European Chips Act targets unachievable, says Court of Auditors
Despite an investment of €80 billion, high energy prices and a shortage of rare raw materials are putting Europe in a difficult position.
Published on May 5, 2025
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The European Chips Act appears to be an ambitious dream going up in smoke. According to the European Court of Auditors, the EU will only achieve 11.7% of the global semiconductor production market by 2030, significantly less than the targeted 20%. The institution warns that current production capacity must quadruple, while fragmented financing and infrastructure lag behind. Despite an investment of more than €80 billion, competition from giants such as TSMC and Intel, combined with the EU's high energy prices and limited raw materials, is relentless. The EU faces the challenge of revising and adjusting its strategy. But is there enough time to navigate the geopolitical minefield and stay on course for technological self-sufficiency?
The European Chips Act was designed with the aim of Europe achieving a 20% share of global semiconductor production by 2030, starting from a base of around 9% in 2020. Annemie Turtelboom of the European Court of Auditors concluded that this target would only be achievable with a fourfold increase in production capacity. However, the realism of this is highly questionable, with forecasts pointing to a market share of only 11.7% in 2030.
Operational challenges
Despite the €80 billion investment that the Chips Act is supposed to mobilize, the EU faces significant challenges such as high energy prices and a shortage of rare raw materials, which make it difficult to compete with Asian and North American players. Vishal Gupta, an industry expert, emphasizes that the high cost of setting up a new factory in the EU and the absence of a leading semiconductor company that could drive the industry, as well as strict regulations, are further barriers to growth.
The European Commission has indicated that the Chips Act has led to €80 billion in investments. However, there is criticism of the allocation of funds, as a significant portion goes to large players such as Intel and non-European companies, rather than to broader investment projects. This concentration of resources raises questions about the sustainability and balance of the financial strategy needed to achieve the goals of the EU Chips Act.
Lack of competitiveness
Despite the EU's ambition to position itself in the global chip market, it appears that the EU is lagging in crucial technologies such as advanced chips for data centers and AI applications. The focus on current strengths, such as the automotive sector, does not offer any noticeable leverage for significant growth in the semiconductor sector. There is a strong need not only to increase capacity, but also to innovate in chip suppliers and technologies that can compete globally.
The European Court of Auditors has called for a “reality check” to adapt the EU's strategy to dynamic market conditions. It emphasizes the need to analyze previous policy failures and a pragmatic and flexible approach that focuses not only on production but also on innovation, patents, and IP development. Where initial measures have fallen short, the Court believes the EU would benefit from a long-term strategy with clear priorities and concrete actions.
