ZVEI New Microelectronics Study Sees Semiconductor Demand in Europe Doubling by 2040

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A new study by ZVEI, the German Electrical and Digital Industry Association, forecasts a significant increase in semiconductor demand in Europe by 2040. Driven by key industries such as automotive, energy, and robotics, the analysis sees realistic opportunities to strengthen Europe’s microelectronics competitiveness through targeted measures—despite existing location disadvantages.

The share of semiconductors used in Europe will double by 2040. This applies regardless of whether the end products are manufactured in Europe or elsewhere. However, semiconductor demand from industry producing within Europe will grow even more strongly, by a factor of 2.4. These are two key findings of the new study “Europe's Semiconductor Business Case: A Demand-Driven Perspective for a Competitive and Resilient Microelectronics Ecosystem.” ZVEI presented the study at its eSummit. The study was conducted by Strategy& as a consultant on behalf of a German-Dutch public-private consortium consisting of ZVEI, the Dutch technology industry association FME, the German Federal Ministry for Economic Affairs and Energy, and the Dutch Ministry of Economic Affairs (EZK).

The message is clear: semiconductor demand in Europe is substantial. It spans all major technology areas and will remain strong in both the medium and long term. Europe must now act decisively to translate this demand into industrial strength, innovation leadership, and economic resilience.

Growth is expected to come, on the one hand, from key European segments such as automotive, energy, and robotics. In addition, new high-growth areas are emerging within these sectors, including industrial AI, autonomous systems, and intelligent industrial applications. “Therefore, existing strengths in European core competencies such as sensors, power electronics, and microcontrollers must now be specifically scaled and transferred into these new growth markets,” emphasizes Tanjeff Schadt, author of the study and partner at Strategy& Germany.

On the other hand, dependencies exist in rapidly growing fields such as AI chips, logic, and memory components for data centers. “Building European capabilities, including in smaller process nodes, is challenging but necessary to strengthen our technological sovereignty,” emphasizes Wolfgang Weber, Chairman of the ZVEI Executive Board. This requires a strategic, step-by-step approach: first, chip design and advanced packaging should be strengthened—areas with high value creation, close links to industrial applications, and comparatively lower capital requirements. Building on this, manufacturing capacities for smaller process nodes should be developed in the long term and driven by demand.

The study recommends placing greater emphasis on trusted and, where possible, Europe-based microelectronics supply chains in clearly defined strategic areas—particularly defense and critical infrastructure. This could not only strengthen resilience but also specifically generate demand for microelectronics with high European value creation. “It is important to consider the entire microelectronics ecosystem—including upstream and downstream segments such as printed circuit boards and electronics manufacturing,” Wolfgang Weber adds.

However, cost disadvantages remain a challenge: front-end production in Germany is on average 15–30 percent more expensive than at the most cost-efficient locations in Asia. These differences can be reduced by five to ten percentage points through lower electricity costs, increased automation, as well as tax incentives and subsidies. Tanjeff Schadt explains: “To ensure that investments have a rapid and broad industrial impact, an evidence-based assessment of demand, costs, and location conditions is essential.”

According to the study, Europe also needs to catch up in approval and funding processes: time-to-production is around 34 months, compared to approximately 19 months in Taiwan. Funding decisions also take too long at 12 to 24 months. Wolfgang Weber states: “A decision should be available within six to nine months.” Europe, however, scores well in terms of infrastructure, political stability, and strong IP protection, which make it an attractive location.