A joint report from the EU Institute for Security Studies and Institut Montaigne warns Europe's semiconductor sector faces mounting pressure from two directions: China's ability to restrict critical minerals and rare-earth exports within weeks, and a structural dependence on US design software and tooling that could be weaponized through legislation like the MATCH Act. While Beijing remains the most immediate threat, Washington's leverage has grown significantly under the second Trump administration. The report argues Europe's only viable path is to build on existing strengths like ASML rather than pursuing broad chip self-sufficiency. Structural weaknesses — high energy costs, thin private capital, and shrinking chip-consuming industries — compound the external risks. The EU's revised Chips Act 2.0 has already shifted toward demand-side incentives, abandoning the original 20% global market share target for 2030.
