The EU chips industry

What are chips and why are they important?

Microchips (also called chips or semiconductors) are tiny sets of electronic circuits created on a small flat piece of silicon.

Chips are the DNA of modern technology – they can capture, store, process and manage data, which makes them essential in a wide range of everyday and critical applications.  

Everyday life

Chips power our smartphones, laptops, games consoles, modems, televisions and home appliances.

Critical applications

Chips are vital in the automotive industry, aviation and healthcare, including in medical diagnostic equipment.

Key infrastructures

Chips play a fundamental role in energy, defence, mobility, data and communication systems.

Chips are also essential to the EU's ambition of becoming a global leader in AI and will provide the foundation for technologies that will be key to boosting EU competitiveness — from AI applications and cloud infrastructure to drones, connected vehicles and industrial robotics.

The global semiconductor market is rapidly evolving. Semiconductors were the world's third most traded commodity in 2025, after oil and vehicles.

By 2030, the global semiconductor market is expected to reach €1.37 trillion in size, with AI-related components driving around 70% of that growth.

Semiconductor consumption in the EU has reached €41.1 billion, equal to 10.5% of global shipments. However, the EU produces less than 10% of global semiconductors.

Furthermore, nearly 80% of suppliers to EU semiconductor firms are headquartered outside the EU.

Three pillars

Chips for Europe initiative

This initiative supports large-scale technological capacity-building and innovation.

Security of supply and resilience

This cornerstone aims to attract increased investments and ensure a reliable supply chain for semiconductor production.

Monitoring and crisis response system

This system makes it possible to anticipate shortages and coordinate responses during crises, allowing the EU to react swiftly to disruptions.

The EU chips act is a vital step towards ensuring the region's competitiveness in the global semiconductor market while also securing Europe's technological future.

According to a Commission evaluation, the chips act has helped mobilise more than €52 billion in public and private investment and created an estimated 46 000 direct and indirect jobs.

Further strengthening the EU's technological sovereignty

Despite the progress made thanks to the European chips act, the EU remains dependent on third countries in key areas such as advanced chip production and semiconductor design. The EU is, for instance, almost entirely dependent on the United States and Asia for the most advanced and leading-edge chips below 5 nanometres, including AI chips.

On 3 June 2026, the Commission tabled a proposal for a European chips act 2.0. Building on the original chips act and its three-pillar structure, the initiative, which is part of the European technological sovereignty package, seeks to reinforce the EU's position in the global semiconductor value chain.

It also aims to support the development of cutting-edge technologies, most notably AI application and cloud technologies, while strengthening resilience and reducing supply chain vulnerabilities.

In addition, the proposal focuses on improving supply chain security and ensuring a stable supply.

The Council and the Parliament are currently defining their positions on the proposal for a European chips act 2.0. Once adopted, they will negotiate the final shape of the regulation.

• European chips act 2.0, Commission proposal

See also