Rising European chip demand calls for urgent action
German-Dutch public-private study underlines the need for structural choices in Dutch and European chip policy.
Published on May 21, 2026
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European demand for semiconductors is set to nearly double by 2040 — but whether Europe will actually benefit remains far from certain. That is the central warning from the European Semiconductor Demand Study, which calls on governments and industry to make hard choices now if Europe wants to stay competitive in the global chip race.
The study, conducted by Strategy& on behalf of a public-private consortium including FME, ZVEI, and the Dutch and German ministries of Economic Affairs, was timed to feed into discussions around a new European Chips Act. Its message is blunt: demand is growing fast, but investment is not following automatically.
Europe is falling behind
The numbers tell a sobering story. Europe currently accounts for around 8% of global semiconductor production — far short of the 20% target set by the original Chips Act. For the most advanced chips, those below 7 nanometres, the figure drops to just 3%. Meanwhile, front-end chip production in Europe costs 15 to 30% more than in the most competitive Asian regions.
The European Court of Auditors has already flagged that the first Chips Act lacked a convincing business case. This new study aims to provide one — ahead of what the industry is calling Chips Act 2.0.
Where the growth is coming from
Demand is not growing evenly. Industrial automation, MedTech, and mobility — sectors where Europe has real strengths — are among the key drivers. But AI and data centers are also surging, and those segments need the most advanced chips: precisely where Europe is weakest.
"Europe must better leverage its strengths and focus strategically on future growth markets," said FME chairman Theo Henrar. "But we must not be naive about our dependencies in critical segments like defense and communications infrastructure."
What needs to change
The study points to a clear cost and competitiveness gap that will not close on its own. FME is calling for more technical talent, faster permitting procedures, stable and competitive energy costs, and sustained government support for semiconductor investment.
On the demand side, the study argues that European end markets need to be more deliberately linked to European chip supply chains — creating the kind of home-market pull that has helped rival regions build scale.
For the Netherlands specifically, FME says the recently published Semicon Vision 2035 needs ambitious and well-funded follow-through.
The stakes
Semiconductors underpin virtually every technology sector, and with AI accelerating that dependency, the strategic stakes keep rising. FME is urging companies to map their own supply chain vulnerabilities and engage in the conversation about resilience — even where that means accepting higher costs.
Chips Act 2.0, FME says, must be "hyper-ambitious." Not just more production capacity, but stronger value chains, smarter demand policy, and a genuine business case for Europe as a place to invest. The window, the study implies, is open — but not indefinitely.