Silicon sovereignty: Europe’s push for semiconductor independence

In an era shaped by digital transformation, energy transition and geopolitical uncertainty, semiconductors have emerged as a cornerstone of global innovation and strategic autonomy. Europe, long a quiet force in certain niches of the semiconductor industry, is stepping into the spotlight - driven by industrial policy, startup dynamism and the urgent need for supply chain resilience.

A 2022 McKinsey forecast projected a $1 trillion global semiconductor market by 2030. Control over this technology has become a matter of national security, economic resilience and industrial competitiveness.

Semiconductors are materials, typically silicon, that possess electrical conductivity between conductors (like copper) and insulators (like glass). This unique property allows them to control electrical signals, making them essential for building transistors, microprocessors, memory chips and sensors.

They power smartphones, electric vehicles, satellites, medical devices and AI systems. Semiconductors are the infrastructure that enables these technologies.

Europe’s semiconductor ecosystem is both rich and fragmented. It excels in analogue, power and speciality chips. European semiconductor startups raised $3 billion of venture capital in 2025. In 2026 they raised $5 billion by 28 September, more than in any previous year.

“The continent’s strength in the semiconductor industry lies in its highly specialised equipment and research,” describes Peter Jenkins, CEO of Infinitesima. “This makes the continent’s key players, such as ASML, essential to the entire global semiconductor supply chain. By focusing its efforts on this foundational technology, Europe has become a core enabler of the entire tech sector. Beyond this, sovereign equipment players mean we hold a key piece on the chessboard that is the future of the semiconductor industry.”

Some of the powerhouses in the European semiconductor industry are:

• ASML (Netherlands): The only company producing extreme ultraviolet (EUV) lithography machines, critical for advanced chip manufacturing.
• Infineon Technologies (Germany): A powerhouse in power semiconductors, crucial for automotive and energy applications.
• STMicroelectronics (France/Italy): Strong in sensors, microcontrollers and automotive chips.
• Arm (UK): A global leader in chip architecture design.

Europe’s strengths in equipment, power chips and chip design coexist with dependence on overseas manufacturing. The European Chips Act aims to strengthen the ecosystem and reduce supply risks. Its original ambition was to double the EU’s global market share to 20% by 2030.

Vladimír Marhefka, Vice Chairman at RV MAGNETICS, argues that “While semiconductors are a fundamentally globalised market, deeply integrated through complex international supply chains, they have become a strategic priority across Europe. Building robust national semiconductor strategies in smaller Central and Eastern European (CEE) countries remains unrealistic. The market is largely dominated by U.S. and Asian players, and while Europe has champions like ASML, Infineon, NXP and ARM, the region as a whole is still somewhat fragmented and dependent on external supply.”

The COVID-19 pandemic and the war in Ukraine exposed the fragility of global supply chains. Chip shortages disrupted car manufacturing, delayed consumer electronics and impacted defence systems. With advanced chip production concentrated in East Asia, including Taiwan, Europe’s dependence on foreign manufacturing has become a strategic liability.

Key vulnerabilities include:

• Geographic concentration: Advanced chip manufacturing is concentrated in East Asia.
• Raw material dependencies: Europe relies heavily on imports of rare earths and critical minerals.
• Manufacturing bottlenecks: Fab construction is capital-intensive and slow, often hindered by permitting delays and regulatory complexity.
• Talent shortages: Europe faces a skills gap in semiconductor engineering and fabrication.

Semiconductors are central to clean technologies - from electric vehicles and solar inverters to smart grids and energy storage. Europe’s strength in power semiconductors, especially silicon carbide (SiC) and gallium nitride (GaN), positions it well to lead in energy-efficient applications.

As Peter Jenkins, CEO of Infinitesima, explains, "The most advanced silicon chips now feature more transistors than there are people on the planet. For these billions of components to function, you must be able to measure and control the thousands of process steps at an atomic level. Our technology enables this by supplying equipment that measures and, therefore, controls each critical step in the chip manufacturing process. As the famous saying goes, 'If you can’t measure it, you can’t control it.' We're providing the essential tools for that control at a scale that's fundamental to the future of the semiconductor industry.”

