In the age of artificial intelligence (AI), semiconductors have become the defining infrastructure of global progress. Once regarded as discrete components, they are now the backbone of AI, electrification, and digital transformation.
Their strategic importance is felt across every industry. For Europe, which is seeking to strengthen its technical sovereignty while remaining connected to global supply chains, the semiconductor story is both a regional priority and global imperative.
Why chips have become strategic infrastructure
The semiconductor industry is entering a period of extraordinary growth that reached 22% in 2025 and, according to Deloitte, is projected to accelerate to 26% in 2026. Even if growth moderates thereafter, annual sales of $2 trillion seem likely by 2036. A shift from Generative to Agentic AI and Physical AI driving this expansion. Chips designed for AI workloads generated approximately $150 billion in sales in 2025, and by 2026, AI-related semiconductors could account for half of global revenues.
For Europe, this transformation is particularly significant. The region has world-leading strengths across semiconductor research, manufacturing equipment, power electronics, automotive, and industrial applications. Yet it remains dependent on an interconnected global value chain for many advanced chips and manufacturing processes.
The European Chips Act is designed to strengthen this position by building research capabilities, increasing production, and improving supply chain resilience. The European Commission has approved 13 state-aid decisions for first-of-a-kind semiconductor facilities, representing more than €32 billion in public and private investment. New manufacturing, testing, and packaging capacity is taking shape across Europe, demonstrating how semiconductors are shifting from industrial inputs to strategic assets at the heart of the region’s economic and energy transition.
Europe’s semiconductor resilience challenge
Europe’s semiconductor ambitions are unfolding against significant geopolitical pressure. Semiconductors are now inextricably linked to sovereignty and security, and governments worldwide are investing in domestic capacity. Export controls and national-security concerns are reshaping trade flows, directly affecting how businesses source and compete.
For Europe, this presents both an opportunity and a challenge. Investment can deepen regional capabilities and make supply chains more resilient. However, no single region can replicate every stage of the highly specialised global semiconductor ecosystem. European resilience will therefore depend on strengthening strategic capacity at home while maintaining reliable international partnerships.
Expectations must also remain realistic. While the EU has set a goal of reaching 20% of global semiconductor production by 2030, the European Court of Auditors has warned that the bloc is unlikely to meet this target, with the European Commission’s forecast indicating a share of around 11.7%. The Commission’s proposed Chips Act 2.0 reflects the need to accelerate progress, reduce strategic dependencies and support advanced chip production.
This has significant consequences for businesses. Chips can be in short supply, while prices and lead times can shift rapidly. European automotive and industrial manufacturers are particularly exposed because semiconductors are now embedded throughout vehicles, machinery, energy infrastructure, and connected systems. Alongside global price volatility, firms must manage skills shortages, complex supply chains, and energy costs that, despite recent declines, remain a major competitiveness concern.
In this setting, access to advanced chips can make or break competitiveness. For European businesses, staying strong means preparing for political and economic shocks while running increasingly energy-intensive factories more efficiently. Those that manage both will be best placed to lead in automation and electrification.
Turning operational efficiency into resilience
For businesses, balancing geopolitical shocks and sustainability pressures ultimately hinges on efficiency. Semiconductor fabs are highly resource intensive, and even small gains in uptime, yield, or energy use can translate into millions of dollars in savings while reducing exposure to volatile chip prices and rising energy costs.
Power quality is central to this. Electrical disturbances such as voltage sags, harmonic distortion, and power-factor imbalance can halt production in milliseconds and damage highly sensitive equipment. A recent Schneider Electric report estimates that resulting downtime can cost semiconductor fabs between $1 and $2 million per hour.
Similarly, semiconductor manufacturing equipment can be disrupted by voltage sags lasting as little as 10 to 20 milliseconds. As fabs move towards greater precision and output, these disturbances can interrupt processes, affect wafer yield, and trigger lengthy equipment recovery or production requalification.
Advanced power-quality monitoring, harmonic filtering, voltage regulation, and digital power management can help facilities identify and address these risks before they cause costly disruption. By providing greater visibility across electrical infrastructure, digital solutions can support condition-based maintenance, improve equipment reliability, and strengthen operational resilience.
Smarter power management and automation can cut consumption on the scale of entire cities, while digital solutions help minimise downtime and improve reliability. These improvements deliver rapid returns. Schneider Electric, for example, has shown that fabs can achieve significant energy savings per site annually, often with return on investment in less than a year. This proves efficiency can be both a cost strategy and a sustainability enabler.
Across Europe and globally, where semiconductor demand is surging and carbon targets are tightening, efficiency is the decisive factor. Firms that operate their fabs more intelligently will be best placed to withstand volatility and lead in the age of AI.
Building Europe’s semiconductor future
Ultimately, the age of AI will be defined by semiconductors. Chips will determine the pace of innovation across every sector, from industrial automation to consumer technology.
For Europe, the implications are profound. The region has a strong foundation of research and specialist technologies, but sustaining and expanding this position requires resilience and strategic foresight. Investment in new capacity must, therefore, go hand-in-hand with investment in the reliable and digitally managed power infrastructure to operate it.
Businesses must align strategies with the evolving chip landscape, ensuring readiness against volatility and investment in sustainable operations. Those that succeed will secure competitiveness and also shape the trajectory of global digital transformation.
Now is the time for semiconductor manufacturers to operate more efficiently and sustainably, to ensure that the backbone of AI and digital transformation remains resilient and future-ready.
