Europe's semiconductor target appears out of reach
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 (ECA).
Despite the ambitions of the EU’s Chips Act, adopted in 2022, the region's current trajectory places it far short of its stated goals.
While the EU Chips Act has boosted activity in the semiconductor sector, it is unlikely to result in a significant shift in the EU's global market position. Europe's share of worldwide microchip value stood at 9.8% in 2022 and is projected to reach only 11.7% by 2030 — well below the 20% target.
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, in a press release. “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”.
Although the total funding for the Chips Act through 2030 is estimated at EUR 86 billion, only EUR 4.5 billion – or around 5% – is managed by the European Commission. The rest is expected to come from member states and the private sector. And, as the auditors pointed out, the top global manufacturers budgeted EUR 405 billion in investment over only three years, from 2020 to 2023, which is nearly five times the Chips Act's total decade-long budget.
Beyond funding, the EU semiconductor sector faces a range of external challenges, among them reliance on imported raw materials, high energy prices, environmental concerns, geopolitical instability, as well as a shortage of skilled labour, according to the report.
Another concern highlighted by the auditors is the fact that the European semiconductor industry is dominated by a small number of large players, meaning that delays, cancellations or failures in individual projects can have disproportionate impacts on the sector as a whole.
Although the Chips Act has stimulated some growth in chip manufacturing capacity, the ECA concludes that it is "highly unlikely to significantly increase the EU’s share of the microchips market, or to meet the objective of 20% of global output."
The ECA recommends that the Commission should urgently reassess the Chips Act, working closely with member states and industry to determine whether its goals remain realistic given current resources, global competition, and challenges. Introduce a system of regular monitoring to identify and address obstacles early.
In parallel, the Commission should begin preparing a new semiconductor strategy, drawing on the lessons of past efforts and setting clear, achievable, and timebound objectives. This future strategy should include appropriate funding measures, consider legal adjustments if needed, and ensure better coordination at the EU level in the face of intensifying global competition.
The full report is available here.
