This global semiconductor shortage began in late 2020, following the surge of the coronavirus pandemic. In response, the European Union crafted a plan known as the European Chip Law, aimed at boosting production across the continent. Negotiators from the Council and the European Parliament reached a provisional political agreement on Tuesday that intends to lift the EU’s world market share to a minimum of 10% and eventually toward 20% by 2030, signaling a strategic shift for the bloc’s tech landscape.
Officials emphasize that the agreement is essential for both the ecological and digital transitions, while strengthening EU resilience during turbulent times. Implementing the measures swiftly could reshape Europe’s dependence on external leaders, reduce sovereignty risks, and influence public and private investment decisions. Ebba Buch, the Swedish minister for energy, trade, and industry, pointed out that semiconductors touch every everyday device, from credit cards to automobiles and smartphones. For instance, a typical smartphone houses about 160 chips, while a modern car can require up to 3,500 semiconductors to operate.
In a geopolitically charged environment, Europe is choosing to take charge of its destiny. The goal is for the EU to emerge as an industrial powerhouse in future markets by focusing on the most advanced semiconductor technologies. This stance is part of a broader effort to safeguard strategic autonomy and reduce dependence on third countries for critical components and capabilities [citation: European Commission statements].
80% of suppliers outside the EU
As artificial intelligence, 5G networks, and the Internet of Things drive demand, the chip market is expected to grow rapidly. A notable challenge remains that roughly 80% of the suppliers serving European chipmakers are located outside the EU, creating vulnerabilities in supply chains. The Chip Law seeks to bolster domestic manufacturing capacity, ensuring long-term competitiveness and maintaining leadership in key technologies while securing dependable supply chains [citation: EU policy brief].
The plan is still under discussion and requires final approval from both the Council and the European Parliament. It envisions mobilizing about 43 billion euros in public-private investments, with 3.3 billion euros coming from the European budget. Implementation would be channeled largely through the Chips Joint Venture, a public-private partnership that unites the EU, member states, and private sector players. The framework also includes supply-security measures, investment incentives, and a crisis response and surveillance system designed to anticipate shortages and coordinate rapid action during disruptions. The emphasis is on building substantial technological capacity, accelerating scale-up, and protecting the resilience of critical supply lines across the bloc.