Tillman Schenk / May 2026
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After postponing it three times, the European Commission is expected to propose a revised Chips Act on June 3. The Commission's position, as set out by Commissioner Virkkunen, is to double down on the ambitions of the first Act. In particular, Brussels wants to onshore design and production of the leading-edge logic chips that power AI training and inference. This is the wrong lesson to draw. The original Chips Act did not fail because it aimed too low. Quite the opposite - its target of capturing 20 percent of global leading-edge manufacturing capacity by 2030 was always a stretch. Today, that share stands at zero.
Pursuing leading-edge chip production in the EU at all costs risks dispersing scarce public resources into unattainable targets once again. Self-sufficiency in semiconductors is not a realistic goal for any single economy. The supply chain is too long, too specialised, and too globally distributed to replicate at home. Therefore, instead of doing more of the same, the strategy itself must be rethought. The EU should use its state aid instruments to achieve sovereignty through indispensability: controlling and defending inputs, capabilities or chokepoints that other players cannot route around.
Holding such chokepoints gives Europe a seat at the table when other powers want to act. Its most important one today is ASML, the Dutch company with a global monopoly on the lithography machines required to make advanced logic chips. That alone confers real leverage: Washington's effort to cut China off from leading-edge semiconductors depends on Dutch cooperation, which it has repeatedly had to negotiate for. Chokepoints also provide a credible source of retaliation, should others weaponize their own. And they create reciprocal dependence: when other powers need European inputs, they acquire a commercial interest in keeping Europe stable, supplied, and integrated into the global system.
A skeptic might object that the recent Nexperia episode proves the opposite and that Europe urgently needs to strengthen its economic resilience by creating its own chip ecosystem. To be clear, reducing foreign dependencies where possible is worth the money. But Nexperia is a less straightforward case than it appears. The wafers at the heart of the dispute are in fact produced in the company’s fab in Hamburg. They are then shipped to China for cutting and packaging before returning to Europe as finished chips. When Beijing imposed temporary export controls, it was this final leg of the supply chain, and not the absence of European production, that gave it leverage over European carmakers and industrial manufacturers. This shows: Even with fabs on European soil, the chip supply chain is too long and too specialised to replicate end-to-end at home.
Pursuing sovereignty through indispensability requires moving beyond simplistic targets towards strategic depth. State aid remains valuable, but only when deployed in a disciplined and coordinated way. Decisions on whether to fund a project should turn on a different question than they do today: does it extend an existing European chokepoint, build a plausible new one, or reduce a foreign chokepoint over Europe? Projects that fail this test should lose priority. Such a strategy will also require Member States and the Commission to dedicate more staff capacity to the sector. And it requires instruments beyond industrial policy. Export controls on chips and manufacturing equipment, for example, remain a national competence. Because ASML is Dutch, every decision about whether to restrict its exports falls on The Hague alone, and so does the retaliation. Pooling that competence at EU level would distribute the cost of retaliation and remove the pressure point counterparties currently exploit.
The first Chips Act failed not because Europe lacked ambition, but because it mistook ambition for strategy. A second built on the same mistake risks failing the same way. Sovereignty, for middle powers in a contested world, is not the ability to do everything alone. It is the ability to make others need you.
The analysis on which this article is based can be found on the Bruegel website.
