The European Union is falling significantly behind global competitors in the race to secure a self-reliant and resilient microchip supply chain, according to a new report released by the European Court of Auditors (ECA) this week. Despite bold ambitions to increase the bloc’s share of global chip production, auditors warn that progress is slow, funding is uncertain, and key milestones are at risk.
The findings come at a time when semiconductors — critical components used in everything from smartphones to cars to defense systems — are increasingly viewed as vital to national security and economic sovereignty.
Lofty Targets, Lagging Progress
The EU set an ambitious goal to capture 20% of global semiconductor production by 2030, up from around 10% currently. This strategy was formally launched with the EU Chips Act, which aims to mobilize more than €43 billion in public and private investments. However, auditors now say these plans are not on track.
“The EU is currently off the pace,” said Annemie Turtelboom, the ECA member responsible for the report. “The implementation of the Chips Act lacks clarity, the funding sources are fragmented, and there are serious doubts about whether the investment targets can be met in time.”
The report notes that while the Chips Act has spurred activity in member states — including proposed large-scale fabs in Germany and France — actual construction, permitting, and funding flows remain sluggish. Moreover, the EU still relies heavily on imports of advanced chips, particularly from Taiwan, South Korea, and the United States.
Dependence on Global Giants
Auditors emphasized that the EU is at risk of remaining dependent on foreign producers for cutting-edge chips — especially the most advanced nodes under 5 nanometers, which are currently manufactured only by a handful of companies such as TSMC, Samsung, and Intel.
While European companies like ASML are global leaders in semiconductor manufacturing equipment, Europe lacks homegrown chip foundries capable of mass-producing the most advanced semiconductors. This leaves the EU vulnerable to geopolitical tensions and supply chain disruptions.
Fragmented Funding, Uncertain Coordination
One of the report's most pressing concerns is the lack of centralized oversight. The auditors pointed out that although the Chips Act is meant to coordinate a Europe-wide strategy, funding mechanisms are spread across multiple EU programs and national budgets. This fragmentation increases the risk of duplication, inefficiency, and delays.
There are also concerns about the readiness of small and medium-sized enterprises (SMEs) to participate in the chip ecosystem. Many lack the scale or resources to engage in high-tech production without significant support.
Industry Response and Next Steps
Industry stakeholders have echoed some of the auditors’ concerns, calling for streamlined regulatory processes and faster allocation of funds. “The EU has a unique opportunity to position itself in the global semiconductor supply chain,” said a spokesperson for the European Semiconductor Industry Association. “But time is of the essence. Delays now could result in long-term dependency.”
The European Commission has defended its strategy, noting that the Chips Act is still in its early phases and that long-term investments take time to yield results. A Commission spokesperson said a number of public-private partnerships and research hubs are already underway and that more detailed implementation plans will be presented later this year.
Strategic Implications
The report’s findings come amid increasing geopolitical competition over critical technologies. Both the United States and China have poured billions into their own chip sectors, racing to control the next generation of computing and artificial intelligence.
Analysts say that without more aggressive investment and coordination, the EU risks being sidelined in this high-stakes contest — a scenario that could undermine both economic growth and technological sovereignty.
As the EU prepares to update its industrial strategy in the coming months, the microchip race is likely to remain a key focus. Whether the bloc can catch up remains an open question — one that may define the future of European industry in the digital age.