# European chips squeezed in a vise between Chinese and American pressure

> For years, Brussels sold the idea of a European technological sovereignty in semiconductors, carried by the Chips Act and billions of euros

- Author: Maxime Marquette
- Publisher: MadMax (https://mad-max.co)
- Section: Reportage
- Published: 2026-07-05
- Canonical URL: https://mad-max.co/en/article/les-puces-europeennes-prises-en-etau-entre-pressions-chinoises-et-americaines

## Introduction: the ambition of **technological sovereignty** under threat

### A report that shatters the official optimism

For years, **Brussels** sold the idea of a **European technological sovereignty** in **semiconductors**, carried by the **Chips Act** and billions of euros in public investment. A new report funded by the European Union, jointly written by the **Institute for Security Studies** and the **Institut Montaigne**, seriously darkens that narrative: Europe's **chip industry** faces a **bleak future**, caught between Chinese **restrictions** and growing **dependence** on the **United States**, according to **Reuters** coverage published on **July 2, 2026**.

This diagnosis breaks sharply with the enthusiastic official discourse of recent years. It's a reminder of a harder reality: **technological sovereignty** cannot be decreed through **subsidies** alone, it has to be built against rivals who don't play by the same rules.

### Why this report should alarm far beyond industry circles

**Semiconductors** are not just another economic sector: they are the foundation of the entire modern **digital economy**, from **smartphones** to **defense systems** to **artificial intelligence**. A dependent **Europe** in this field is a vulnerable **Europe**, both economically and strategically, facing rivals ready to weaponize that **dependence**.

*I'll say it plainly: this report should land on **Brussels** like a welcome slap in the face. You cannot claim to want **technological sovereignty** while refusing to admit how vulnerable Europe remains on both sides of the Pacific.*

## The Chinese threat, a vise that keeps tightening

### **Critical minerals**, **Beijing**'s silent weapon

**China** controls an overwhelming share of the world's production of **critical minerals** and **magnets** essential to the **manufacturing** of semiconductors and advanced electronic components. Its export **restrictions**, already used as a lever of **geopolitical** pressure, represent a direct threat to European supply chains, according to the **Institut Montaigne** report.

This dependence on Chinese **raw materials** isn't new, but it takes on a more critical dimension as **Beijing** demonstrates, in other trade disputes, its willingness to use these levers to extract political and economic concessions from its partners.

### **Taiwan**, the systemic risk nobody wants to name

The report also highlights the risk of a conflict in the **Taiwan Strait**, where the overwhelming majority of the world's most advanced **chip** production is concentrated, notably at Taiwanese giant **TSMC**. A military crisis in that region would instantly paralyze the global semiconductor supply, with devastating consequences for the European industry, which is entirely dependent on that Asian **supply chain**.

This scenario, long considered hypothetical by European industrial planners, is now treated as a serious possibility that must be built into any medium-term industrial **resilience** strategy.

***China** knows exactly what it's doing by cultivating this dependence on **raw materials**. It's a patient, methodical strategy meant to turn every future trade negotiation into a balance of power tilted in its favor.*

## American dependence, a revealing blind spot

### A striking admission from a specialized analyst

What stands out most in this report is the finding that dependence on the **United States** now worries nearly as much as the Chinese threat. **Joris Teer**, an analyst at the Institute for Security Studies quoted by Reuters, sums up the situation bluntly: while Beijing remains the biggest perceived threat, dependence on **Washington** has become a markedly more serious concern since the **Trump** administration's return.

This statement is significant coming from a circle of experts usually cautious about criticizing Europe's traditional transatlantic allies.

### **ASML** at the heart of a possible transatlantic showdown

The report points to the risk that **Washington** could impose unilateral restrictions on **exports** to **China** of technology produced by European companies, foremost among them **ASML**, the Dutch maker of **lithography** machines, considered Europe's most valuable company in the tech sector.

A proposed American bill under study could allow **Washington** to impose such export controls even on European allies, a prospect that deeply worries industry players, caught between their lucrative **Chinese market** and their technological dependence on American **design software**.

