Why "Strategic Autonomy" is the wrong framework for Europe's Chips Act 2.0

From a new piece in Foreign Affairs

I had the opportunity earlier this year to participate in a series of conversations hosted by the GeoTech Center of Globsec, the European think tank, on the future of the European chips industry. It was timely because Europe is debating updates to its own Chips Act, while juggling a series of interrelated challenges: the demands of rearmament, Trump’s tariff threats, and an increasingly confrontational trade and technology relationship with China.

(For more on the latter, check out Dutch journalist Marc Hijink’s coverage of this week’s news about the Dutch government’s assertion of control over Nexperia, a Netherlands-based but Chinese-owned chipmaker, amid allegations of financial malfeasance as well as geopolitical pressure.)

Meanwhile, I keep reading headlines like these, suggesting that reducing reliance on US tech is an optimal strategy for Europe. Amid rearmament and an AI boom that Europe is missing out on, this doesn’t seem wise.

So it seemed like a good time to take stock of these challenges and the implications for Europe’s chip industry. John Allen and I just published this new piece in Foreign Affairs, which I’ve excerpted below. You can find the full version here.

European leaders have grand ambitions to reduce the continent’s reliance on sensitive technologies from abroad. Today, they are debating an update to the European Chips Act, which was finalized in 2023 and allocated billions of euros to subsidize chip-making on the continent. The act was meant to increase Europe’s share of global chip manufacturing from ten to 20 percent by 2030, but it will likely fall short of that target by a wide margin.

A purely European supply chain for semiconductors—the sector that undergirds the digital economy and defense sector—is a fantasy that distracts from real opportunities. Many of the powerhouses of Europe’s chip industry, such as ASML, a Dutch company that makes semiconductor equipment, and Merck, a German firm that produces chemicals for chip-making, don’t manufacture semiconductors. Companies like these are cutting-edge, are often highly profitable, and draw on Europe’s industrial expertise in precision machinery, specialty chemicals, and advanced materials. Yet they are overlooked by politicians who focus on chip output.

At the same time, the semiconductor industry is facing rapid technological changes, trade restrictions, and geopolitical shifts that Europe is not prepared for. The main driver of rising demand for chips is artificial intelligence, an area in which Europe is comparatively weak. European firms are being squeezed out of China’s market, which used to be a primary source of growth for them. And the United States, which used to be a close partner, is threatening tariffs that would limit European sales to the U.S. semiconductor market. Merely setting targets for domestic chip production will not solve these challenges.

A self-sufficient semiconductor industry may be out of Europe’s reach, but a more vibrant one is not. Europe has a meaningful edge in certain steps of the semiconductor supply chain, and it can cooperate with allies—including the United States—for the supply chain segments it lacks. The billions of euros being poured into the continent’s rearmament can also be an opportunity for its chip makers, given how critical artificial intelligence has become to defense. To take full advantage of these trends, European leaders need to build on the chip industry’s strengths with deeper partnerships, not a futile drive for self-sufficiency…

For more, here’s the full piece on Foreign Affairs.