The European Commission is set to unveil a new proposal aimed at boosting demand for European chips, particularly for artificial intelligence technologies, according to a draft seen exclusively by Euronews.
Brussels is preparing a major shift in its industrial policy on semiconductors through a revised Chips Act, due to be published on 3 June.
“While the initial Chips Act has been predominantly supply-driven, the Chips Act 2.0 places greater emphasis on demand-side measures. The two dimensions are mutually reinforcing: cultivating robust local demand supports the strengthening of local semiconductor supply,” an early draft of the proposal reads.
The original Chips Act focused heavily on supporting the construction of semiconductor manufacturing facilities in Europe via public subsidies. That approach suffered a setback after US chipmaker Intel scrapped plans to build two mega-fabs in Germany.
According to the draft, one lesson from the first legislation is that supply-side investment alone is insufficient to create scale without stronger demand. The proposal points to tools such as procurement coordination and consumption incentives to stimulate the market.
The revised legislation would therefore focus on “demand aggregation”, aimed at consolidating fragmented markets to improve the commercial viability of European chip production in strategic sectors.
The draft also proposes changes to the EU’s management of semiconductor supply chain crises. It calls for more proactive information-sharing by companies and a more structured process for activating emergency measures.
In the event of a crisis, the Commission would be able to organise joint purchasing and request priority orders from publicly subsidised fabrication plants.
The revamped Chips Act forms part of a broader push to strengthen Europe’s technological sovereignty.
Tech sovereignty package
A separate strategy document accompanying the initiative highlights the need to expand Europe’s industrial capacity, diversify supply chains and strengthen control over critical infrastructure.
“As geopolitical fragmentation deepens and supply chains are increasingly weaponised, technological dependencies are becoming strategic liabilities,” the document, seen by Euronews, states.
The paper argues that technological sovereignty should be based on fair competition rather than isolationism or protectionism. The approach echoes comments made by EU digital chief Henna Virkkunen in a recent interview with Euronews.
The annex to the document lists the EU’s current dependencies on foreign providers across the technology supply chain, listing semiconductors, cloud technologies and consumer applications as critical.
The strategy also calls for the development of EU-based technological solutions across the entire value chain, closely aligning with proposals promoted by the EuroStack movement.
“The communication directly echoes our focus on growth and capturing economic value along the stack, not just defensive security, as the main motivation,” Cristina Caffarra, founder and chair of the EuroStack Initiative, told Euronews.
Caffarra also welcomed the document’s emphasis on open-source technologies, describing them as “Europe’s magic sauce” and “a major strength”.
Another key element of the package is a proposed Cloud and AI Development Act. According to the strategy paper, the legislation would establish four levels of sovereignty for cloud services, which public authorities would need to consider in procurement decisions depending on the sensitivity of the use case.
The levels would be based on “criteria linked to the control over the service, control over the supply chain, the processing of AI inference data, the location of the infrastructure and the level of cybersecurity,” the document states.
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