The EU is “very unlikely” to meet its ambition of taking a 20 percent slice of the global microchip market by 2030, the European Court of Auditors has warned.
Developing high-power computer chips is a major ambition of the EU which set a target of grabbing one-fifth of the global market by the end of the decade.
The European Commission said that the EU’s Chips Act which entered into force last year is “a cornerstone initiative within the broader strategy to strengthen Europe’s semiconductor ecosystem.”
It’s a sector that Ireland has been building too in recent years.
The Irish microelectronics sector employs more than 20,000 people, according to the IDA.
The European Court of Auditors (ECA), the EU’s watchdog, said that whilst the Chips Act has “brought new momentum to the European microchip sector, the investments driven by it are unlikely to significantly enhance the EU’s position in the field.”
“The EU urgently needs a reality check in its strategy for the microchips sector”, said ECA auditor, Annemie Turtelboom.
“This is a fast-moving field, with intense geopolitical competition, and we are currently far off the pace needed to meet our ambitions.”
To reach the EU’s 20 percent target would mean quadrupling Europe’s current production capacity.
“We are nowhere close to that with our current rate of progress”, she warned.
In response, the European Commission did not dispute that the EU was falling behind, but only promised to “reassess the feasibility of reaching the 20 percent digital target” as part of a review of the law in September 2026.
The European Commission rejected the ECA’s advice to bring forward that review to this year.
The Chips Act promised to generate €86 billion in funding for the microchip sector, but only 5 percent, €4.5 billion, is coming from the EU. The rest of the money is supposed to be generated by member states, including the Irish government, and by the industry itself.
The ECA warned that the funding was small when competition is fierce on the world stage.
“The top global manufacturers budgeted €405 billion in investment over just a three-year period, from 2020 to 2023, which dwarves the financial firepower of the Chips Act”, the ECA said.
Other vulnerabilities are also limiting the EU’s ability to grow its microchip sector.
“These include dependency on imports of raw materials, high energy costs, environmental concerns, geopolitical tensions and export controls, and a shortage of skilled workers.
Furthermore, the EU microchip industry consists of a few large enterprises focused on high-value projects, meaning that funding is concentrated. The cancellation, delay or failure of a single project can therefore have a significant impact on the whole sector”, auditors warn.
At the current rate, the EU will hold 11.7 percent of the global market in chips by 2030, up slightly from 9.8 percent in 2022.