Strengthening Europe’s semiconductor industry: Strategic insights from Finland for the EU Chips Act 2.0
The risks associated with geopolitical tensions and trade conflicts are rising. Against this backdrop, it is imperative for the European Union to enhance its capabilities in information networks, defense technology, and AI processing. All these fields rely on advanced chip technologies, pushing Europe to keep up with rapid semiconductor advancements. The chips industry is essential for the bloc’s competitiveness and economic security.
The European Chips Act, adopted in 2023, was pivotal in refocusing the EU’s efforts in the field of critical technologies. It has already attracted R&D and manufacturing projects worth tens of billions of euros, which deliver positive spillovers across the bloc. However, Europe needs to step up its game. The follow-up to the EU’s semiconductor policy, a Chips Act 2.0, should take a systemic approach by aligning both national and EU policies to maximize European semiconductor innovation through key investments, promoting collaborative research, and addressing workforce challenges.
Finland’s pioneering chip sector, under its new national strategy Chips from the North, seeks to contribute to the EU’s goal of developing a robust semiconductor industry. Drawing on Finland’s experience, this article highlights essential measures to boost Europe’s semiconductor industry.
Excellence-based EU funding: fueling high-growth technologies
Europe should focus its resources on high-growth semiconductor technologies. This includes providing subsidies, loans, and equity investments, as well as public-private investment schemes, to support sectors like chip design (e.g., Edge AI and 6G chips), MEMS/sensors, photonics, quantum technologies, advanced materials, and process technologies (e.g., atomic layer deposition). Funding should be allocated based on demonstrated excellence and potential for global leadership, ensuring that only the most promising projects receive support.
All the while, with the current IPCEI (Important Projects of Common European Interest) on microelectronics and communication technology concluding by 2027, it is vital to begin planning for a new IPCEI in this domain. The new “fast-track” IPCEI should focus on streamlining processes, minimizing administrative burdens, and prioritizing mobile connectivity, edge AI, and cutting-edge chip design. It should provide a level playing field for European chips and connectivity champions and emerging innovators in their ecosystems vis-à-vis competitors in Asia and North America who benefit from substantial state support.
Innovation hubs: establishing centers of semiconductor excellence
Innovation thrives through collaboration. The EU should establish semiconductor innovation hubs as centers of excellence for semiconductor research, development, and commercialization, thereby fostering cross-border R&D collaboration. These hubs, supported by Chip Competence Centers, should incorporate industry clusters, pilot lines, and the EU design platform to facilitate rapid prototyping and testing of new semiconductor technologies.
The forthcoming EU R&D framework program (FP10) must promptly secure substantial funding for the semiconductor sector. By maintaining financial support for pilot lines, the design platform, and ambitious R&D initiatives within innovation hubs, the EU can facilitate the efficient transition of breakthroughs in innovative semiconductor technologies from research to manufacturing and deployment in digital infrastructure.
Finland’s approach of integrating industry and academia in its hubs and pilot lines, such as Kvanttinova and SiPFAB, aims to advance technology commercialization, encourage start-up creation, and support EU-wide innovation ecosystems to facilitate rapid scale-up and market deployment.
Addressing the workforce challenge
One of the most significant challenges facing the semiconductor sector is the need for a highly skilled workforce. The Finnish chips industry anticipates adding 15,000 employees by 2035, tripling its current workforce. As demand for semiconductors grows, Europe must prioritize workforce development programs which support semiconductor education and talent mobility across Member States. Finland fully supports EU-wide talent initiatives that facilitate the flow of skilled workers and deepen Europe’s semiconductor talent pool.
Leading in green semiconductor manufacturing
Sustainability is integral to Europe’s technological vision, and green semiconductor manufacturing provides a powerful opportunity to lead globally. Europe should direct R&D and other investments toward eco-friendly production, including energy-efficient manufacturing, water conservation, and recyclable materials. Finland’s own commitment to sustainable manufacturing, exemplified by the Chip Zero initiative and leadership in nanocarbon materials, positions it as a critical contributor to the EU’s green technology leadership.
Strengthening international partnerships
In an interconnected global chips industry, closer cooperation with partners such as the U.S., Japan, Korea, and Taiwan is essential. Strengthening supply chains and driving innovation through closer partnerships with likeminded countries is crucial for enhancing Europe’s technological advancement and resilience. This objective should be prioritized in the EU’s revised chips strategy, including provisions that permit third-country companies to enter into joint ventures with EU firms and access EU-funded R&D infrastructure. By establishing robust international collaborations, Finland aims to promote the exchange of knowledge, technologies, and best practices.
An ambitious Quantum Chips plan
Quantum technology will play a defining role in the future of computing, and Europe must take decisive action to establish a leading position. To this effect, the EU needs an ambitious Quantum Chips plan to develop a 1M-qubit quantum computer, supported by public-private partnerships and scalable manufacturing infrastructure. Funding should prioritize capabilities and IP-friendly conditions for quantum chip companies to promote innovation and commercial scale-up.
Finland, with its thriving quantum technology ecosystem, stands ready to contribute significantly to Europe’s quantum leadership. The country hosts more than 10 leading quantum technology companies and receives significant investments in the sector, accounting for 10% of the top 20 investments in quantum technology within Europe.
Finland’s commitment: Chips from the North
The EU Chips Act 2.0 represents a transformative opportunity for Europe to shape its semiconductor future. Policymakers must adopt a bold approach that prioritizes excellence, sustainability, collaboration, and resilience. Together, Europe can build a thriving semiconductor ecosystem that secures its place at the forefront of global technology.
Aligned with the EU’s semiconductor vision, Finland’s Chips from the North strategy sets ambitious goals, aiming to triple the semiconductor industry’s revenue to €5-6 billion by 2035. Finland’s dedication to R&D collaboration, workforce development, and sustainable innovation reinforces its role as a central player in Europe’s semiconductor ecosystem. By focusing on excellence-based funding, green manufacturing, and cross-border partnerships, Finland is committed to building a robust, resilient semiconductor industry that supports Europe’s technological sovereignty and global competitiveness.
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