Europe Pursues New AI Chip Dream - Center for European Policy Analysis (CEPA)

Europe is pursuing a new AI chip strategy through the proposed Chips Act 2.0, aiming to build a sovereign semiconductor manufacturing facility. However, experts caution that this approach faces signif... Read original →

The EU’s push for a sovereign advanced-node fab under Chips Act 2.0 misreads its technological niche. While Europe dominates automotive and industrial chips on mature 28/22nm nodes, chasing NVIDIA-led 3nm/2nm AI silicon without domestic AI demand guarantees poor ROI. This diverts capital from Infineon and STMicroelectronics’ core strengths, inflating compliance costs and blunting their agility in high-margin legacy markets. U.S. hyperscalers will likely deepen ties with TSMC in Taiwan, China, while leveraging export controls to limit European access to next-gen EUV tools. Over the next 12–24 months, unless the EU pivots to nurturing fabless AI chip designers—integrating firms like Mistral with Siemens’ industrial IP—the initiative risks becoming a fiscal sinkhole. A smarter play: emulate Arm by anchoring an open IP ecosystem around ASML, IMEC, and Zeiss in optical integration, not politically driven fabs.