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The debate surrounding Europe’s semiconductor strategy has largely been framed around manufacturing. Governments have committed tens of billions of euros to attract new fabs, strengthen supply chains, and reduce dependence on overseas production. These investments are important and long overdue.
However, if Europe’s ambition is to become a global semiconductor leader, manufacturing alone will not be enough. The most successful semiconductor companies in the world don’t necessarily own the largest fabs. They own customer relationships, system expertise, intellectual property, product roadmaps, and long-term supply chains. Europe’s next challenge is not simply to build more fabs. It is to build more semiconductor champions.
Understanding where value is created
It’s easy to understand why manufacturing gets all the attention: Fabs are highly visible, capital-intensive, and strategically important. Yet semiconductor value is created across a much broader ecosystem.
The industry’s success depends upon research institutions and universities, EDA software providers, semiconductor IP developers, chip architects and design teams, foundries, assembly and test providers, product companies, system integrators, and end customers. A semiconductor product may involve dozens of organizations operating across multiple countries. The greatest value often lies not in any individual manufacturing step, but in the ability to bring these capabilities together to create a commercially successful product.
By Piyush Sancheti, VP Central Engineering Solutions (3D IC), and Todd Burkholder, 3D IC Technology Writer, Siemens EDA 08.05.2026
By Alessandro Chimera, Industry Solutions Lead, Spotfire 08.05.2026
By MRPeasy 08.01.2026
Europe’s competitive advantage
Europe possesses many of the ingredients required for semiconductor leadership. The region has world-class strengths in automotive electronics, industrial automation, aerospace and defense, secure communications, medical technology, power electronics, RF and wireless systems, and semiconductor equipment.
European companies frequently lead their markets in highly specialized applications where performance, reliability, safety, and longevity matter more than manufacturing scale. These sectors increasingly need customized silicon that can’t be bought off the shelf. This is where European semiconductor companies that understand the application as well as the underlying technology have a genuine edge.
The rise of application-specific silicon
The days of designing one chip to do everything are coming to an end. AI, autonomous systems, satcoms, industrial automation, and cybersecurity are creating demand for highly specialized devices optimized for particular workloads. The more complex systems become, the more the competitive advantage shifts toward companies that understand the complete application, not just the component level. Success increasingly depends on system architecture, hardware and software integration, security implementation, functional safety, qualification and certification, and long-term product support. The companies best placed to do this are the specialist semiconductor product houses that sit close to their customers and understand their problems from the inside.
Sovereignty is about capability
Much of the discussion about semiconductor sovereignty still comes back to one question: Where is the wafer made? Genuine technological sovereignty goes further than that. A country or region has meaningful semiconductor capability when it can:
Define system requirements
Design advanced integrated circuits
Develop proprietary intellectual property
Verify and validate products
Secure manufacturing capacity
Qualify devices for critical applications
Manage long-term product lifecycles
Together, these capabilities allow countries and industries to retain control over technologies that are increasingly central to economic growth and national security. France is the clearest example of what this looks like in practice.
It starts at the foundation of the supply chain. Soitec, the world leader in FD-SOI and RF-SOI substrates with roughly 70% of the global market, produces the engineered wafers on which much of this silicon depends, while STMicroelectronics turns them into devices at scale at its 300-mm fab in Crolles, a capacity the French State has backed with direct investment alongside France 2030 and the European Chips Act. On that materials-and-manufacturing base, France has deliberately nurtured a layer of specialist design houses, which are exceptionally well supported. They draw on public funding through vehicles such as the French Tech Souveraineté fund, managed by Bpifrance, and the France 2030 plan, while several carry direct ownership stakes from national defense primes such as MBDA and Thales. When a strategically valuable supplier runs into difficulty, the French State and its industrial champions have repeatedly stepped in to rescue it, keeping prized design capability in French hands rather than letting it fall to foreign buyers.
Much of the rest of Europe’s defense sector has taken the lower investment route, building its products on U.S. technology. This is faster and cheaper in the short term, but it hands over control of the capability that ultimately matters.
The French model is the one that the rest of Europe should be following. France has shown that genuine sovereignty comes from backing the whole stack—the materials and manufacturing base and the design houses built on top of it. Europe doesn’t have to choose between building fabs and building design champions; the two reinforce one another, and the regions that invest in both will hold real technological sovereignty.
There are encouraging signs that others are starting to move in this direction. The UK’s National Semiconductor Strategy is beginning to translate into tangible action, backing startups through dedicated incubation, opening funding calls that span semiconductors across a broad range of applications rather than concentrating solely on quantum and AI, and investing in the talent pipeline through the UK Electronics Skills Foundation (UKESF). Its government-funded Skills, Talent, and Education Programme now runs from school level right through to postgraduate training. The Semiconductor Talent Award alone supports more than 300 undergraduates across thirty universities.
Spain shows the same instinct on a larger scale. Its PERTE Chip programme commits €12.25 billion (~$14.1 billion) of public investment across the whole value chain through 2027, aligned with the European Chips Act, and devotes a dedicated pillar to design, backing fabless companies, pilot lines, and training rather than chasing fabrication alone. Just as telling is how the money is deployed: Through its state vehicle SETT, Spain co-invests alongside the private sector, taking equity stakes of up to 49.9%. OpenChip, a Barcelona-based designer of RISC-V accelerator chips for high-performance computing and AI, is the clearest example so far; it has attracted €111 million (~$128 million) of public backing and selection by the European Commission as an Important Project of Common European Interest. Europe needs more homegrown champions like it if sovereignty in advanced computing is to mean anything in practice.
A strategic opportunity for Europe
Europe has a chance to build a new generation of semiconductor companies—ones that combine design excellence with product ownership and supply-chain leadership, that serve markets where Europe already leads—from space and defense to automotive, industrial automation, energy, healthcare, and communications—and that create lasting economic value in the process: intellectual property, skilled employment, and technology that stays on this side of the Atlantic.
Looking beyond the first Chips Act
The first phase of semiconductor investment rightly focused on addressing manufacturing vulnerabilities and supply chain resilience. The next phase needs to be more ambitious. That means supporting semiconductor product companies and advanced ASIC development, strengthening design and verification capability, building functional safety and cybersecurity expertise, investing in workforce development, and providing scale-up funding for fabless businesses—all while securing access to advanced manufacturing technologies.
The objective shouldn’t simply be to manufacture more chips in Europe; it should be to create more European companies capable of conceiving, designing, supplying, and supporting the technologies that will power industries in the years ahead.
The next decade
The regions that succeed in this transformation won’t be those that focus on a single part of the value chain. They’ll be the ones that brought innovation, design capability, manufacturing access, and deep application knowledge together, and Europe already has many of these strengths.
The semiconductor industry’s future won’t be decided solely by those who own the fabs. It will be determined by those who create the products, own the IP, and actually understand what their customers need.
Read also:
CHIP DESIGN, CHIP MANUFACTURING, DIGITAL SOVEREIGNTY, EU CHIPS ACT, IP (INTELLECTUAL PROPERTY), SEMICONDUCTORS