European Court of Auditors cites insufficient investment and limited access to raw materials as major hurdles.
Hardly any modern electronic device or vehicle can function without microchips—from smartphones and washing machines to cars. The supply disruptions during the COVID-19 pandemic made it painfully clear how critical these high-tech components are for the global economy—and how vulnerable the supply chains remain. To boost resilience in this sector, the European Union launched the European Chips Act in early 2022 (we reported). The plan aims to double the EU’s share of global chip production to 20 percent by 2030. However, a new report by the European Court of Auditors now reveals that this goal is unlikely to be met. At the current pace, the EU would only reach around 11.7 percent.
The auditors criticize that most of the required investments must come from individual EU countries and private companies. The European Commission contributes significantly less, only about five percent of the roughly €86 billion budget outlined by the Chips Act through 2030. By contrast, leading chipmakers like TSMC, Samsung, and Intel invested a staggering $425 billion between 2020 and 2023. The report also notes that the Commission lacks the authority to coordinate investments across member states effectively.
Raw Material Access and Geopolitical Tensions Threaten Europe’s Chip Ambitions
In addition to a shortage of skilled labor and high energy costs, the report highlights limited access to critical raw materials as a key risk. The EU remains highly dependent on foreign suppliers, and ongoing geopolitical tensions are further straining supply chains. For example, 95 percent of refined gallium, a key chip ingredient, comes from China. Taiwan is also crucial, as it is home to chip giant TSMC. The conflict between China and Taiwan casts a shadow over the industry’s stability.
While the Chips Act has injected new momentum into Europe’s semiconductor ambitions, the auditors conclude that it urgently needs a reality check. Without significant adjustments, the EU risks falling short in the increasingly competitive global market.
Read More: A similar report last summer found that the EU is also likely to miss its targets for the green hydrogen sector.
Photo: kemalbas, wooyaa via Canva