The proposal is part of the Technological Sovereignty Package and is intended to help strengthen Europe's technological sovereignty, economic resilience and industrial competitiveness over the long term. At the same time, the Commission is responding to the experiences of recent years: geopolitical tensions, supply chain bottlenecks, increasing international subsidies and global competition for key technologies.

What Does the Chips Act 2.0 Propose?

Key elements of the Commission's proposal include the introduction of new European Semiconductor Technology Initiatives (ESTI) and Strategic Projects as strategic investment projects of European interest, the further development of the Chips for Europe Initiative with a stronger focus on technology transfer, design infrastructure and pilot lines, as well as expanded supply chain monitoring and new crisis response mechanisms.

Overall, the proposal thus marks an important paradigm shift: away from a primarily supply-driven industrial policy towards an approach more closely oriented towards the semiconductor ecosystem as a whole.

Putting Competitiveness at the Centre

From the perspective of German industry, the Commission's proposal contains important improvements on the first Chips Act. Particularly welcome are the greater attention paid to the entire semiconductor value chain, the inclusion of demand-side instruments and the focus on resilient supply chains and technological sovereignty.

Focusing on Europe's Strengths

German industry explicitly supports the stronger strategic prioritisation in the Chips Act 2.0. Europe will not be able to lead global competition in all technology areas simultaneously. Limited public funds must therefore be targeted at areas where particular strengths already exist or where there is realistic potential for technological leadership.

Strengthening Demand and Accelerating Innovation

One of the proposal's most important innovations is its greater emphasis on the demand side. While the first Chips Act focused primarily on production capacity, so-called Demand Accelerators and a European Demand Forum are intended to identify and aggregate industrial needs more systematically in future. Joint technology roadmaps, co-design projects and coordinated innovation initiatives can help bring European technologies into industrial applications more quickly and reduce investment risks.

The planned pilot lines can also make an important contribution, provided they are consistently aligned with the needs of industry, start-ups and SMEs. It will be crucial to involve industry in the further development of this infrastructure at an early stage and in a structured manner.

What Is Still Missing

Despite many positive approaches, the Commission's proposal still fails to adequately address key factors affecting Europe as a business location. These include the growing shortage of skilled workers, persistently high energy costs, complex permitting and funding procedures, and a lack of long-term financing prospects.

A competitive European semiconductor industry cannot be built through funding programmes alone. It needs a reliable policy and regulatory framework, sufficient skilled workers, competitive energy costs and a sustained reduction in bureaucracy.

Outlook

For the Chips Act 2.0 to realise its full potential, competitiveness and economic viability must take centre stage. Ultimately, the success of the Chips Act 2.0 will not be measured by the number of projects funded, but by whether it enables Europe to build more resilient supply chains, innovative companies and internationally competitive value creation.

In the coming months, the Council and the European Parliament will develop their positions. An agreement is not expected before 2027, while key funding and investment instruments, including the new Competitiveness Fund, are expected to become available from the next EU financial period, starting in 2028.