Semiconductors have become the “industry of industry”, underpinning almost every major industrial sector in Europe, from automotive and aerospace to energy, telecommunications, healthcare and defence. They are also essential to artificial intelligence and advanced digital technologies. Europe’s next Chips Act must therefore go beyond attracting investment and become a genuine industrial policy tool that strengthens European production, technological sovereignty and quality employment.

This was industriAll Europe’s message at the INT Section debate on “Chips Act 2 and Beyond: Building a Competitive, Resilient and Sovereign European Semiconductor Ecosystem”, held at the EESC.

IndustriAll Europe’s Deputy General Secretary Isabelle Barthès participated in the debate, stressing that Chips Act 2.0 must learn from the shortcomings of the first Chips Act and put investment, workers and Europe’s industrial capacity at its core.

The semiconductor shortages during and after the COVID-19 pandemic provided a stark warning. Disruptions affected automotive production, medical equipment, industrial machinery and other strategic sectors. For workers, semiconductor shortages can translate directly into production stoppages, short-time work and threats to employment far beyond the semiconductor industry itself.

At the same time, geopolitical tensions, trade restrictions and the concentration of production and critical inputs in a small number of regions continue to expose vulnerabilities in global supply chains.

IndustriAll Europe therefore welcomes the development of Chips Act 2.0. But the first Chips Act did not have the resources necessary to match its ambitions. Europe must now learn from these shortcomings.

“The Chips Act 2.0 cannot simply be about announcing new fabs or mobilising private investment. Europe needs a genuine industrial strategy covering the whole semiconductor value chain, backed by substantial and predictable public investment. And when public money is used, it must come with social conditionalities that guarantee quality jobs, skills and long-term industrial activity in Europe,” said Isabelle Barthès.

Build the whole European semiconductor ecosystem

A resilient semiconductor industry requires much more than manufacturing capacity. Europe needs capabilities across the entire value chain: research and design, equipment, specialised materials and chemicals, wafer fabrication, advanced packaging, assembly, testing and industrial applications.
The strategy must also recognise the close relationship between semiconductor production and Europe’s wider industrial base. Automotive, machinery, energy, healthcare and aerospace all depend on reliable access to chips.

This means Europe cannot focus exclusively on leading-edge technologies. Mature and legacy chips remain indispensable for many strategic industrial applications and will continue to be essential to European manufacturing.

Public money must deliver public value

Semiconductors require massive, long-term investment. If Europe wants to compete globally and reduce strategic dependencies, substantial and predictable public funding will be needed.

Public support must deliver long-term industrial and social value and be linked to clear conditions on quality employment, training, skills development and the retention of industrial capabilities in Europe.

Commitments made by companies receiving public funding must also be monitored over time. Public support cannot be followed by outsourcing, restructuring or relocation that undermines the objectives for which the funding was granted. Where justified, claw-back mechanisms should be available.

Europe should also explore strategic public equity participation in key semiconductor companies, ensuring that public investment can contribute directly to long-term technological sovereignty while allowing society to share in the value it helps create.

Workers are Europe’s strategic asset

Europe’s semiconductor ambitions ultimately depend on people. Engineers, operators, researchers, technicians, maintenance specialists, clean-room operators, software developers, electricians and mechanics all possess skills and experience that are strategic assets for European industry.
This makes the contradiction between warnings of skills shortages and ongoing restructuring in the sector particularly worrying. Europe cannot prepare for tomorrow’s semiconductor industry while allowing valuable industrial knowledge to disappear today through restructuring and job cuts in some key companies of the sector. 

Upskilling, reskilling, apprenticeships, lifelong learning and knowledge transfer must therefore be treated as integral parts of industrial investment. Workers and trade unions must also be involved in anticipating skills needs and managing technological transformation.

Strengthen European industrial cohesion

Chips Act 2.0 must strengthen European cohesion rather than trigger a subsidy race between Member States. Investment decisions should consider existing industrial ecosystems, skills, research capacity, infrastructure and energy availability, as well as their contribution to European value chains.
The strategy must also address access to affordable and clean energy and secure supplies of critical raw materials such as gallium, germanium and rare earths.

Chips Act 2.0 is an opportunity to correct the weaknesses of the first Chips Act. But resilience will not come from new factories alone. Europe needs a complete semiconductor ecosystem, long-term investment, secure energy and raw materials, strong downstream industries and, above all, the skilled workers who make European industrial production possible.