Semiconductors now sit at the center of nearly every technology shaping the next decade, from artificial intelligence and cloud infrastructure to drones, connected vehicles, and industrial robotics. That reality is exactly why the European Union is moving forward with the Chips Act 2.0, a follow-up to the original 2023 legislation designed to close persistent gaps in Europe’s semiconductor capabilities and secure its place in a rapidly expanding global market.
The Legacy of the First Chips Act
The original Chips Act was Europe’s first coordinated response to serious vulnerabilities exposed in the global semiconductor supply chain. It succeeded in mobilizing more than €52 billion in public and private investment and helped create an estimated 46,000 direct and indirect jobs, while strengthening the region’s research and innovation base. It also reversed two decades of decline in European semiconductor capacity. Even so, Europe remains far short of its goal to double its share of global chip production to 20 percent, and it still depends heavily on other countries for advanced manufacturing and chip design.
Why Do We Need the Chips Act 2.0?
The case for the Chips Act 2.0 comes down to timing and scale. The global semiconductor market is projected to reach €1.37 trillion by 2030, with AI-related components driving roughly 70 percent of that growth. Without a stronger push, Europe risks capturing only a small slice of this expansion. There’s also a structural gap to address: fabless companies, which design chips without owning factories, generate about half of global chip industry revenue, yet European firms capture less than one percent of that market. The Chips Act 2.0 is designed to correct that imbalance by building demand-side measures alongside the manufacturing focus of the original act, ensuring processors, AI accelerators, and memory—the categories Europe currently lacks—get the attention they need.
Main Objectives of the Chips Act 2.0
The proposal rests on four pillars. First, it aims to improve conditions for investment and competitiveness by speeding up permitting to a maximum of 12 months and introducing “Grand Challenges” targeting priority technologies like AI chips. Second, it works to stimulate demand and industrial uptake through new Demand Accelerators and closer coordination with the Cloud and AI Development Act. Third, it reinforces the supply side with state aid for “First-of-a-Kind” projects spanning the entire value chain, from raw materials to packaging. Fourth, it seeks to increase resilience by establishing a Business-to-Business Semiconductor Supply Chain Platform and reducing overreliance on external suppliers for critical technologies.
Industry Reactions to the Chips Act 2.0
Early responses from industry and research groups have been cautiously positive. Officials involved in drafting the proposal describe it as an evolution rather than a revolution, preserving most of the original act’s instruments while sharpening its focus on demand. Executives from fabless design firms have welcomed the added emphasis on advanced chip design capacity, arguing that fabrication alone was never going to be enough. That said, several stakeholders have cautioned that the plan currently reads more like a wish list than a fully funded industrial policy, since the budget allocation for 2028–2034 has yet to be finalized.
The Road Ahead for the Chips Act 2.0
The Chips Act 2.0 still needs to be negotiated between the European Parliament and EU member governments, a process expected to take 12 to 18 months. Its success will ultimately hinge on whether funding commitments match its ambitions. What’s clear is the underlying rationale: Europe cannot afford to treat semiconductors as a manufacturing problem alone. Design capability, demand stimulation, and supply chain resilience all need to move together if the region hopes to turn its technological sovereignty ambitions into lasting industrial strength.
To discuss semiconductor manufacturing, fab construction and key issues facing the industry, connect with solution providers and network with delegates, attend the 4th Constructing Semiconductor FAB Summit Europe: Advances in Planning, Design and Engineering, taking place October 21-22, 2026, in Munich, Germany.
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