The European Commission has unveiled the Chips Act 2.0, a proposed regulation to bolster the EU’s semiconductor ecosystem, sharpen technological sovereignty, and secure supply chains. Announced on 3 June 2026 as part of the broader Technology Sovereignty Package, it complements initiatives like the Cloud and AI Development Act. The initial European Chips Act mobilised over €52 billion in public-private investment and set up pilot lines and competence centres, but the EU still accounts for under 10% of global chip production and remains heavily reliant on external suppliers for advanced design and cutting-edge manufacturing—a vulnerability the new proposal directly targets.

The Chips Act 2.0 focuses on four pillars. For investment and competitiveness, it promises fast-tracked permitting in under 12 months, “Grand Challenges” to drive industrialisation of AI chips and other strategic technologies, and expanded international Strategic Partnerships on Semiconductors. To stimulate demand, the plan creates Demand Accelerators to speed market adoption of novel components, leverages innovation procurement to support startups and scaleups, and forges synergies with the Cloud and AI Development Act to channel demand from data centres and AI Gigafactories. On the supply side, it backs “First-of-a-Kind” projects across the full value chain—from materials to advanced packaging—introduces Strategic Projects with EU and member-state co-investment, and launches a Semiconductor Regions of Excellence label to attract investment into regional clusters. Finally, to boost resilience, it establishes a B2B Semiconductor Supply Chain Platform for greater visibility, supports risk mitigation, and aims to cut overreliance on external sources for critical technologies.

A key evolution from the first act is the heightened emphasis on demand-side levers, better aligning European production with the needs of strategic industries and emerging markets like AI. The legislation now enters discussions in the European Parliament and Council, where it is expected to shape the EU’s long-term semiconductor strategy and industrial resilience.

Brussels, 3 June 2026 – The European Commission has presented the proposed Chips Act 2.0, a new framework designed to strengthen Europe’s semiconductor ecosystem, enhance technological sovereignty, reduce strategic dependencies, and reinforce the resilience of semiconductor supply chains. The proposal forms part of the broader Technology Sovereignty Package and complements other initiatives, including the Cloud and AI Development Act.

The proposal builds on the achievements of the first European Chips Act, which helped mobilise more than €52 billion in public and private investments, establish advanced pilot lines and competence centres, and strengthen coordination and crisis preparedness across Member States.

Today, semiconductors underpin virtually every digital technology, from connected vehicles and industrial automation to cloud computing and artificial intelligence. As global demand continues to accelerate, the semiconductor market is expected to reach €1.37 trillion by 2030, with AI-related components driving a significant share of future growth.

Why Chips Act 2.0?

Despite Europe’s strengths in areas such as power electronics, sensors, photonics, manufacturing equipment and materials, the EU remains highly dependent on external suppliers for advanced semiconductor design and leading-edge manufacturing. According to the Commission, Europe currently accounts for less than 10% of global semiconductor production and remains particularly exposed in critical technology segments.

The Chips Act 2.0 seeks to address these challenges by supporting both the supply and demand sides of the semiconductor ecosystem while strengthening Europe’s long-term competitiveness and resilience.

Key objectives

The proposed regulation focuses on four main priorities:

– Improving conditions for investment and competitiveness

Strengthening research, innovation and skills across the semiconductor ecosystem;

Accelerating permitting procedures, with approvals targeted within a maximum of 12 months;

Launching “Grand Challenges” to support industrial development of strategic technologies, including AI chips;

Expanding international cooperation through Strategic Partnerships on Semiconductors.

–  Stimulating demand and industrial uptake

Strengthening links between chip manufacturers and user industries;

Establishing Demand Accelerators to speed up market adoption of new semiconductor products;

Increasing the use of innovation procurement to support European startups and scaleups;

Creating synergies with the Cloud and AI Development Act to support growing demand from data centres, cloud infrastructure and AI Gigafactories.

– Reinforcing supply-side measures

Supporting “First-of-a-Kind” projects across the semiconductor value chain, from materials to advanced packaging;

Introducing Strategic Projects to unlock EU funding and facilitate co-investment from Member States and industry;

Launching a new Semiconductor Regions of Excellence label to promote regional semiconductor ecosystems and attract investment.

– Increasing resilience and reducing dependencies

Establishing a Business-to-Business Semiconductor Supply Chain Platform to improve visibility and resilience across supply chains;

Supporting risk assessments and mitigation measures in exposed sectors;

Reducing overreliance on external suppliers for critical semiconductor technologies.

A stronger focus on demand

One of the notable evolutions of the proposed Chips Act 2.0 is the increased emphasis on demand-side measures. While the original Chips Act primarily focused on strengthening manufacturing and research capabilities, the new proposal seeks to better align European semiconductor production with the needs of strategic industries and emerging markets.

The Commission highlights that stronger demand can reinforce local production, improve industrial resilience, and support the commercialisation of innovative European technologies.

Next steps

The proposal will now enter the European legislative process involving the European Parliament and the Council. As discussions progress, the Chips Act 2.0 is expected to contribute significantly to shaping the next phase of Europe’s semiconductor strategy, industrial competitiveness, technological sovereignty and long-term resilience.

Download the Chips Act 2.0 Proposal and Annexes.

Source: European Commission

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