As global demand for semiconductors surges, governments are scrambling to secure control over their domestic chip supply chains. What was once a technical issue confined to the electronics sector has rapidly evolved into a geopolitical and economic priority. In response, nations have enacted sweeping “chip acts” to stimulate local manufacturing, reduce foreign dependence, and safeguard national interests.

But what are the real challenges behind these initiatives? Why are well-funded programmes struggling to deliver impact, and what must change if Europe, in particular, hopes to become a serious player in the global semiconductor race?

The Challenge With Chip Acts

In recent years, the question of semiconductor independence has moved from a niche industry concern to a central issue in national security. Countries around the world are acutely aware that control over chip production is not just a matter of economic advantage but a strategic necessity. The semiconductor supply chain underpins everything from consumer electronics to advanced military systems. Any disruption (whether through geopolitical tension, trade restrictions, or industrial espionage) can have cascading effects that extend far beyond the technology sector. This urgency has been amplified by the rise of major semiconductor players such as China. Beyond conventional competition, these markets present risks in the form of counterfeit products, intellectual property theft, and attempts to gain undue influence over global supply chains.

In response, governments in both the West and East have launched dedicated programs, often referred to as chip acts, designed to bolster domestic semiconductor manufacturing and research. These initiatives typically provide substantial funding, tax incentives, and infrastructure support to both established companies and startups. The goal of such acts is clear: reduce reliance on foreign suppliers, secure critical components, and ensure that domestic industries retain technological sovereignty. However, while the intentions behind chip acts are strategically sound, their execution has proven more complicated.

Rigid Funding Frameworks and Startup Barriers

One persistent challenge is that many of these programs are constrained by overly rigid requirements regarding fund usage and business qualifications. Startups, which are often the most innovative and capable of pushing semiconductor technology forward, may find the application process excessively complex or the restrictions on spending too tight to support genuine research and development. Conversely, when the requirements are too loose, programs become vulnerable to misuse. For example, a number of cases have emerged where businesses receive funding only to dissolve shortly after, sometimes without having delivered any meaningful progress.

Another difficulty lies in the distribution of funds. Governments aim to make strategic investments, but semiconductor markets are inherently high-risk and fast-moving, and judgments about which companies or technologies will succeed are often flawed. Political considerations may further distort funding decisions, leading to investments that prioritise national optics over technical feasibility. Consequently, the efficiency of many chip acts is uneven, where some initiatives foster real technological advancement, while others struggle with fraud, mismanagement, or limited impact on broader industrial capabilities.

Semicon Coalition Declaration on a Revised EU Chips Act

On September 29, 2025, the Semicon Coalition issued a declaration calling for a revised EU Chips Act to strengthen Europe’s position in the global semiconductor industry. The released statement states that semiconductors are critical to economic growth, technological innovation, and national security, underpinning sectors from automotive and telecommunications to defence and AI-driven technologies.

The coalition goes on to highlight that Europe currently risks losing ground in semiconductor value creation, as global competitors, particularly China, continue to invest heavily. The existing EU Chips Act, with its broad 20% market share target, has been deemed to be overly ambitious and insufficiently strategic. To address this, the declaration proposes three primary objectives: prosperity, by fostering a competitive European semiconductor ecosystem; indispensability, by securing leadership in key technologies and control points; and resilience, by ensuring reliable supply chains in times of disruption.

To help support these needs, the coalition has proposed five policy priorities.

1. Ecosystem development through collaboration among industries, research organisations, SMEs, and startups, alongside streamlined permitting and infrastructure support. 
2. Coordinated public and private funding, including IPCEI mechanisms, venture capital, and simplified R&D procedures to accelerate commercialisation. 
3. Workforce development via STEM education, vocational training, and talent mobility programs to address critical skill gaps. 
4. Sustainability, emphasising energy efficiency, circularity, and cleaner manufacturing processes. 
5. International partnerships to build resilient, secure, and strategically autonomous supply chains while leveraging global collaboration.

By proposing aligned funding, ecosystem support, and strategic workforce and sustainability measures, the coalition believes that effective semiconductor policy must be part of a coordinated industrial strategy to secure Europe’s technological leadership, economic resilience, and strategic autonomy in a sector increasingly vital to global competitiveness.

What the Semiconductor Industry Really Needs

While proposals like the revised EU Chips Act are pragmatic in intent, they only partially address the real challenges facing Europe’s semiconductor industry. The scope of the plans is ambitious, yet in some areas, unrealistic. 

Funding is emphasised as the primary solution, but there is little discussion of the underlying structural requirements that actually determine industrial success. Key issues such as workforce development, technical expertise, and the practicalities of government bureaucracy are largely overlooked. Semiconductors are complex, high-tech products that require specialised knowledge and highly skilled engineers. Without a pipeline of trained talent, investments in infrastructure or equipment cannot translate into meaningful production or innovation.

Government inefficiency further complicates matters, as strategic projects like semiconductor fabs can be delayed for years due to permitting, regulatory compliance, and administrative hurdles. Current proposals underestimate these delays, presenting a cleaner picture than industry realities allow. Similarly, the declaration’s emphasis on sustainability, while politically appealing, fails to recognise that semiconductor manufacturing is inherently resource-intensive and environmentally demanding. A strict green narrative risks slowing production or increasing costs without delivering tangible benefits.

What the industry truly requires is a pragmatic, incentive-driven approach focused on core enablers. This includes robust educational initiatives to train engineers and technicians, alongside vocational and advanced STEM programs to maintain a skilled workforce.

Physical infrastructure must be supported, including land availability with practical regulatory considerations, to allow rapid fab construction. Energy and water costs must be reduced to make European production economically viable. Finally, targeted economic incentives should encourage engineers to work on local semiconductor projects, retaining talent and ensuring that investments result in concrete technological and industrial gains.

Europe’s semiconductor ambitions will remain aspirational unless policy is grounded in these practical, measurable requirements rather than broad strategic goals.