*Here's the painful paradox of this era: the ally supposedly protecting Europe can, overnight, decide to economically strangle it through a single regulatory decision. Trump remains a necessary military ally, but on the economic front, his unilateral decisions deserve the closest scrutiny.*

## **ASML**, a symbol of European **vulnerability** and excellence

### An irreplaceable company in the global chain

**ASML** occupies a unique position in the global semiconductor industry: it's the only company in the world capable of producing the **extreme ultraviolet lithography** machines needed to **manufacture** the most advanced chips. This **near-monopoly** position makes it both a major **strategic asset** for Europe and an obvious target for **geopolitical** pressure, whether from Beijing or Washington.

Any restriction, whether imposed by the **United States** to limit **exports** to **China**, or by China itself in retaliation, would have immediate repercussions on the revenues and competitive position of this Dutch and European industrial flagship.

### The impossible choice between markets

For ASML and other European companies in the sector, the current situation imposes a near-impossible dilemma: complying with American demands to restrict China risks closing off an immense and lucrative **Chinese market**, while ignoring those demands risks American retaliation on access to **design** technologies and Western markets.

This dilemma shows just how impossible industrial neutrality has become in a sector so fiercely contested between the world's two technological superpowers.

*I can't help admiring ASML's position while fearing for its future: being the best in the world at what you do doesn't protect you from becoming the geopolitical hostage of two empires fighting for technological dominance of the twenty-first century.*

## The structural weaknesses Europe has dragged for years

### Energy costs that crush **competitiveness**

Beyond external geopolitical pressures, the report identifies well-known but still unresolved structural weaknesses: **energy prices** in Europe remain markedly higher than in the **United States** or **Asia**, a major competitive **disadvantage** for an industry as energy-intensive as semiconductor manufacturing.

This structural energy weakness, worsened since the energy crisis tied to the war in Ukraine, continues to weigh heavily on Europe's ability to attract new **investment** in chip-making **plants**, despite the public **subsidies** available.

### A chronic lack of **private capital**

The report also points to the persistent lack of **private venture capital** available in Europe to finance **innovation** in the semiconductor sector, unlike the **United States**, where far more developed financial ecosystems support large-scale technological risk-taking.

This weakness in private financing forces Europe to rely almost exclusively on public subsidies, a slower and more bureaucratic approach than the American model, driven by agile and abundantly capitalized private investors.

*This excessive reliance on public subsidies deeply worries me. Public money can jump-start an industry, but it cannot indefinitely replace a dynamic private investment ecosystem capable of taking risks that governments will never take.*

## The decline of customer industries, an underestimated problem

### Europe's **automotive** sector, once a pillar, now weakened

Europe's **automotive** industry, long one of the main buyers of chips manufactured on the continent, is itself going through a period of deep turbulence, caught between a costly electric transition and aggressive Chinese **competition** on cheap electric vehicles.

This decline of traditional customer industries creates a **vicious cycle**: less local demand for European chips further undermines the economic viability of **investments** in new production capacity on the continent.

### A broader **deindustrialization** that worries Brussels

This phenomenon fits into a wider fear of **deindustrialization** in Europe, a subject increasingly troubling **European decision-makers** facing Chinese **competition** across nearly every manufacturing segment, from solar panels to electric vehicles to consumer electronics.

Without a solid customer industrial base on its own territory, Europe's ambition of semiconductor sovereignty risks staying largely theoretical, for lack of sufficient economic outlets to justify the colossal investments required.

*You cannot build a cutting-edge chip industry on a continent that is simultaneously losing its automotive **plants** and its heavy manufacturing industry. These two crises are linked, and Brussels still seems to be treating them as separate files.*

## The **European Commission**'s response, between ambition and realism

### A **Chips Act** 2.0 to fix the gaps in the first

Faced with this harsh assessment, the **European Commission** presented in June 2026 a proposal for a **Chips Act 2.0**, meant to fix the gaps identified in the first version of that legislation, deemed insufficient by many industry players and experts to truly close the gap with the United States and Asia.

