EU Chips Act European Court of Auditors criticizes: Current EU Chip Strategy is Not Working

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The EU is unlikely to achieve a 20% share of the global microchip market by 2030 as planned. This is according to a recent report from the European Court of Auditors. Although the EU's Chip Act of 2022 has reinvigorated the European microchip industry, the related investments are unlikely to significantly improve the EU's position in this sector.

The EU is pursuing ambitious goals in the microchip industry, primarily the 20 percent target by 2030. However, a recent report by the European Court of Auditors shows that the strategy is on shaky ground. Despite political initiatives and investment pledges, Europe is far from playing a significant role in the global chip market.

Reality Check Urgently Required

"The EU urgently needs to subject its strategy for the microchip industry to a reality check," writes Annemie Turtelboom, the European Court of Auditors member responsible for the report, in a statement on the report. "The development in the industry is rapid, and there is intense geopolitical competition. We are currently far behind our ambitious goals."

The Chip Act, commonly referred to as the EU Chips Act and introduced in 2022, aimed to strengthen Europe's semiconductor industry, avoid future supply shortages, and establish technological sovereignty. On paper, $91 billion are planned until 2030, but only a fraction of this—around $4.8 billion—comes from the EU budget. The rest is expected to come from member states and industry. In comparison, the three leading global manufacturers alone invested around $430 billion billion between 2020 and 2023.

There is a Lack of Momentum and Necessary Structures

The Court of Auditors criticizes that the 20 percent target is hardly achievable. To meet it, Europe would need to quadruple its production capacities within a few years—a development for which neither momentum nor the necessary structures are currently evident. In its latest forecast, the European Commission itself only anticipates a moderate increase in market share from 9.8 percent (2022) to 11.7 percent in 2030.

A central problem: the implementation of the Chip Act is proceeding without clearly defined goals, reliable impact monitoring, and a mandate to coordinate national investments. The result is a patchwork of projects lacking efficiency and strategic orientation. Additionally, the industry is heavily concentrated on a few large companies—if one project fails, it can disrupt the entire sector.

Structural challenges such as high energy costs, dependence on raw material imports, geopolitical risks, regulatory uncertainty, and the ongoing skilled labor shortage further complicate development. Technologically, Europe has also fallen behind: the production of chips on 12-inches wafers—crucial for high-end applications—scarcely takes place in Europe anymore. As early as 2014, the European share of this was below one percent.

The Quick Fix from the Pandemic Era Offers No Long-Term Benefits

Politically, the chip legislation was drafted under great time pressure as a response to pandemic-related supply shortages. Established practices such as market analyses and impact assessments were largely overlooked, criticizes the European Court of Auditors. The pressure to act quickly has resulted in a strategic patchwork lacking substance.

The conclusion: Even though the desire to strengthen the European semiconductor industry is there, the EU Court of Auditors now also notes that the measures decided are not enough: the EU needs more than declarations of intent. Without realistic goals, reliable financing, clear responsibilities, and targeted promotion of technological key areas, the Chip Act risks being nothing more than a missed opportunity. (sg)

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