It was a gala ceremony. In the Belgian university town of Leuven, the European Commission’s top tech official and the CEO of Dutch chips tool supplier ASML gathered at the modern headquarters of the Interuniversity Microelectronics Centre (Imec) to celebrate the inauguration of a €2.5 billion chips research hub.   

The investment aims to cement the stranglehold of ASML’s chip printing machines that use extreme ultraviolet light to produce the world’s most advanced semiconductors. Imec houses research that allows ASML to build its machines — by 2030, the company aims to cram a trillion transistors into one sealed unit that snaps straight onto a circuit board.  

At the opening, speakers countered the narrative of a backward continent fading into irrelevance.  ASML holds around 90% of the advanced lithography market. Imec leads the world in research on exotic chipmaking materials. US chipmakers partner in Imec’s R&D programs, providing 75% of Imec’s budget. Taiwan’s TSMC tests out new designs in the Leuven laboratory. Imec’s CEO, Luc van den Hove, said the continent’s strengths “should create a kind of reverse dependencies towards European technology.” 

Beyond lithography, Europe holds other chip chokepoints in power electronics, crucial for EVs, fast‑charging, and green grids. European chip companies Infineon, STMicroelectronics, and NXP together are among the top suppliers of automotive and industrial power semiconductors. 

Admittedly, Europe’s chip ambitions face big challenges — fragmented national policies, limited leading‑edge volume, and talent shortages. The continent needs to stop attempting to catch up on manufacturing. Instead, it should strengthen its partnership with the UK, which is home to a world-class chip design infrastructure, and focus on its considerable strengths. 

“Europe can own the ‘next’ generation of chips, not the last one,” argues Jalal Bagherli, Co-Chair of the UK Semiconductor Policy Advisory Panel and — full disclosure — my ex-boss. It “should stop chasing Taiwan on legacy CPU manufacturing and instead double down on new materials (Silicon Carbide, Gallium Arsenide), chiplets, photonics, edge AI, and system‑level design, where it already has structural strengths.” 

The continent is investing in these strengths. The EU Chips Act mobilizes more than €43 billion of public and private investment, not to clone Taiwan’s TSMC, but to secure strategic segments. It is pouring €623 million into GlobalFoundries and X‑FAB to set up “first‑of‑a‑kind” specialty fabs in Dresden and Erfurt, targeting automotive, industrial, and Internet of Things chips. Another €2.2 billion will go to Franco-Italian STMicroelectronics to build what is described as the world’s first fully integrated silicon carbide device fab in Catania, Sicily, serving electric vehicle and industrial customers. And yet another €400 million will create a major European node for silicon carbide wafers and power devices in the Czech Republic.  Yole’s automotive report notes that European chipmakers Infineon, NXP, and STM together account for nearly half the global automotive semiconductor market. 

These projects will lock in Europe as a non‑Asian hub for the power and smart‑power chips that underpin electrification and industrial automation. A second‑phase “Chips Act 2.0” discussion focuses on turning these pilot lines and design hubs into permanent infrastructure so that European — and allied — companies can prototype and scale new chip architectures. 

These strengths give Europe export‑control leverage. Since 2023, the Netherlands has required licenses for shipping ASML’s advanced tools to China, meaning decisions in The Hague and Brussels directly determine how far China can move up the semiconductor ladder.  

European officials make the correct noises. They stress resilience over autarky: policy papers highlight cooperation with the US, Japan, and like‑minded partners. Although they insist that they are not considering weaponizing their chipmaking chokepoints, they acknowledge their potential utility in our increasingly “might makes right” world. 

Europeans cannot rest on their present competitive advantage. They must keep moving ahead. One risk is technological — lithography, the basis for cutting-edge chipmaking, could be replaced by another technique. Some chip specialists have already hinted at etching as a more cost-effective alternative.  

Europe must position itself in future supply chains. Northern Europe is building a coordinated semiconductor region: Nordic and Baltic countries are setting up linked competence centers, pooling education programs, R&D labs, and start‑up support. Cloudberry’s $35.2‑million specialized VC fund, based in Helsinki and London, targets compound‑semiconductor, photonics, and AI‑chip start‑ups that fit this “next‑generation chips” thesis. 

It’s also important to include the UK, which brings world-class design. Cambridge-based Arm design the processor at the heart of almost all the world’s mobile phone chips. South Wales hosts strong designhouses and a leading compound‑semiconductor cluster. Commentators note that, taken together, Europe and the UK have a long history of leadership in “next‑generation chip” technologies. StrengthenedEU–UK coordination around pilot lines, export‑controls, and joint development would create a single, coherent European pillar. 

For US policymakers, the implication is clear: working with Europe secures irreplaceable chip chokepoints, while export controls coordination over ASML tools keeps China from reaching the frontier. Europe represents an essential ally in de‑risking semiconductor supply chains and reducing long‑term dependency on Beijing 

Christopher Cytera CEng MIET is a senior fellow with the Tech Policy Program at the Center for European Policy Analysis and a technology business executive with more than 30 years’ experience in semiconductors, electronics, communications, video, and imaging. 

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.

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