Europe's position in semiconductors has two sides. On one side, a handful of European companies and institutes are essential to making every advanced chip in the world, including the GPUs used for AI. On the other, Europe produces a small and slowly shrinking share of chips. The European Court of Auditors reported in 2025 that the EU held about 9 percent of global chip manufacturing capacity, down from around 10 percent in 2013, even though output grew in absolute terms. [1]

This gap between technological influence and manufacturing volume shapes European policy. The EU has tried to use subsidies to attract fabs while also protecting the equipment and research base that gives it leverage in global supply chains.

ASML is the only company that makes extreme ultraviolet (EUV) lithography systems, which print the smallest features on leading-edge chips using light with a wavelength of 13.5 nanometres. Its newest EXE systems use a numerical aperture of 0.55, known as High-NA EUV, to reach a resolution of 8 nanometres. Chipmakers rely on these machines for their most advanced processes, including those used to make AI processors and GPUs. [2]

The company's scale reflects that position. ASML reported 2025 net sales of 32.7 billion euros with a gross margin of 52.8 percent and research and development costs of 4.7 billion euros. In the second quarter of 2026 it reported net sales of 9.3 billion euros and a gross margin of 54 percent. In September 2026 ASML began building a new campus in Eindhoven and announced expanded collaborations with Intel Foundry and Samsung on High-NA EUV and next-generation manufacturing. [3][4][5]

ASML's optical systems come from Germany. ZEISS Semiconductor Manufacturing Technology, based in Oberkochen, makes the lithography optics for DUV, EUV and High-NA EUV systems and says around 80 percent of the world's microchips are made using its optics. ZEISS and ASML have had a strategic partnership since 1997, and ASML became a minority shareholder in the ZEISS SMT business in 2016. The segment reported revenue of about 5.06 billion euros in fiscal 2024/2025. [6]

ASM International supplies deposition equipment, notably atomic layer deposition (ALD) and epitaxy tools that lay down extremely thin films on wafers. ASM describes itself as a materials discovery company, employs more than 4,800 people, and states that its strategy is to keep a leading share in ALD for logic and foundry customers while growing in DRAM and HBM memory. It targets revenue above 5.7 billion euros by 2030. [7]

Belgium's imec, founded in 1984 and headquartered in Leuven, describes itself as the world's largest independent research centre for nanoelectronics and digital technology, with about 6,500 researchers and engineers from more than 100 countries. Chipmakers and equipment suppliers from around the world use imec to develop future process technologies before they reach high-volume fabs. Under the EU Chips Act, imec is building a pilot line for technology beyond 2nm, part of a 3.5 billion euro programme. [8]

The European Commission says the Chips Joint Undertaking supports five pilot lines for process development, testing and small-scale production, intended to shorten the path from European research to manufacturing. [9]

Europe's three largest chipmakers specialise in automotive, industrial, power and embedded chips rather than leading-edge processors. Infineon makes discrete power semiconductors as well as analog and mixed-signal chips for industrial, automotive and consumer markets. STMicroelectronics, with about 49,000 employees, focuses on automotive electrification, power and energy, and connected devices. NXP Semiconductors, with about 32,000 employees, concentrates on automotive, industrial and IoT markets. [10][11][12]

These segments matter for AI infrastructure even though they do not produce GPUs. Power semiconductors of the kind Infineon and ST make are used in the power supplies and voltage regulators of AI servers and data centres, where power delivery has become a growing engineering constraint.

Infineon's new plant in Dresden is one of the largest projects supported under the Chips Act. In February 2025 the European Commission approved 920 million euros of German state aid for the fab, in which Infineon planned to invest about 3.5 billion euros. It is designed to switch production between discrete power technologies and analog and mixed-signal chips for industrial, automotive and consumer markets, and is expected to reach full capacity by 2031. [12]

The European Semiconductor Manufacturing Company (ESMC) in Dresden is a joint venture announced in August 2023, owned 70 percent by TSMC and 10 percent each by Bosch, Infineon and NXP. Total investment was expected to exceed 10 billion euros, including public support, for a fab producing up to 40,000 300mm wafers per month on 28/22nm planar and 16/12nm FinFET processes for automotive and industrial customers, with production targeted for the end of 2027. [13]

According to ESMC's own updates, construction reached its first-concrete milestone in March 2025 and the office building was topped out in December 2025. As of September 2026 the company's website had not announced a new production start date beyond the original plan. [14][13]

Not every project went ahead. Intel said in July 2025 that it would no longer move forward with its planned projects in Germany and Poland. [15]

The European Chips Act entered into force in September 2023. It aimed to mobilise at least 43 billion euros of policy-driven public investment, expected to be matched by a similar amount of private money, and supported the target of producing 20 percent of the world's leading-edge and sustainable chips by value by 2030. The Commission says it has since approved 18 state aid decisions representing more than 32 billion euros of public and private investment. [9][1]

The European Court of Auditors concluded in 2025 that the Chips Act was very unlikely to be sufficient to reach the 20 percent target, noting that the Commission's own forecasts pointed to an EU share of 11.7 percent by 2030. It also noted that the Commission directly controls only about 4.5 billion euros of the estimated funding, with most of the money coming from member states and industry. [1]

In June 2026 the Commission proposed a Chips Act 2.0 intended to further support the industry, reduce strategic dependencies and back advanced chip production in the EU. The industry association SEMI has welcomed parts of the draft and called for faster permitting, broader support across the value chain and measures to address Europe's production-cost disadvantage. [9][16]

Europe's chip industry supports the global AI build-out mostly from upstream, through lithography, optics, deposition tools and research, rather than by making GPUs or HBM. New European fabs will strengthen supply of automotive, industrial and power chips, but the accelerators running in European data centres will continue to be made in Asia and, increasingly, the United States for the foreseeable future. For teams that need GPU capacity inside Europe, for example for data residency, availability and price vary considerably by country and provider. On Kovara you can explore European GPU cloud regions, compare prices, or ask Kova which providers offer the accelerators you need in a given European location.