Europe is ramping up spending across its semiconductor ecosystem as the European Chips Act begins to reshape investment patterns, with a focus that stretches beyond manufacturing into design, pilot lines and competence centres. The European Commission says the Act, adopted in 2023, has prompted more than €80 billion in chip-related investments to-date, almost twice the €43 billion the Commission initially hoped to mobilise. Despite this, Europe’s share of global chip production has remained around 10%, as other regions have matched or exceeded its efforts in a global race for advanced microchips for data centres, artificial intelligence, defence and other strategic uses.
The Chips Joint Undertaking is coordinating the push to onshore production and avoid a repeat of the COVID-19-era supply chain shocks, aiming to combine funding from the European Union, member states and industry. The initial €43 billion target mixed public and private commitments, and recent Commission data suggests total investment committed may reach €100 billion by 2030 as national governments and global technology companies announce new fabs and research centres. Flagship projects include the European Semiconductor Manufacturing Company plant in Dresden, which is expected to require over €10 billion in combined investment, half backed by public funds, with 70% of the facility owned by TSMC and targeted at automotive, industrial and artificial intelligence customers. France is backing a €2.9 billion project with STMicroelectronics and GlobalFoundries for next-generation manufacturing, Italy has approved a €2 billion state aid package for a new STMicroelectronics SiC facility in Catania, and Austria has provided €227 million in public funding for an ams OSRAM expansion, alongside a private plan that could add another €567 million by 2030.
Smaller member states are positioning themselves as critical nodes within this wider network, with Malta highlighted as a cost-competitive and agile location for semiconductor investment. Electricity prices in Malta are around 18% less than in the eurozone, and wages and salaries in Malta’s manufacturing sector are also 41% lower than the average prevailing in the eurozone, giving it an advantage as microchip factories seek affordable energy, labour and specialised inputs. STMicroelectronics has operated a plant in Malta since 1981 and has just completed its largest-ever expansion, turning it into the most advanced chip backend manufacturing site in the European Union and a hub for assembly and packaging. Malta Enterprise is using incentives and risk-sharing to attract investors and anchor projects under the Important Projects of Common European Interest scheme on microelectronics and communication technologies, with efforts focused on advanced automation and new semiconductor processes for automotive, industrial and consumer markets. Officials argue that smaller jurisdictions can move faster on regulation, pilot niche capabilities such as advanced packaging and use highly targeted support to punch above their weight in Europe’s expanding semiconductor value chain.
