Industry groups push for EU Chips Act 2.0

The European Commission has been consulting on the next stage of the EU Chips Act to support the semiconductor ecosystem across the region. Various industry groups, from the ZVEI in Germany to Semicon Sweden and Semi Europe, have contributed to the EU Chips Act 2.0 consultation, highlighting critical gaps and a highly bureaucratic process in the first act that has slowed implementation.

For example, the initial Chips Act set up the Alliance on Processors and Semiconductor Technologies, which has taken over two years to have its first meeting, with Working Groups on Skills, Supply Chains, PFAS, and Automotive. The Alliance first met in March, with the second meeting in November 2025 with a dedicated session to focus on the revision of the act.

Despite this, political investments amounting to €43 billion and private investments of the same amount are expected by 2030 under the first Act, which could mean an expected total investment of at least €86 billion. The review of the first act has been pulled forward to early 2026 to input into the development of the follow-on act which is expected to be proposed in the first half of 2026.

“While the original EU Chips Act in 2023 established an important foundation by mobilizing public and private investments, rapid technological evolution, increasing geopolitical developments, and industrial interdependence require a more integrated and forward-looking strategy,” said Svensk Elektronik, host of Semicon Sweden. It stresses that successful implementation requires clear industrial alignment. Policy should be firmly anchored in the operational realities of European industries and market demands.

Semicon Sweden highlights nine priorities for EU Chips Act 2.0 to bridge the gap between world-class European research and commercial execution. This includes more integrated research and innovation with industrialization as well as developing a strategy for strategic electronics manufacturing in Europe and building resilience to ensure stable semiconductor supply for critical sectors. It calls for a focus on Europe’s strengths and opportunities in AI and highlights the need to bridge the scale-up gap for European start-ups and small companies.

• Member states back EU Chips Act 2.0

This is echoed by Silicon Catalyst, an incubator and accelerator that is dedicated to semiconductors that has been expanding from the UK across Europe. “We welcome the renewed focus in the discussion for the next EU Chips Act on semiconductor startups and scale-ups. Our ChipStart EU early stage semiconductor startup incubator had over 40 applications from 17 different countries in the European Economic Area,” said Sean Redmond, managing partner of SiCatalyst.

There is an argument Europe is building capacity with fabs and seven pilot lines in various technologies, including 2nm process technology and silicon on insulator (SOI), but missing the high-value segments: design tools (EDA, IP libraries), semiconductor equipment (e.g., lithography, metrology), materials and advanced packaging, says semiconductor executive Rupert Baines.

“I think we will see a shift from “building volume” to “building value” and “building resilience”,” says Baines. He also points to the lack of support for scaling up semiconductor companies. “I think it is quite likely “Chips Act 2.0” is arguably more interesting than the original act: a shift towards design, advanced packaging, and enabling ecosystem rather than “big fabs only” and to specialize in adjacent high-value niches, for example packaging for AI accelerators, MEMS, wide-band-gap power devices rather than “brute force” trying to replicate leading-edge nodes,” he said.

“There is a big geographic / political gap with some countries doing a very good job of playing the game. Germany, obviously, with multi-billion investments in fabs, but to a degree that’s predictable. Spain has done surprisingly well and getting a lot of focus and a lot of work. Malta’s carving out its niche and given that Malta is tiny, that could be quite significant. But others are missing out,” he said.

This can be down to lack of expertise in European governments. “When I was at [processor developer] Codasip, we got an awful lot of funding simply because we tried for it, but we ran into a barrier that the Czech government just didn’t understand – almost literally, no one in Prague spoke semiconductor,” he said.

The ZVEI industry association in Germany points out that the first European Chips Act was introduced during the COVID-19 crisis. Critical value chains were disrupted, leading to calls for greater resilience in Europe, as semiconductors are fundamental components for multiple industries and infrastructures.

Since the COVID-19 crisis and the initial implementation of the act, global geopolitical challenges have intensified. Other parts of the world have developed ambitious strategies and made significant investments to promote their entire microelectronic ecosystems. The European semiconductor industry has increased its turnover, but not its market share. Furthermore, Europe lags behind the US and Asia in terms of investment says the association using data from KPMG and Yole.

This has shown the shortcomings of the Act, which places too much emphasis on front-end manufacturing. This is particularly evident in the overly narrow scope of the pilot lines, it says, as important parts of the microelectronics ecosystem such as materials, chip design, equipment, packaging capacities, PCBs, and EMS/systems integration have not been considered. Public funding is also fragmented and is significantly lower than in other economic regions, especially when additional tax credits and incentives in other regions are considered.

“The processes in all three pillars of the Act have been too complex, too bureaucratic, and not fast enough,” said the association. “It also became clear that state aid alone is not enough to stimulate private investment as long as serious locational disadvantages remain, such as high electricity costs, grid congestion, a shortage of technical specialists and expertise, the lack of a fully integrated single market and lengthy approval procedures that make business activities more expensive.”

It also points out that efforts to build trusting partnerships with third countries have failed in the face of heightened geopolitical and trade tensions, and the semiconductor industry has not been insufficiently consulted, particularly on the establishing of the pilot lines, the design platform and competence centers, and is not represented on the European Semiconductor Board.

“We still are a long way from having a knowledge base that can serve as the foundation for short-term crisis prevention and long-term strategies. And pragmatic crisis response mechanisms are not yet ready for use. Overall, the objectives were very ambitious (achieving a 20% market share), but they were not sufficiently operationalized (no SMART objectives, no roadmap) and were not backed up with sufficient resources. There was no clear ownership in the execution, no clear distribution of responsibilities and insufficient coordination (between EU Commission, Member States, and Industry). This made it difficult to implement the Act,” it said.

So it is recommending a dedicated budget for semiconductors as well as simplifying and accelerating public funding processes. Like the Swedish response, the Germans want to see the pilot lines extended across the other areas of the value chain and including other areas of strategic importance such as power, edge, security, and photonics to AI.

SEMI Europe, the European arm of the US semiconductor trade association, recently published a report on the EU Chips Act with 30 recommendations for the next steps, identifying critical gaps in geographical and technological coverage, the administrative complexity, and the need for support for key segments such as chip design, materials, and semiconductor equipment. “Our findings underline the need for a more resilient supply chain and forward-looking Chips Act that supports innovation and front-end manufacturing to further strengthen Europe’s ecosystem with focus on materials and equipment suppliers, design and advanced packaging to ensure long-term resilient technological sovereignty,” said Laith Altimime, President of SEMI Europe.