, supporting new manufacturing facilities and establishing world-class technological infrastructure. Nevertheless, forecasts indicate that it will remain far from achieving its target. The question is no longer simply how much Europe invests, but what happens to that investment afterwards.

From research to manufacturing: the missing link

The EU is home to world-leading research centres, companies that excel in specific segments of the semiconductor industry, and an industrial base with a growing demand for chips. Yet developing an innovative technology in a laboratory does not mean it can immediately be manufactured at scale.

Bridging this gap requires technologies to be validated, their reliability in manufacturing to be demonstrated, investment to be secured and customers willing to adopt them to be found. This process represents one of Europe’s main challenges.

A technology may work perfectly in an experimental environment and still never reach the market. It may be too expensive to manufacture, struggle to attract sufficient funding or lack the demand needed to justify industrial production. This is why technological autonomy cannot be achieved simply by funding research or building new facilities. It also requires creating the conditions for these capabilities to translate into sustainable industrial activity.

Manufacturing chips is not enough: Europe must also stimulate demand

In June 2026, the European Commission presented its proposal for the Chips Act 2.0, a revision of the regulation adopted three years earlier. One of its main developments is the recognition that technological investment needs to be more closely aligned with actual demand for semiconductors.

While the original Chips Act focused primarily on increasing manufacturing capacity, attracting investment and developing research infrastructure, the new proposal introduces mechanisms to encourage collaboration between chip designers and manufacturers and the companies that need their products.

The proposed measures include instruments to identify the needs of industrial sectors, encourage demand commitments and promote the procurement of innovative technologies. The reasoning is straightforward: if a company is going to invest substantial amounts in developing or manufacturing a new semiconductor, it needs confidence that there will be a market for it. This is particularly relevant in Europe, where industries such as automotive, energy and telecommunications represent major potential customers.

Chips JU pilot lines: another opportunity for Europe

One of the main achievements of the original Chips Act has been the development of five major European pilot lines through the Chips Joint Undertaking (Chips JU). Backed by approximately €3.7 billion in combined EU and national public investment, these facilities make it possible to test new technologies under conditions closer to those of a real manufacturing environment. They cover areas ranging from next-generation chip manufacturing processes to power semiconductors, photonic circuits and new techniques for integrating electronic components.

Their purpose is to enable companies, technology centres and universities to develop and validate solutions without having to bear the enormous cost of these facilities individually. However, their deployment raises a fundamental question: how should we measure their success?

The amount of investment mobilised, the facilities built and the scientific advances achieved are important indicators, but they should not be the only ones. We also need to understand how many companies actually use these facilities, how many technologies progress beyond the experimental stage and how many ultimately make their way into commercial manufacturing processes.

The European semiconductor industry itself is calling for pilot lines to become more than shared research facilities. They should be part of an industrialisation pathway that can be financed from beginning to end. This means making them more accessible to companies, particularly SMEs, and ensuring that funding instruments are available to support technological developments from initial prototypes through to commercial production.

The Chips Act 2.0 provides an opportunity to strengthen this connection. The challenge will be to ensure that pilot lines, industrial investment and demand-stimulation mechanisms operate as part of a coherent strategy.

The Nexperia case and Europe’s external dependencies

The need for a broader approach to the semiconductor industry became particularly evident during the Nexperia crisis in 2025. Tensions involving the Dutch-based, Chinese-owned company, followed by export restrictions imposed by China, caused supply disruptions that particularly affected Europe’s automotive industry.

The case exposed a vulnerability that often goes unnoticed: semiconductor manufacturing does not necessarily end when the chip itself is produced. Further stages, such as assembly, testing and packaging, may be required before the component is ready for commercial use. These activities are often spread across different countries.

Consequently, even when part of the manufacturing process takes place in Europe, essential stages may still depend on facilities located in Asia. Producing more chips in Europe does not guarantee greater autonomy if we continue to rely on other countries to complete the manufacturing process.

From technological autonomy to industrial competitiveness

Europe has taken significant steps towards strengthening its position in the global semiconductor industry. However, the experience of the original Chips Act shows that increasing funding alone is not enough to transform such a complex and globalised value chain. The challenge is not necessarily to manufacture every chip the European economy needs within Europe, but to develop competitive capabilities in strategic technologies and reduce critical dependencies.

The Chips Act 2.0 proposes instruments to move in this direction. Nevertheless, the real success of Europe’s strategy should not be measured solely by the billions of euros mobilised, the facilities inaugurated or the projects funded. It should also be measured by our ability to turn these efforts into commercially available technologies, competitive companies, more resilient supply chains and sustainable industrial production.

Ultimately, the future of Europe’s semiconductor industry will not be decided in laboratories alone, but by our ability to bring these technologies into factories and turn them into products that the market genuinely needs.