Brussels eyes slice of AI chip boom
BRUSSELS — The European Commission is reviving a long-running dream of making cutting-edge artificial intelligence chips in Europe, reducing the continent’s reliance on producers in the U.S. and Asia.
The bloc’s executive arm is working with the Belgian R&D center Imec and the German innovation agency SPRIND on early plans for a state-of-the-art semiconductor factory, according to three people briefed on the talks.
The push reflects growing concern in Brussels that Europe has fallen far behind when it comes to the core technology powering the AI economy, with the bloc reliant on chips designed in the U.S. and manufactured there, or in Taiwan and South Korea. Developing local manufacturing capacity would give Europe a shot at controlling more of the AI supply chain, capturing more of its economic value and insulating itself from geopolitical shocks.
But previous attempts to lure advanced chipmaking to Europe have stumbled, and critics question whether the region has enough demand — or public money — to sustain such a factory.
The proposed semiconductor factory is expected to be part of a broader push that includes an update to Brussels’ landmark chipmaking strategy, an initiative known as the Chips Act 2.0, which is scheduled to be released by the Commission next week as part of an effort to reduce Europe’s dependence on foreign technology.
The Chips Act 2.0 will include a proposal to encourage private investors to fund large-scale “strategic projects” to promote “sovereign and advanced manufacturing, advanced chips design and supply-chain resilience,” according to a draft legislative proposal obtainedby POLITICO.
While the proposed plant is not included in the draft legislation, a factory for “advanced semiconductor manufacturing to produce AI chips” could be proposed later as a strategic project, according to a draft strategic document obtained by POLITICO earlier.
The Commission has been talking to Imec and SPRIND to determine what would be needed for such a project, code-named “EU-made Advanced Semiconductor Manufacturing,” according to the people briefed on the talks.
The discussion remains at an early stage, and the people familiar with the talks cautioned that no decision has been taken on whether to back the proposal, where a potential factory would be located or how it would be funded.
If it goes ahead, the proposal would build on an element from the Commission’s 2023 chipmaking plan, in which Belgium-based chips R&D center Imec received €700 million in EU funding to develop next-generation “two-nanometer” chips, which are expected to be more powerful and energy efficient than existing models.
One of the people familiar with the talks said one option being discussed is the construction of a “one-nanometer” chip factory in Germany by 2035.
Taiwan-based TSMC, South Korean Samsung and U.S.-based Intel are the frontrunners in chip manufacturing, making them global leaders in the production of the infrastructure running AI models.
Some officials and industry figures have pointed to Japan’s Rapidus as a possible model for the EU. The company, set up in 2022 with backing from major Japanese companies and the government, aims to begin large-scale advanced chip production in 2027.
But Brussels’ effort faces sharp doubts, not least because Europe has tried before. In 2022, then Internal Market Commissioner Thierry Breton pushed to bring advanced chip manufacturing to the bloc, only for Intel’s planned mega-factory in Germany to collapse in 2024 amid financial troubles at the U.S. chipmaker.
In an interview with POLITICO last week, Christophe Fouquet, CEO of ASML, an industry leader that manufactures the machines that make chips, warned against such a project.
“If you had a [factory] like this in Europe, all the wafers that would be manufactured would be exported to the United States,” Fouquet said. “So then you’ll be in a situation where Europe subsidizes a big project and the output of this project goes somewhere else.”
Bart Groothuis, a Dutch member of the European Parliament, recently visited Rapidus’ headquarters in Japan and said he was impressed, but he echoed Fouquet’s concerns about the European market.
“The question remains whether there’s sufficient demand and whether there’s sufficient trust among the [chips] designers to have their advanced chips produced there,” he said.
Funding is another unresolved question. One person familiar with the talks said they feared the German government would struggle to make such a factory viable, warning it could require “permanent subsidies.”
Berlin has reserved €5 billion for semiconductors in its 2026 budget, and another half-billion for a common European project on artificial intelligence. German Finance Minister Lars Klingbeil, however, already announced cuts for next year, with every ministry required to cut costs by 1 percent.
An Imec spokesperson said that industrialization is the “important next structural phase” for the EU’s chips push, following the 2023 Chips Act, which focused on research and pilot projects.
The European Commission declined to comment for this article. SPRIND also declined to comment for this article.
The EU’s chipmaking plans will also include tools to respond to supply chain crises, such as last year’s shortages, after the government in the Netherlands intervened at Dutch-based, Chinese-owned, Nexperia semiconductor manufacturer.
Those chips are “boring” legacy chips, tailored to car makers, an area in which the EU has a somewhat stronger position.
