Semiconductor Policy in EU Member States

The EU has become dependent on foreign producers, including China, for semiconductor production; the EU is adopting a law – the European Chips Act – to bolster R&D and production in Europe; state aid envisioned under the law may mean that companies will receive added benefits when partnering with the EU on semiconductor supply chains. (pp. 9-10)
These EU member states are best positioned for increased US semiconductor collaboration:
- Belgium is a top player in the global semiconductor R&D supply chain, home to top research universities and one of the world’s top semiconductor R&D institutes, though it has a shortage of STEM labor that limits its high-tech potential. (pp. 11-12)
- The Netherlands is a semiconductor powerhouse with a fully integrated vertical semiconductor supply chain including applied research, chip design, chip architecture, chip production, and system integration and applications; it is highly competitive for business, has high levels of education, is well-located, has good infrastructure and has proven to be a good US partner, though it will contend with both political pressure from the US Government and the attractiveness of the Chinese market. (pp. 12-13)
- France has a significant presence in the European semiconductor industry with centers for R&D, manufacturing, and packaging; its industry receives support both from the EU and domestic initiatives; it is an innovation hub, is one of the world’s largest economies, is well-located and has good infrastructure; France also has access to critical mineral reserves; regulations and bureaucracy, however, can restrain the French market. (p. 14)
- Italy has the third-largest economy in the EU with several large manufacturing sites for a diverse set of chip components; however, it has poorer economic performance and inefficient government, spends less on R&D, has a less-educated workforce and government instability, and has a complicated relationship with China. (pp. 15-16)
- Germany is the world’s fourth-largest economy; fourth-largest exporter and fourth-largest importer of semiconductor devices; it is key to semiconductor production due to its production of key inputs; it has advanced R&D, a pro-business climate, established supply chain linkages and the policy to enforce due diligence, a strong industrial base, and a stable domestic government. (pp. 16-18)
The EU is an attractive partner for the US in building resilient semiconductor GVCs due to its single market, financial support for semiconductor industry development, close cooperation with the US on tech policy and export controls, and geographic proximity to the US; its relations with China create complications because of the ambivalence of the EU’s approach. (pp. 18-19)