This new initiative aims in particular to simplify the administrative procedures for accessing subsidies and to more precisely target the segments of the value chain where Europe retains a real **competitive advantage**, rather than trying to compete on every front at once.

### The Pax Silica initiative, a name that says a lot about the ambitions

At the same time, Brussels launched an initiative called **Pax Silica**, a name that explicitly evokes the ambition of a kind of strategic peace built on mastery of silicon, the cornerstone of all modern electronics. The initiative aims to strengthen Europe's international partnerships beyond its sole relationship with the United States and China.

It remains to be seen whether this rhetorical ambition will translate into concrete industrial results, or whether it will join the long list of well-intentioned European initiatives that were never funded enough to truly shift the global balance of power in this sector.

*The name Pax Silica sounds good at a press conference, but recent history of technological Europe is littered with ambitiously named initiatives that never delivered the promised industrial results. I want to see factories break ground before celebrating anything.*

## What this means for the global race in **artificial intelligence**

### No **advanced chips**, no sovereignty in **artificial intelligence**

The crisis in European semiconductors isn't just an isolated industrial concern: it directly shapes the continent's ability to fully participate in the global race for **artificial intelligence**, a field where **advanced chips** have become the single most critical strategic resource, much like oil in the twentieth century.

Without guaranteed access to these cutting-edge components, European ambitions to develop competitive artificial intelligence models against the American and Chinese giants of the field risk remaining structurally hobbled by this unresolved hardware dependence.

### A lag that fuels the flight of **talent** and capital

This structural lag in semiconductors also fuels a worrying flight of **talent** and capital toward the **United States**, where the best European researchers and **engineers** in artificial intelligence and microelectronics find far more favorable financing and infrastructure conditions for their ambitions.

This technological **brain drain** forms an additional **vicious cycle**: the less effectively Europe invests in its semiconductor ecosystem, the more it loses the talent needed to one day reverse that trend.

*I believe Europe must urgently choose between the ambition it projects and the investment it actually makes. You cannot hope to keep your best tech talent while chronically underfunding the infrastructure they need to succeed on the continent.*

## The comparison that stings, American and Chinese investment

### Washington bets hundreds of billions on its own capacity

The **United States** has committed hundreds of billions of dollars, through the American CHIPS Act and massive private investment, to bring part of advanced semiconductor production back onto its own soil, reducing its own dependence on Asia while consolidating its technological lead.

This mobilization of resources, both public and private, far exceeds the scale of comparable European investments, widening the gap between the two Western blocs in this strategic sector.

### Beijing accelerates despite Western sanctions

**China**, for its part, continues to invest massively in developing its own semiconductor industry, seeking to bypass Western restrictions on the export of advanced technology through an accelerated strategy of self-sufficiency, with mixed results but real progress on some less advanced segments of the market.

This three-way race between Washington, Beijing and a Europe struggling to keep pace shows the urgency for the continent to quickly find its place in this new global technological geography, before the positions freeze durably to its disadvantage.

*Watching America and China invest at this scale while Europe still debates the administrative structure of its next **Chips Act** is frankly discouraging. Time is running out, and time clearly isn't on the continent's side.*

## Industry voices calling for a wake-up call

### European executives growing increasingly alarmist

Several European technology company executives have multiplied their public **statements** in recent months to warn about the urgency of the situation, calling for bolder measures than Brussels's current initiatives, seen as too timid given the scale of the competitive challenge posed by Washington and Beijing.

These calls generally converge on the same demand: drastically simplify European **regulation**, speed up industrial investment approval procedures, and mobilize **public funding** amounts matching those committed by American and Chinese rivals.

### The risk of a gap between rhetoric and political action

This persistent gap between the scale of the political rhetoric about European technological sovereignty and the reality of the resources actually mobilized remains one of the most recurring points of friction between industry and European institutions.

As long as this gap isn't closed through **financial commitments** and regulations matching the stated ambitions, Europe risks continuing to fall behind rivals who act with markedly greater determination and resources.

