How Europe is gradually moving from the pursuit of technological autonomy toward control over the critical infrastructure layers shaping the global AI economy

CHIPS ACT 2.0 — The New European Semiconductor Architecture

Europe’s semiconductor strategy is changing. What began as an attempt to rebuild manufacturing capacity is increasingly evolving into something broader: a search for strategic relevance inside the infrastructure systems underpinning the digital age.

When the European Union launched the original Chips Act, much of the political narrative revolved around sovereignty.

Europe wanted to reduce external dependencies, strengthen domestic semiconductor production and regain industrial resilience after years of supply chain disruptions and geopolitical instability.

At the time, the logic appeared straightforward: produce more chips inside Europe and dependence will decrease. But the semiconductor industry has changed faster than many policymakers anticipated.

Artificial intelligence, advanced packaging, heterogeneous integration and hyperscale infrastructure are reshaping the technological landscape at extraordinary speed. Semiconductor ecosystems are becoming larger, more interconnected and increasingly impossible for any single region to fully control.

That reality is quietly forcing Europe to rethink the meaning of sovereignty itself.

The limits of full autonomy

The original Chips Act emerged during a period of growing geopolitical anxiety.

Pandemic-era shortages exposed the fragility of global supply chains. Rising tensions between the United States and China further intensified fears surrounding technological dependence. Semiconductors increasingly became viewed not simply as industrial products, but as strategic infrastructure essential to economic stability, defense systems and digital power.

Europe responded by attempting to rebuild parts of the semiconductor chain domestically. But complete autonomy was always going to be difficult.

Modern semiconductor production depends on an extraordinarily complex global ecosystem where lithography, advanced materials and chip design must seamlessly align with substrate development, advanced packaging, software orchestration and highly specialized manufacturing equipment.

“No region can realistically achieve complete semiconductor self-sufficiency across the entire value chain.”

European Court of Auditors — Special Report on the Chips Act

As AI infrastructure rapidly expands, that complexity is becoming even more pronounced.

The semiconductor industry is no longer simply about manufacturing chips. It is increasingly about coordinating entire technological ecosystems. And ecosystems are much harder to nationalize.

Europe’s structural strengths

Yet Europe also possesses something many regions lack: deep structural positioning across multiple critical layers of the global technology stack.

The continent may not dominate consumer platforms or hyperscale AI models in the same way as the United States or China. American firms largely dominate the software and cloud layers of the AI economy, while Asia continues to anchor much of the world’s manufacturing scale and assembly capacity.

Europe, however, remains deeply embedded inside several of the physical and industrial foundations underpinning modern computing itself.

ASML controls extreme ultraviolet lithography. Europe maintains advanced research ecosystems through institutions such as imec, Fraunhofer and CEA-Leti. European firms remain globally influential in photonics, industrial automation, automotive semiconductors, precision manufacturing and power electronics.

Increasingly, advanced packaging and systems integration are also entering that equation.

“Semiconductor leadership increasingly depends on ecosystem coordination across the full value chain.”

European semiconductor policy analysis

This changes how technological power can be understood.

Strategic influence may no longer depend solely on dominating finished products or maximizing manufacturing scale. It may increasingly depend on controlling the critical layers that the broader global ecosystem cannot easily function without. In other words: indispensability.

From ownership to coordination

This emerging doctrine represents an important philosophical shift.

For years, many discussions surrounding technological sovereignty implicitly assumed that resilience required ownership and domestic control over entire supply chains. But the semiconductor industry may simply be too globally interconnected for that model to remain realistic.

Instead, Europe increasingly appears to be moving toward a different form of strategic thinking: replacing the illusion of total control with the calculated execution of systemic leverage.

That means ensuring Europe remains indispensable across enough critical infrastructure layers that global semiconductor ecosystems continue depending on European participation.

This logic already appears visible across multiple sectors.

European lithography systems remain essential to advanced chip production. European industrial software helps coordinate manufacturing environments. European power electronics remain deeply integrated into automotive and industrial infrastructure.

And advanced packaging — as seen in Europe’s emerging southern semiconductor corridor — is increasingly transforming from a localized manufacturing gap into a strategic leverage point inside the physical integration of future AI hardware.

Under this model, resilience emerges not from isolation, but from structural embeddedness.

The semiconductor industry as geopolitical infrastructure

The implications extend far beyond semiconductors themselves.

The AI era is transforming technology into infrastructure at unprecedented scale. Data centres increasingly shape energy systems. Advanced compute influences military capability, scientific research and industrial productivity. Semiconductor bottlenecks now affect cloud computing, automotive manufacturing and geopolitical competition simultaneously.

This is gradually changing the role industrial policy plays inside Europe.

The Chips Act is therefore evolving far beyond simple semiconductor policy; it is becoming a core instrument in a broader European effort to secure infrastructure resilience, scale energy capacity, deploy sovereign AI systems and redefine technological governance.

In many ways, Europe appears to be searching for a distinctly European model of technological power: less platform-centric, less hyper-scaling, but deeply rooted in industrial systems, standards, infrastructure and coordination.

A different kind of power

This may ultimately become the most important transformation unfolding behind Chips Act 2.0.

Europe is beginning to recognize that sovereignty in the digital age may not mean complete independence. It may mean becoming impossible to bypass.

That distinction matters. Because in highly interconnected technological systems, power increasingly belongs not only to those who own platforms or dominate markets — but also to those controlling the critical infrastructure layers connecting entire ecosystems together.

Semiconductors reveal this transformation particularly clearly.

The future of technological power may not belong solely to the regions producing the largest number of chips. It may belong to the regions shaping the architectures through which modern computational systems operate.

And increasingly, Europe appears determined to ensure it remains part of that architecture.

This article is part of the series CHIPS ACT 2.0 — The New European Semiconductor Architecture, in which Altair Media Europe examines how semiconductors are evolving from an industrial sector into a foundational layer of modern infrastructure, AI systems and geopolitical power. Across four articles, the series explores advanced packaging, OSAT, AI infrastructure and Europe’s growing search for technological indispensability.

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Credit

Artwork generated with AI for Altair Media Europe

Caption

A minimalist compass symbolizing Europe’s strategic search for direction in the age of AI infrastructure and semiconductor geopolitics. The Italian-colored needle reflects the continent’s growing shift from technological sovereignty toward strategic indispensability.