After the flop of the first Chips Act, Brussels tries again with 120 billion: what does Chips Act 2.0 foresee
The European Union is preparing a new intervention to strengthen its semiconductor industry. After the disappointing results of the first Chips Act approved in 2023, Brussels is working on a new version of the program, informally renamed "Chips Act 2.0", which could mobilize up to 120 billion euros of public and private investments by 2035, according to preliminary documents reviewed by Bloomberg News.
The objective of the new strategy is not only to increase European production capacity but also to create greater domestic demand for chips developed and manufactured within the EU. This marks a significant shift in approach compared to the first initiative, which emerged in the midst of the global semiconductor crisis and was heavily focused on the production side of the ecosystem.
Among the most relevant projects under consideration is the possible construction of a new foundry costing around 30 billion euros dedicated to the production of advanced semiconductors for AI applications and 3-nanometer chips. The funding would involve the European Commission, individual member states, and private partners.
The 3nm technological process currently represents one of the most strategic segments of the entire industry. Currently, the lead in advanced manufacturing is largely concentrated in Asia, with players like TSMC and Samsung, while Europe continues to occupy a marginal position in the manufacturing of next-generation chips intended for AI and HPC loads.
According to preliminary documents, Brussels would also like to facilitate collaboration between semiconductor manufacturers and European companies operating in sectors deemed strategic, including automotive, telecommunications, and defense. The idea is to promote the development of customized solutions built around European industrial needs, thereby increasing the competitiveness of the entire continental supply chain.
The proposal is expected to be presented to European legislators next week, although the text may still undergo changes before the final version.
The new plan fits into the broader European project of technological sovereignty, with Brussels aiming to reduce technological dependence on the United States and China. In this context, Chips Act 2.0 would become one of the central tools to support local industrial champions and favor technological infrastructures developed within the Union, including semiconductors and cloud services.
On the operational side, the European Commission intends to use resources already available in the Horizon Europe and Digital Europe programs at least until 2028. Subsequent funding, however, will need to be confirmed in the next EU multiannual budget, currently under negotiation among member states.
The first European Chips Act set the goal of bringing the EU's production share to 20% of the global semiconductor market through investments in research and development and a relaxation of state aid rules. However, in recent years, the European bloc has continued to lose ground compared to the United States and Asia, especially in the sector of chips intended for artificial intelligence.
The new legislation could also introduce accelerated procedures for projects deemed critical to the European technology ecosystem. In some cases, Brussels might classify the initiatives as "strategic projects", limiting the participation of non-EU companies unless specific exemptions are granted.
This move highlights how control over the semiconductor supply chain is now considered a central element not only on the economic front but also on the geopolitical and industrial levels. However, it remains to be seen whether the new approach aimed at strengthening domestic demand will be sufficient to bridge the gap accumulated by Europe compared to the main global poles in the sector.