The semiconductor industry lies at the heart of the global economy and geopolitics, shaping innovation, security, and economic power. Governed by Moore’s Law, this sector remains impenetrable to new players due to its high technical barriers and a deeply fragmented value chain spanning continents. What began as an economic efficiency-driven trade ecosystem has evolved into a geopolitical battlefield, with nations adopting protectionist measures and engaging in subsidy races to secure strategic advantages. The EU, despite its limited competencies in industrial policy, plays a vital role in key segments such as advanced lithography. However, it faces challenges in navigating subsidy competition among Member States and setting realistic objectives. This article argues that no jurisdiction can fully dominate the semiconductor value chain without incurring significant costs and inefficiencies. It also argues the EU must focus on leveraging its strengths, fostering collaboration among Member States, and adopting policies that ensure resilience rather than unattainable self-sufficiency.
European Foreign Affairs Review