European leaders have set themselves an ambitious goal—to reduce the continent’s dependence on foreign technologies. Today they are discussing an update to the European Chips Act, formally adopted in 2023, which allocates billions of euros to subsidize semiconductor production in Europe. The law aimed to double the continent’s share of global chip output—from 10 to 20 percent by 2030—but that target now appears out of reach.
The idea of creating a fully autonomous European semiconductor supply chain—an industry underpinning both the digital economy and defense technologies—is little more than an illusion distracting from real strengths. Many of Europe’s leading technology players, such as Dutch equipment maker ASML and German chemical giant Merck, do not manufacture chips themselves. These firms represent the technological vanguard, posting strong profits and building on Europe’s traditional strengths in precision engineering, specialty chemicals, and advanced materials. Yet politicians fixated on boosting chip output often overlook their crucial role.
Meanwhile, the global semiconductor industry is undergoing sharp technological shifts, trade restrictions, and geopolitical realignments for which Europe is ill-prepared. Artificial intelligence has become the main driver of chip demand—an area where Europe lags far behind its rivals. European companies are being squeezed out of the Chinese market, once a key source of growth. The United States, a former close partner, now threatens tariffs that could limit European sales in America. Simply setting domestic production targets will not solve these deeper problems.
Building a fully self-sufficient semiconductor industry is likely unattainable, but making it more dynamic is entirely possible. Europe holds real advantages in specific parts of the supply chain, and the missing elements can be offset through cooperation with allies, including the United States. The billions of euros being poured into rearming the continent create new opportunities for chipmakers, especially given the growing role of artificial intelligence in defense. To seize these trends, European leaders should build on their industrial strengths and deepen partnerships rather than chase an unattainable vision of technological autonomy.