The renewed emphasis on industrialization and demand creation will help establish the right framework. Building on the foundations of the original 2023 EU Chip Act, the new package recognizes the rapidly evolving geopolitical and technological environment, the strategic importance of semiconductors—including core technologies—and the crucial role chips will play in the future of artificial intelligence, energy, defense, mobility, and industrial automation.
ESIA welcomes the Commission's growing emphasis on Europe's entire semiconductor ecosystem, stronger demand-side measures, and supply chain resilience. However, ESIA stresses that the European semiconductor strategy must now decisively shift from political ambition to industrial implementation. A key principle going forward will be to translate ambition into market reality and create the right framework for the semiconductor ecosystem.
“Europe cannot achieve leadership in semiconductors through regulation alone,” says Erik Rein, President of ESIA and Executive Vice President and Member of the Board of Mobility Electronics responsible for the semiconductor business at Bosch. “The global semiconductor race will be won by those who innovate fastest, industrialize fastest, and create the greatest market demand. The Chips Act 2 must become a genuine industrial competitiveness strategy that enables Europe to build robust industries.”
The Commission's recognition that Europe must strengthen its position in AI-related semiconductor technologies comes at a critical time. "There is no European sovereignty in AI without European sovereignty in semiconductors," added Mr. Rein. "The future of AI will unfold in factories, cars, hospitals, energy systems, and industrial infrastructure. Europe already has many of the technological foundations needed to lead this transformation."
ESIA believes Europe has a unique opportunity to lead in areas where it already possesses strong industrial capabilities, particularly edge AI, power semiconductors, sensors, connectivity technologies, automotive electronics, robotics, and secure communications. ESIA also strongly supports expanding the concept of first-of-its-kind (FOAK) projects beyond manufacturing plants to a whole-ecosystem approach that involves the end user.
Europe's strength in semiconductors lies in its entire value chain, from research, design, equipment, and materials to product engineering and industrial co-development. A narrow focus on factories may have helped with supply security concerns, but it is not enough for the semiconductor industry to thrive. At the same time, Europe's competitiveness gap cannot be closed without a radical simplification of administrative procedures and framework conditions. Today, semiconductor projects in Europe remain significantly more expensive and slower to implement than in competing regions.
Slow approval processes, fragmented regulations, complex state aid, energy costs, and inconsistent implementation across Member States continue to undermine the attractiveness of investment. ESIA President Erik Rein stated: “Industrial policy only works if it keeps pace with industry. Semiconductor innovation cycles are measured in months, not years. Europe cannot compete globally for tomorrow’s technologies with yesterday’s approval timelines.” The association also reiterated its call for a permanent, structured, high-level dialogue between industry and policymakers within the European semiconductor governance framework, something the proposal does not fully address. “Europe already has world leaders in the semiconductor sector,” Mr. Rein concluded. “What Europe needs now is a world-class industrial policy environment. One that aligns innovation, industrial demand, investment, energy, trade, and regulation into a single competitive strategy.”
ESIA looks forward to working closely with European institutions, Member States and industry stakeholders as the legislative process progresses.
