European Chip Industry Pushes for Urgent Overhaul of Chips Act 2.0 Amid Rising Global Competition

• Why Is Europe's Chip Industry Sounding the Alarm?
• What Changes Does SEMI Propose?
• The Global Chip Arms Race Heats Up
• When Will Reforms Take Effect?
• FAQs: Europe's Chip Crisis Explained

The European semiconductor industry is calling for a major revision of the Chips Act 2.0, citing concerns over the EU's competitiveness against global rivals like the U.S. and China. SEMI Europe, the industry association representing semiconductor manufacturers, has submitted formal recommendations ahead of the EU's planned 2026 review. Key proposals include streamlining state aid approvals, boosting R&D funding by €20 billion, and creating a centralized hub for chip projects. With the EU lagging in production capacity and technological innovation, these reforms aim to strengthen Europe's position in the quantum computing and AI accelerator race. The clock is ticking—the EU must finalize updates by March 2026 or risk falling further behind.

Why Is Europe's Chip Industry Sounding the Alarm?

Europe's semiconductor sector is at a crossroads. While the 2023 Chips Act laid groundwork with its five pillars—cloud-based design platforms, pilot production lines, quantum chips, competence centers, and SME funding—industry leaders argue it's no longer enough. "The current framework treats innovation like a VIP club," remarks a BTCC market analyst. "We're excluding projects that could massively scale production because they don't fit narrow definitions." SEMI's data shows the EU accounts for just 8% of global chip manufacturing capacity, compared to Taiwan's 46% and South Korea's 19%. With the U.S. pouring $52.7 billion into its CHIPS Act and China aggressively subsidizing domestic production, Europe's "innovate or die" moment has arrived.

What Changes Does SEMI Propose?

The recommendations read like a survival checklist for Europe's tech sovereignty:

• State Aid Revolution: Ditch the innovation-only requirement, allowing funding for capacity-boosting projects (think: mature-node chips crucial for autos and industry)
• €20 Billion War Chest: Dedicated funding pool covering advanced manufacturing, R&D, and pilot lines—that's 40% of Intel's planned German fab investment
• One-Stop Chip Shop: Centralized EU commission desk to slash bureaucratic delays (current average: 18 months for approvals)

SEMI's head of EU policy put it bluntly: "We're not asking for handouts—we're asking to compete on equal footing. Right now, it's like bringing a baguette to a gunfight with Washington's dollar cannons."

The Global Chip Arms Race Heats Up

While Europe debates, competitors are sprinting ahead. The U.S. CHIPS Act has already disbursed $33 billion in subsidies, luring companies like Samsung and Micron. Taiwan's TSMC is building fab cities in Arizona. China's "Big Fund" has invested over $50 billion since 2014. "Europe risks becoming the quaint artisanal cheese shop of semiconductors—premium products, no scale," warns a veteran industry consultant. The numbers sting: Europe's chip equipment market grew just 3% in 2023 versus 15% in North America (Source: SEMI Worldwide Equipment Market Statistics).

When Will Reforms Take Effect?

Mark your calendars for March 2026—the EU's deadline to publish Chips Act revisions. But with groundbreaking on major fabs taking 3-5 years, every month of delay pushes Europe's self-sufficiency goals further into the 2030s. The Commission is already eyeing relaxed subsidy rules, potentially allowing Germany and France to outbid each other for mega-projects. "It's not ideal, but beggars can't be choosers," quips a Brussels insider. "After all, Airbus wasn't built by playing nice."

FAQs: Europe's Chip Crisis Explained

What's the biggest flaw in the current Chips Act?

The innovation-only funding requirement excludes practical capacity expansions—like a chef only paid for inventing recipes, not cooking meals.

How does Europe's funding compare to the U.S. CHIPS Act?

SEMI's proposed €20 billion is just 38% of the U.S.'s $52.7 billion package. Adjusted for GDP, Europe WOULD need €45 billion to match America's commitment.

Which countries benefit most from current rules?

Germany (home to Infineon and Bosch) and France (STMicroelectronics) dominate subsidies, while Eastern European nations struggle to attract investments.