Luxembourg, 28 April 2025
EU Auditors on EU Microchip strategy: EU off the pace in a global race
- The target of 20 % global market share by 2030 appears out of reach.
- Member states and the private sector account for the lion’s share of investment; the European Commission manages much smaller funds.
- Issues like access to raw materials, energy costs, and geopolitical tensions pose additional challenges.
It is very unlikely that the EU will meet its target of a 20 % share of the global market for microchips by 2030, according to a new report by the European Court of Auditors. While the 2022 EU Chips Act has brought new momentum to the European microchip sector, the investments driven by it are unlikely to significantly enhance the EU’s position in the field.
Microchips play a vital role in modern life, and the global shortage of microchips during the COVID-19 pandemic highlighted their critical importance to the economy. The EU’s Digital Decade strategy set a target for the Union to gain a 20 % share of global production value in cutting-edge and sustainable microchips by 2030. The European Commission has made reasonable progress on implementing its strategy, but the auditors found that there is a gap to bridge between ambition and reality.
“The EU urgently needs a reality check in its strategy for the microchips sector”, said Annemie Turtelboom, the ECA Member in charge of the audit. “This is a fast-moving field, with intense geopolitical competition, and we are currently far off the pace needed to meet our ambitions. The 20 % target was essentially aspirational – meeting it would require us to approximately quadruple our production capacity by 2030, but we are nowhere close to that with our current rate of progress. Europe needs to compete – and the European Commission should reassess its long-term strategy to match the reality on the ground”.
The Commission is responsible for only 5 % (€4.5 billion) of the €86 billion in estimated funding for the Chips Act up to 2030. The remainder is expected to come from member states and industry. For comparison, the top global manufacturers budgeted €405 billion in investment over just a three-year period, from 2020 to 2023, which dwarves the financial firepower of the Chips Act.
Nevertheless, as the auditors point out, the Commission has no mandate to coordinate national investments at EU level to ensure they align with the Act’s objectives. In addition, the Chips Act lacks clarity in its targets and monitoring, and it is difficult to know whether it takes proper account of the industry’s current levels of demand for mainstream microchips.
Several other key factors affect the EU’s competitiveness in the field, and the chances for successful implementation of the Chips Act. These include dependency on imports of raw materials, high energy costs, environmental concerns, geopolitical tensions and export controls, and a shortage of skilled workers. Furthermore, the EU microchip industry consists of a few large enterprises focused on high-value projects, meaning that funding is concentrated. The cancellation, delay or failure of a single project can therefore have a significant impact on the whole sector.
Overall, the auditors found that the Chips Act is highly unlikely to significantly increase the EU’s share of the microchips market, or to meet the objective of 20 % of global output. Indeed, the European Commission’s own forecast, published in July 2024, predicts that despite a significant expected increase in manufacturing capacity, the EU’s overall share of the global value chain in a fast growing market would increase only slightly, from 9.8 % in 2022 to just 11.7 % by 2030.
Background information
As part of the EU’s industrial policy, the Chips Act was introduced in February 2022, against a backdrop of global supply chain disruptions caused by the COVID-19 pandemic. The aim of the Act was to tackle microchip shortages and strengthen the EU’s technological leadership. The Chips Act Regulation came into force in September 2023.
The Chips Act was preceded by a 2013 Strategy aimed at strengthening the micro- and nano-electronics sectors. While the EU’s microchip production capacity increased significantly from 2013 onwards, it failed to keep pace with global growth, resulting in a decline in the EU’s share of the global market.
The Chips Act was prepared with some urgency, partly in response to post-COVID-19 pandemic shortages. As a result, the standard procedures for preparing legislation were not fully followed, such as an evaluation of previous strategies and an impact assessment of the proposal.
The European Commission’s first intermediate evaluation and review of the Chips Act is due to be presented to the European Parliament and the Council by September 2026.
Read the ECA Report
Related links
- Special report 12/2025: The EU’s strategy for microchips – Reasonable progress in its implementation but the Chips Act is very unlikely to be sufficient to reach the overly ambitious Digital Decade target
- Key facts and findings
European Chips Act – EU Commission Update on the latest milestones
Brussels, 28 April 2025
The European Chips Act is the EU’s strategic plan to strengthen its ability to design and produce semiconductors – crucial components found in everything from smartphones to cars.
It is part of the EU’s policy response to global challenges in semiconductor technologies: with Europe heavily reliant on suppliers from other regions, the Chips Act aims to aims to ensure the EU’s resilience and technological sovereignty in semiconductor technologies and applications. In just over 1.5 years since it came into force, the Chips Act has delivered substantial progress to ensure Europe can meet its semiconductor needs and increase our capacity to innovate and produce semiconductors in Europe.
Chips for Europe
Under Pillar I, the Chips for Europe Initiative has already committed over 85% of its budget, connecting top-tier research with industrial applications. The Chips Joint Undertaking is supporting five pilot lines with a total of EUR 3.7 billion in European and national funding. All Member States and Norway have now established competence centres in their territories or are close to doing so. These centres are key to provide businesses (especially SMEs and start-ups) with essential resources to develop semiconductor solutions, including support, training, and access to large infrastructure facilities established under the Chips Act. Moreover, SMEs and start-ups will be able to apply for using the design platform by the end of this year. In addition, six cutting-edge projects have just been selected as part of the EUR 200 million EU investment in quantum chips. These projects will accelerate breakthroughs in quantum applications such as computing, communication, and sensing. Under the Chips Fund, the European Innovation Council and selected partners are already providing equity support to semiconductor start-ups.
State aid decisions
Under Pillar II, the Chips Act has already catalysed more than EUR 80 billion in investments in chip manufacturing capacity, thereby contributing to increasing the EU’s market share vis-à-vis competitors. The Commission has already approved seven first-of-a-kind State aid decisions already totalling more than EUR 31.5 billion of public and private investment. This comes in addition to the Commission’s approval of an Important Project of Common European Interest (‘IPCEI’) to support research, innovation and the first industrial deployment of microelectronics and communication technologies across the value chain with over EUR 21 billion total public and private investment. Decisions on the status of Integrated Production Facilities (IPFs) and Open EU Foundries (OEFs) are expected before the summer. In addition to the first-of-a-kind and the IPCEI, a number of additional projects are still under development or in the decision pipeline.
European Semiconductor Board
Under Pillar III, the European Semiconductor Board has been actively steering progress—coordinating national efforts and monitoring supply chain resilience. Member States have already provided information to identify “key market actors” (feeding into the Commission’s ongoing strategic mapping of the sector), but also to assess economic security elements related to the semiconductor supply chain in Europe. Supply chain monitoring has advanced considerably through analysis of the EU’s position in the global semiconductor landscape. All this will contribute to a much better understanding of risks related to Europe’s supply chains and possible mitigation measures that could be considered to address identified risks.
Related topics
Advanced Digital Technologies Electronics Chips Act
Source – EU Commission