The European Union initiated the Chips Act in 2022 to reduce reliance on foreign suppliers, with the regulation taking effect in 2023.

Despite having competitive players like Infineon and NXP, the EU cannot meet its growing demand for legacy chips, increasing its dependence on Chinese imports.

The ECA identifies several key challenges facing the EU's chip production, including reliance on raw material imports, high energy costs, geopolitical tensions, and a shortage of skilled workers.

The ECA recommends that EU lawmakers urgently reassess the 20% target and implement systematic monitoring of construction plans for semiconductor factories.

ECA member Annemie Turtelboom emphasized the need for the EU to reevaluate its microchip strategy amidst intense geopolitical competition.

A Commission spokesperson acknowledged the report, asserting that the Chips Act has established a strong foundation for Europe’s semiconductor market, despite the challenges outlined.

Despite the EU's aim to mobilize €86 billion in investments, this amount pales in comparison to the €405 billion invested by leading global chipmakers from 2020 to 2023.

In response to the Chips Act, Taiwanese manufacturer TSMC has begun constructing a €10 billion facility in Dresden, while Intel has paused its factory project in Magdeburg for two years.

However, a report from the European Court of Auditors (ECA) warns that the Chips Act is unlikely to achieve its ambitious goal of capturing a 20% share of the global semiconductor market by 2030.

The ECA predicts that by 2030, China will surpass Taiwan as the leading chip manufacturer, while the EU's market share is expected to rise only slightly.

The report also highlights the fragmented funding distribution, which has favored countries like Germany, potentially leading to unequal development across the EU.

There are calls for a 'Chips Act 2.0' to establish clearer and more realistic objectives based on past experiences and current challenges.