The global electronic components market is expected to grow to $847.88 billion by 2032. It is therefore logical that it has become a central focus of global geopolitical and economic haggling. In recent years, the United States has been expanding a strategy to dominate the sector’s supply chain through production, budgets, regulatory regimes and geopolitical leverage. While this effort first became prominent under Donald Trump’s first presidency, many of its elements have persisted into the Biden era, and now they are being formalised in agreements that risk locking Europe into long-term dependence.

The European Union, struggling to build up its capacity in chip design and fabrication, must find ways not only to catch up, but to assert genuine sovereignty. This means placing trust in European companies at the forefront of innovation that are pushing to re-establish Europe’s position in the design and supply of advanced microprocessors, semiconductors and the like.

The U.S. strategy

For years now, the U.S. has been leveraging multiple levers in order to achieve its objective of tech hegemony. Beyond trade deals and export restrictions, entire programmes are designed to vacuum up supply. The Trump administration has relaunched Stargate, a massive exascale computing and AI infrastructure plan that analysts expect will consume a significant proportion of the most advanced chips produced globally. At the same time, the White House launched an “AI Action Plan” designed to consolidate Washington’s grip on ever-evolving AI markets.

Meanwhile, legislators are pushing for domestic-first sales. A bipartisan group in Congress has tabled provisions that would require Nvidia and other US suppliers to give American buyers the “first option” on AI GPUs before any export takes place, even to allies. As reported by Tom’s Hardware, this initiative, folded into the defence spending bill, could make the EU and other partners systematically second in line for access to state-of-the-art chips, in spite of the EU’s promise to buy up to $40 billion worth of U.S.-made chips in the framework of the recent U.S.-EU trade agreement. These headline commitments come with strings attached, however: alignment of security protocols, avoiding “technology leakage to destinations of concern”, and adoption by Europe of export control regimes more in line with US priorities.

These instruments add to the wider pull effect of TSMC’s planned $100 billion investment in US fabs and the “America First” logic underpinning trade agreements. In short, whether through industrial mega-projects, legislation, or trade coercion, the US strategy is consistent: secure as much of the world’s cutting-edge semiconductor capacity as possible, while allies like Europe are left negotiating access. Fundamentally, this situation is incompatible with European efforts to build strong foundations for tech sovereignty.

Europe’s predicament

Europe is facing a stark industrial catch 22: although it’s lack of fabs means its reliance on foreign manufacturers in Asia and the United States remains, it retains a critical lever of technological sovereignty, namely its ability to design and own the intellectual property of high-end processors. Focusing on this strength is essential is the content is to pave the way for future fab development and resilience in the tech sector.

This school of thought was somewhat lacking in the pages of the first European Chips Act, finalised in 2023. The Act was designed to stimulate semiconductor capacity in the EU and double Europe’s share of global semiconductor production by 2030. Yet experience has shown that competing head-to-head on fabs alone is a costly, time-consuming race that Europe is unlikely to win quickly. The continent’s real advantage lies upstream: in science, design, and IP. These are the assets that generate leverage in global value chains and that can allow Europe to shape the rules of the game, even before the most advanced fabs are built. 

There are a number of smaller firms that represent this very European techno-intellectual prowess. At the AI Summit in Paris back in February, European Commission President Ursula von der Leyen underlined how Europe must play to its own strengths. “Too often I have heard that we should replicate what others are doing and run after their strengths. I think that instead, we should invest in what we can do best and build our own strengths here in Europe. Our own strengths are our science and technology mastery that we have given to the world…” she said.

SiPearl, a French firm part of the European Processor Initiative (EPI), is one that aims to bring back to Europe the ability to design high-performance processors. According to Philippe Notton, CEO of SiPearl, the company is developing Rhea1, a “sovereign microprocessor” for high-performance computing. It recently “taped out” the Rhea1 chip, with silicon sampling expected in early 2026, and an eventual integration into the JUPITER supercomputer expected around the same time. Positive developments are coming thick and fast, as Sipearl has just announced the launch of Ahena1, Europe’s first high-performance processor with up to 80 cores designed for both civilian and military use. Philippe Notton stated “As part of the roadmap entrusted to us by Europe to foster the return of high-performance processor technologies to the continent, Athena1 is the perfect complement to Rhea1 in helping to assert Europe’s strategic independence“. The firm has also launched the Seine Reference Server, a modular server platform intended as a reference design and validation tool. Its goal is not just to produce chips, but to provide customers with a package: chip, server, motherboard, software environment. Notton emphasises that “it’s not enough to just make a chip….we give them [our customers] a ready-made kit (Reference Design)”.

The Netherlands’ ASML is perhaps the most telling example: it does not manufacture chips itself, yet its extreme ultraviolet lithography machines are indispensable for any country or company that wishes to produce at the most advanced nodes. This gives Europe rare leverage in design and tooling. This capacity is what should be driving the next phase in Europe, the development of fabs would be the logical next step, but in the future.

In order for this to happen effectively, robust legislation must provide a backbone. This is why Chips Act 2 must be a real step change. The priority should be to reinforce Europe’s capacity to design processors, and any kind of semiconductors that will have an impact on photonics, interconnects, mesh, etc., secure IP ownership, and create the conditions for innovative firms to thrive. Fabs will come, but design is the essential foundation. Indeed, semiconductor firms and industry coalitions have directly called for the Act to address design, materials and equipment. The good news is that the Commission’s own analysis of the Chips Act seems to align with this view, and it is considering how to foster innovation in less-advanced chips, where, as we have mentioned, Europe is currently better positioned. A new proposal is expected in the second quarter of 2026.

Sovereignty or subservience?

The current US-EU framework, though presented in cooperative language, tilts the playing field significantly in America’s favour. The commitment from Europe to buy US$40 billions of advanced US AI chips, while simultaneously aligning to US export control and security rules, hands considerable leverage to Washington. For many European companies and policymakers, that is deeply concerning. Is this sovereignty, or dependence dressed up as partnership?

That said, the framework also signals recognition by both sides of the importance of semiconductors, chip design, and supply chain security. For Europe, acting with urgency is essential. Several policy measures, notably Chips Act 2.0, must therefore be scaled up: the prioritisation intellectual property and design, the strengthening of regulatory and trade regimes and ensuring public procurement and state investment favour European capacity in innovation and design.