The European Commission is preparing to unveil its Chips Act II proposal on May 27 as Europe intensifies efforts to strengthen its semiconductor industry amid growing global competition.
The proposal follows the European Chips Act introduced in 2023. According to the Commission, the first phase helped trigger more than €80 billion in semiconductor manufacturing investments across Europe.
Despite that progress, investors and industry stakeholders say Europe still faces major structural challenges. The United States and Asian economies continue expanding semiconductor manufacturing capacity at a faster pace.
Daiva Rakauskaite, manager at Aneli Capital, said Europe must create faster and more predictable investment conditions for semiconductor companies.
She said chip projects require large upfront investments and move on short innovation cycles. Delays linked to permitting, state-aid approvals, and compliance processes weaken competitiveness.
Europe currently holds around 10 percent of the global semiconductor market. The Chips Act aims to increase that share to 20 percent by 2030.
According to estimates from McKinsey & Company, the global semiconductor industry could reach $1.6 trillion in value by the end of the decade.
Investor interest in European semiconductor firms has grown sharply in recent years. Data from PitchBook showed that European semiconductor start-ups raised a record €972 million in 2025. Funding in the first quarter of 2026 had already crossed €380 million.
Investors are increasingly focusing on hardware and deep tech sectors such as semiconductors, robotics, and quantum technologies. Analysts say these businesses are more difficult to replicate than software-based AI platforms.
However, industry experts say funding alone is not enough.
A report from Dealroom found that Europe produces twice as many science and engineering graduates as the United States and hosts nearly 30 percent of the world’s leading deep tech universities.
Yet Europe continues to struggle with commercialisation. Nearly 40 percent of deep tech unicorns founded by Europeans are now based in the US, according to the report.
Rakauskaitė said many European deep tech firms face a difficult transition between research funding and commercial revenue.
Semiconductor companies, in particular, require expensive prototyping, testing, certification, and customer qualification before scaling production.
Industry observers say faster commercialisation pathways and simpler regulatory frameworks will be critical if Europe wants to retain high-growth semiconductor companies.
Funding beyond Series B rounds also remains limited. Dealroom estimates Europe could soon see several venture funds exceeding €1 billion focused on deep tech.
Still, investors argue that structural reforms remain essential. These include faster state-aid approvals, more flexible public-private financing, and stronger participation from pension funds in venture capital.
The upcoming Chips Act II proposal is expected to play a major role in shaping Europe’s semiconductor ambitions as countries compete to secure future chip manufacturing capacity and technology leadership.
