The European Commission is preparing a significant recalibration of its semiconductor strategy, with a revised Chips Act set to be published on 3 June. According to a draft seen by Euronews, the new legislation shifts the focus from subsidising chip fabrication to stimulating demand for European-made semiconductors, particularly for artificial intelligence applications.
“While the initial Chips Act has been predominantly supply-driven, the Chips Act 2.0 places greater emphasis on demand-side measures. The two dimensions are mutually reinforcing: cultivating robust local demand supports the strengthening of local semiconductor supply,” the draft states.
The original Chips Act, launched in 2022, concentrated on public subsidies to attract semiconductor manufacturing plants to Europe. That approach suffered a blow when US chipmaker Intel abandoned plans to build two mega-factories in Germany. The draft acknowledges that supply-side investment alone cannot achieve scale without stronger demand, pointing to tools such as procurement coordination and consumption incentives.
Demand Aggregation and Crisis Tools
The revised legislation introduces “demand aggregation” as a core mechanism, aiming to consolidate fragmented markets across the EU’s twenty-seven member states. By pooling demand from strategic sectors—such as automotive, healthcare, and defence—the Commission hopes to make European chip production commercially viable.
The draft also overhauls crisis management for semiconductor supply chains. Companies would be required to share information more proactively, and the Commission would gain the ability to organise joint purchasing and request priority orders from publicly subsidised fabrication plants during emergencies. This mirrors approaches seen in other critical sectors, such as energy and pharmaceuticals.
The Chips Act 2.0 is part of a broader push for technological sovereignty, outlined in a separate strategy document. “As geopolitical fragmentation deepens and supply chains are increasingly weaponised, technological dependencies are becoming strategic liabilities,” the document warns. It argues that sovereignty should be based on fair competition, not isolationism or protectionism—a stance echoed by EU digital chief Henna Virkkunen in recent remarks.
The strategy annex identifies semiconductors, cloud technologies, and consumer applications as critical dependencies on foreign providers. It calls for developing EU-based solutions across the entire value chain, aligning with proposals from the EuroStack movement. Cristina Caffarra, founder and chair of the EuroStack Initiative, told Euronews: “The communication directly echoes our focus on growth and capturing economic value along the stack, not just defensive security, as the main motivation.” She also welcomed the emphasis on open-source technologies, calling them “Europe’s magic sauce” and “a major strength”.
Another key element of the package is a proposed Cloud and AI Development Act. According to the strategy paper, the legislation would establish four levels of sovereignty for cloud services, which public authorities must consider in procurement decisions based on data sensitivity. This is part of a wider effort to reduce reliance on non-European cloud providers, such as Amazon Web Services and Microsoft Azure.
The revised Chips Act and accompanying strategy reflect a growing consensus in Brussels that Europe must secure its position in the global semiconductor race, especially as AI drives demand for advanced chips. The shift from supply to demand marks a pragmatic adjustment after the setbacks of the first Chips Act, but success will depend on member states’ willingness to coordinate procurement and invest in domestic capabilities.
