Europe’s semiconductor strategy is undergoing a quiet but significant reversal. After years of focusing on manufacturing capacity and supply-chain resilience, a new industry blueprint argues that Europe started in the wrong place. The next phase of policy, it says, must focus less on fabs and more on the conditions that create them: chip design, startup scale, local demand, and faster execution.

“We have to build the house from the basement, not from the roof,” Maria Marced told EE Times. Chair of the Industry Advisory Group (IAG) and past president of TSMC EMEA, Marced said Europe’s first semiconductor push emphasized manufacturing before ensuring enough local technology and market demand existed to support it.

That same argument is echoed by Francesc (Cesc) Guim, whose Barcelona-based startup, Openchip, was one of only two fabless AI chip companies in the IAG. “It doesn’t make sense to invest in advanced fabs if you don’t have the demand to fill them,” Guim told EE Times. “Demand creates local companies that do chips. Once you create demand, you incentivize the creation of local manufacturing.”

What makes that rethink especially notable is where two of its clearest voices are coming from: Spain.

Long overshadowed by semiconductor heavyweights such as Germany, France, and the Netherlands, Spain is emerging as a more influential player in Europe’s next chip debate—through design startups, photonics, quantum technologies, and a growing talent base. In Marced and Guim, it also has two industry figures helping shape the policy response from inside Brussels.

Why fabs weren’t enough

The IAG emerged after the European Commission sought feedback last fall on the performance of the first European Chips Act. That process sparked a discussion that informs what many in the industry now call Chips Act 2.0.

Industry Advisory Group’s Maria Marced

According to Marced, the IAG was formed partly because companies felt they were not being heard directly enough.

“Industry in general was complaining that once again the EU was asking for advice from other parties, but not from industry itself,” she said. “Associations are important, member states are important, but companies also wanted to be heard directly.”

The Commission responded by assembling a 16-company group spanning the value chain: equipment makers, foundries, integrated device manufacturers, fabless startups, and end users in sectors such as telecom, defense, and automotive. The mandate was not just to submit comments but to produce a common blueprint.

Guim said that diversity made the process very different from a normal consultation. “You pick companies that represent different realities of the European landscape,” he said. “Then you try to get them to provide a unified input. That is much harder than everyone sending separate opinions.”

Marced acknowledged the internal tensions. “It was not easy at all,” she said. “You can imagine the tension between the IDMs and the fabless, between mature-node priorities and leading-edge priorities. We needed a lot of diplomacy.”

But what resulted was a March 2026 report calling for a broader industrial policy centered on demand, resilience, and improved framework conditions.

The first Chips Act was shaped by the global shortages of 2020–2023, when Europe’s immediate concern was to bring more manufacturing capacity onto EU soil. The IAG report credits Chips Act 1.0 with raising political awareness, enabling state aid flexibility, and supporting fab investments. But it also says the strategy was too narrow.

Despite billions in support, Europe continued to lose market share in a semiconductor market that was expanding faster elsewhere. The IAG argues that focusing on manufacturing alone ignored key parts of the value chain, especially design, product development, and demand generation.

“The first thing you have to do is incentivize design by helping design companies, especially fabless companies, to design chips,” Marced said. “If we don’t help those startups to prototype, to tape out, to reach customers, it will be impossible to have local content and therefore local demand for local chips.”

“If nobody is buying the chips, the fab is not sustainable,” Guim said. “A fab needs customers, volume, and long-term visibility. Demand is not a side issue; it is the foundation.”

Maria Marced symbolically handing over the report to Henna Maria Virkkunen, EVP of the European Commission for Technological Sovereignty, Security and Democracy.

Creating demand and injecting capital

If subsidizing factories is politically visible, creating demand is much harder. It means aligning procurement policy, encouraging end-user industries to work with European chip suppliers, backing new design firms, and sometimes favoring local technologies over established global incumbents.

The IAG report calls for pre-commercial commitments, advanced purchase commitments, and strategic public procurement programs in critical sectors. It also proposes a “Trusted Supplier of Chips” concept tied to resilience and economic security.

According to Marced, industrial players pressed for stronger action, including measures that would give European technologies greater opportunity in public-sector projects. “The European industry needs and wants this,” she said.

Openchip’s Francesc (Cesc) Guim

“If Europe does not get into 20% to 30% of consuming local technology, I would say the goal is not going to be achieved,” Guim said. “You need reference customers. You need scale. Otherwise, startups stay small, and customers keep buying elsewhere.”

That illustrates the central tension facing Chips Act 2.0: Industry wants stronger demand-side tools, while Brussels must weigh competition rules, trade concerns, and political sensitivities.

Demand is only part of the challenge; the second is money. Asked to name the biggest structural barrier facing semiconductor startups in Europe, Guim answered in one word: “Capital.”

He contrasted Europe with the U.S., where investors are often more willing to back long-horizon chip bets. “Here, we want to play Champions League,” he said. “But it’s impossible if people expect quick returns from businesses that need years of development.”

The IAG report proposes a dedicated blended finance facility offering €30 million to €500 million per company for semiconductor scale-ups, plus a separate €20 billion to €30 billion startup and scale-up fund.

Marced said financing must be matched by speed. “It’s too bureaucratic, it’s too lengthy, it’s too cumbersome,” she said of current approval and funding processes. “Semiconductors move fast. If Europe takes too long, the opportunity moves somewhere else.”

That concern runs throughout the report, which calls for six-month approval timelines, simplified state aid procedures, and even automatic approvals if deadlines are missed.

Why Spain now matters

Spain is not Europe’s largest semiconductor base. But it increasingly represents the kind of distributed innovation model that Europe may need more of.

Marced pointed to photonics clusters in Barcelona, Valencia, Malaga, and Vigo, alongside strong universities and growing technical talent. “The area where Spain is quite relevant today is photonics,” she said. “And we have talent. We have very good universities. The challenge is converting that talent into growth and success.”

Guim sees a broader ecosystem forming around AI chips, quantum technologies, research institutes, and the Barcelona Supercomputing Center. “We have the talent, and we have the people,” he said. “What talent needs is vision, challenge, and some level of security.”

That message resonates beyond Spain. Europe’s future semiconductor growth may come not only from established hubs but from newer clusters able to combine research, entrepreneurship, and specialized talent.

If the IAG process demonstrates anything, it is that Europe’s semiconductor industry is more aligned than it has been in years. Large incumbents and startups may differ on priorities, but they broadly agree on three needs: more demand, more scale, and faster execution.

The March report gives Brussels a roadmap grounded in industry realities. Whether Chips Act 2.0 can turn that roadmap into policy—and policy into results—remains the unanswered question.

Europe now appears to understand that fabs alone will not secure its semiconductor future. The harder test is whether it can build the foundation quickly enough.