However, the supply chain for critical materials remains a major concern. Semiconductor manufacturing relies on inputs like gallium, germanium, tungsten, cobalt and rare earth elements - many of which are mined, refined or controlled by China.

Any disruption - whether due to trade restrictions, geopolitical conflict or environmental regulation - could severely impact Europe’s clean tech and semiconductor ambitions. The Draghi Report for EU Competitiveness highlights the need to de-risk these dependencies and build capabilities in areas where Europe can lead, such as equipment, speciality materials and compound semiconductors.

Defence applications increasingly rely on advanced chips for radar, secure communications, AI-driven decision-making and autonomous systems. Semiconductors are now dual-use technologies - serving both civilian and military needs.

Their small size, low power consumption and high reliability make them ideal for military applications. European defence primes and startups are increasingly integrating advanced chips into their platforms.

Europe is ramping up its defence tech capabilities:

• Black Semiconductor: A German startup that uses the 2D material graphene to create ultra-fast, energy-efficient, and scalable chip fabrics by connecting thousands of chips to interact as one.
• IQM: A Finnish startup building quantum computers with national security implications.
• Silex Microsystems: A MEMS foundry enabling next-gen defence sensors.

Startups in this space face high barriers: capital intensity, long development cycles, regulatory complexity, export controls, IP protection and talent retention. Governments and defence primes are seeking sovereign, secure and scalable chip solutions, making the strategic imperative for Europe to build its own capabilities clearer.

Europe’s deeptech startup scene is gaining momentum, especially in semiconductor design, materials and AI acceleration.

“In the context of geopolitical developments, EU-wide coordination becomes essential,” argues Vladimír Marhefka, Vice Chairman at RV MAGNETICS. “Still, the bloc grapples with fragmented R&D efforts, a funding gap when compared to the U.S. or Asia, and sluggish permitting for fab construction.”

Notable semiconductor startups:

• SiPearl: Building high-performance, energy-efficient processors for European supercomputers and AI, using Arm Neoverse V1 cores.
• Alice & Bob: A French startup working to build a universal, fault-tolerant quantum computer.
• Axelera AI: A Netherlands-based chip company creating AI hardware and software for edge computing.

These companies are part of a growing wave of deeptech ventures translating research into market-ready solutions.

Investors such as EIC Fund, Invest-NL and Bpifrance are backing semiconductor ventures. From 2020 to 28 September 2026, the top European countries by VC funding were the United Kingdom ($5.9 billion), the Netherlands ($2.4 billion), France ($2 billion) and Germany ($854 million).

VC-backed European semiconductor startups also received 443 grants worth $1.3 billion from 2020 to 28 September 2026. While capital intensity and long time to market remain barriers, opportunities include chiplets, open-source hardware and quantum computing.

Quantum computers and processors raised $4.5 billion of VC from 2020 to 28 September 2026, the most of the five segments. AI chips and processors raised the most in 2026: $2.2 billion by 28 September, against $1.4 billion for quantum. Neuromorphic chips are the smallest segment, with $155 million since 2020.

On 4 September 2025, Honeywell announced an approximately $600 million capital raise for Quantinuum at a $10 billion pre-money equity valuation.

The European Investment Bank Group announced its €70 billion TechEU programme in June 2025. It provides equity, quasi-equity, loans and guarantees for 2025–2027, with the aim of attracting private capital and generating at least €250 billion in investment. Its scope includes AI, supercomputing, critical raw materials, green industries and security and defence technologies.

Europe has the talent, research infrastructure and industrial base to lead in strategic segments. Opportunities include compound semiconductors, edge AI chips and European design houses focused on niche applications.

Specifically in the UK, Peter Jenkins, CEO of Infinitesima, notes the world-class university ecosystem that has produced global contenders in the semiconductor arms race. “However, the industry does still face a critical scaling challenge. Local innovation often faces hurdles in attracting the necessary capital to compete, with many startups having to look to the US in order to secure the funding required for growth.”

The convergence of clean tech, defence and digital transformation has made semiconductors a strategic priority. With coordinated investment, startup development and industrial collaboration, Europe can build a more resilient semiconductor ecosystem.

Explore the companies selected for IoT Tribe’s semiconductor research, grouped into 35 categories. The selection includes companies headquartered outside Europe. It is not a census of European startups or a list of IoT Tribe programme alumni.

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