The European Union is preparing to revise its Chips Act, with a new focus on stoking demand for domestically made semiconductors even as it continues to push for more production capacity. The original law, adopted in 2023, aimed to double the bloc's share of global chip output to 20% by 2030 by pouring billions into factories and R&D. But officials now say that without a parallel effort to stimulate local buyers, the new fabs could end up idle or reliant on export markets.
Why the revision is coming
Brussels sees a gap between the supply-side measures already in place and the actual take-up of European chips by European industries. The revision is meant to close that gap. The European Commission hasn't published a legislative text yet, but insiders describe a plan to create incentives for auto manufacturers, industrial equipment makers, and defense contractors to source chips from EU-based plants. The idea is to build a self-sustaining loop: more demand supports more production, which in turn lowers costs and attracts more users.
What the original act did
The Chips Act as it stands focuses heavily on capital expenditure. It freed up public money for pilot lines, design platforms, and large-scale manufacturing projects — most notably the planned mega-fabs by Intel and TSMC in Germany and Dresden. It also relaxed state-aid rules so governments could co-invest. But the law included only weak provisions for demand, such as a vague commitment to “promote” European chips in public procurement. That hasn't moved the needle, officials acknowledge privately.
The demand challenge
Europe consumes about one-fifth of the world's semiconductors, but the vast majority are imported from Asia and the United States. Automakers, for instance, rely heavily on legacy chips from Taiwan and South Korea. Shifting those supply chains to EU fabs isn't trivial. It means requalifying parts, redesigning circuits, often paying a premium. The revision is expected to include funding for that requalification process and possibly a European preference clause in public tenders for connected devices, electric-vehicle components, and defense electronics.
What happens next
The Commission is expected to present a draft of the revised Chips Act in the first half of 2025. It will then need approval from the European Parliament and the Council, a process that could take a year or more. The question left hanging is whether the EU can create enough demand pressure to make the supply-side investments pay off — and whether member states will agree to the kind of binding procurement rules that could make the difference.
