“Finally, the ‘Chips Act 2.0’ should include mechanisms for flexibility and adaptability to rapidly respond to industry shifts and geopolitical changes, ensuring that the EU’s strategy remains relevant and effective in the evolving semiconductor landscape,” Rawat added.

Overcoming export restrictions

A significant challenge has been the trade restrictions placed on companies like ASML regarding exports to China. The ESIA has urged a more constructive approach, advocating for incentives over protectionism.

“By curbing sales of advanced semiconductor manufacturing equipment, European companies risk losing substantial revenue streams, which could weaken Europe’s position as a leader in this high-tech industry,” Rawat said. “Moreover, the reduced market size might lead to a slowdown in research and development investments, ultimately hampering innovation within Europe’s semiconductor ecosystem.”

Moreover, these restrictions could trigger retaliatory actions from affected nations, potentially disrupting global supply chains and driving up operational costs for European companies.