The European Union’s semiconductor strategy is facing a credibility test as several of the investment projects associated with the 2023 European Chips Act have been delayed, paused or cancelled, raising questions about whether the bloc can meet its stated ambition to account for 20 per cent of global semiconductor production “by value” by 2030.
The Chips Act, set out in Regulation (EU) 2023/1781 and in force since September 2023, was intended to strengthen Europe’s semiconductor ecosystem, improve supply-chain resilience and reduce external dependencies, combining EU-level measures with national state aid and faster permitting for “first-of-a-kind” facilities.
In practice, the investment pipeline has proved uneven. Two projects that had been presented as emblematic of Europe’s reindustrialisation push have not moved forward as initially outlined.
In France, a plan to expand STMicroelectronics’ site at Crolles, announced in 2022 with US partner GlobalFoundries and framed as a multi-billion-euro capacity doubling, has been reported as paused or shelved, with decisions tied to market conditions and customer demand. The project had been associated with substantial public support, and its slowdown has become a reference point in the debate over whether announced figures translate into new capacity on the ground.
In Germany, Intel’s proposed “mega-fab” in Magdeburg, promoted in 2023 as a cornerstone investment for leading-edge manufacturing in Europe, has been cancelled as the company retrenched. Reports in July 2025 said Intel would no longer proceed with planned projects in Germany and Poland, reversing earlier expectations that the Magdeburg site would anchor a new European production hub.
A third setback concerns silicon carbide, a segment linked to electric vehicles and power electronics. Wolfspeed delayed and later shelved plans for a roughly $3 billion project in Germany’s Saarland, and an industry source told Reuters that automotive supplier ZF planned to withdraw from the venture.
Not all projects have stalled. In August 2024, the European Commission approved a €5 billion German state-aid measure to support European Semiconductor Manufacturing Company (ESMC) — a joint venture led by TSMC with Bosch, Infineon and NXP — to build a plant in Dresden, part of the cluster often described as “Silicon Saxony”. The Commission said the facility is intended to serve demand, particularly for automotive and industrial applications, with production targeted to begin in 2027.
The uneven project map matters because the EU’s 2030 target is not simply a political aspiration; it is a quantitative benchmark embedded in the Commission’s broader digital and industrial strategy. In April 2025, the European Court of Auditors concluded it was “very unlikely” the EU would meet the 20 per cent objective by 2030, estimating that the EU’s global share would reach about 11.7 per cent under the trajectory then foreseen. The auditors also flagged the scale of expansion implied by the target, stating that capacity would need to increase sharply within a short period.
Several factors recur across company announcements and policy assessments. Semiconductor investment decisions are cyclical and capital intensive, and projects are sensitive to demand forecasts in end markets such as automotive and industrial equipment. A further issue is the speed and structure of subsidy approvals. Le Monde reported that delays in EU state-aid clearance contributed to uncertainty around some projects, contrasting European timelines with faster disbursement processes elsewhere.
There is also a strategic question about the mix of technologies Europe is targeting. The “by value” framing of the 20 per cent goal tends to privilege advanced manufacturing, while a significant share of European industrial demand depends on mature nodes and specialised components, including chips used widely in vehicles and industrial systems. The result is a dual challenge: building or attracting advanced capacity while also ensuring supply security in foundational segments where shortages can halt production lines.
Against this backdrop, discussion has moved to a potential follow-on initiative. In March 2025 the Commission Executive Vice-President Henna Virkkunen said Brussels was planning a new semiconductor support programme, often described as “Chips Act 2.0”, aimed at addressing remaining gaps including advanced manufacturing, packaging and supply resilience. Industry groups have separately called for a broader approach that also strengthens design, materials and equipment, areas where Europe has established capabilities.
If a “Chips Act 2” proposal is brought forward in 2026, it will arrive with a record of mixed delivery: one major new fab build moving ahead in Dresden, and several high-profile projects paused or cancelled after being presented as central to Europe’s chip revival. The key test will be whether revised instruments can convert announced investment into operating capacity within the 2030 timeframe implied by the EU’s stated target.