*I understand the frustration of European industry players. It's hard to compete with rivals investing at a speed and scale the Brussels bureaucratic machine structurally struggles to match, despite all the political goodwill on display.*

## Possible scenarios for the next decade

### An **optimistic scenario**, but a demanding one

In the best-case scenario envisioned by the report's authors, Europe manages to consolidate its niche positions, notably around ASML and a few specialized champions, while intelligently diversifying its international partnerships beyond the sole transatlantic axis, thereby reducing its **vulnerability** to unilateral decisions from Washington or Beijing.

This scenario nonetheless assumes a far more determined political and financial mobilization than what has been observed so far, along with an ability to quickly resolve the structural weaknesses identified, particularly around **energy** costs and access to **private capital**.

### A **pessimistic scenario** that cannot be ruled out

Conversely, the most pessimistic scenario envisions a Europe increasingly marginalized in the global semiconductor value chain, reduced to a mere consumer market for chips designed and manufactured elsewhere, with all the geopolitical and economic consequences that would carry for the continent's **strategic autonomy**.

This scenario, while not irreversible at this stage according to the report's authors, would become markedly more likely if current trends of relative **underinvestment** and persistent strategic dependence were to continue without major correction in the years ahead.

*I refuse to give in to fatalism, but I also cannot ignore the seriousness of this diagnosis. Europe still has a window to act, but that window is closing faster than the reassuring rhetoric of certain officials would suggest.*

## The role of the **Netherlands**, unwitting guardians of a strategic treasure

### A national responsibility that has become a continental issue

The **Netherlands**, as host country to **ASML**, finds itself in a particularly delicate diplomatic position, constantly having to arbitrate between American pressure to restrict exports to China and its own national economic interests tied to that company's sales in the Chinese market.

This situation effectively turns The Hague into a front-line geopolitical actor in the Sino-American technology tensions, a responsibility disproportionate to the country's size, but one that shows how far the stakes of technological sovereignty now exceed traditional national borders.

### Still insufficient European coordination on this file

Despite the obvious strategic importance of this issue for the whole continent, coordination between the **Netherlands** and other European capitals on the strategy to adopt against American and Chinese pressure remains judged insufficient by several experts cited in the report, with each country tending to defend its own national industrial interests ahead of the collective European interest.

This decision-making fragmentation weakens Europe's overall negotiating position against American and Chinese counterparts who, for their part, generally speak with one coherent national voice on these strategic issues.

*Watching the Netherlands carry such a heavy geopolitical weight alone, without sufficiently coordinated European support, illustrates once again the Union's structural problem: a collective ambition on display, but national reflexes that always take over at the critical moment.*

## What European citizens need to understand about this issue

### A technical subject with very concrete consequences

To the general public, semiconductor issues can seem abstract and distant, reserved for industry experts and trade negotiators. Yet the availability and price of electronic chips directly affect the cost of cars, **smartphones**, household appliances and practically every connected device in the daily lives of European citizens.

A chip **shortage**, like the one experienced in the early 2020s, already showed how much this dependence could concretely disrupt everyday economic life, from car delivery delays to the prices of consumer electronics.

### A question of collective **resilience**, not just industrial policy

Beyond the purely economic aspect, this issue touches on Europe's **collective resilience** against external geopolitical shocks, whether a conflict over **Taiwan**, new Chinese restrictions on raw materials, or unilateral American decisions affecting access to critical technologies.

This resilience cannot be guaranteed without a sufficiently robust and diversified European industrial base in this sector, which places this technical question squarely at the heart of democratic debates about the continent's strategic future.

*I sincerely believe European citizens should pay closer attention to this seemingly technical file, whose consequences directly affect their wallets and the economic resilience of their continent against the next inevitable geopolitical crises.*

## Training talent, the often-forgotten link

### A **shortage** of **engineers** specialized in **microelectronics**

Beyond factories and subsidies, Europe's **semiconductor** industry suffers from a chronic shortage of **specialized engineers** in **microelectronics** and materials physics, a skills gap that directly limits the continent's ability to operate new plants even when funding is available.

Several European universities have begun strengthening their specialized training programs, but these efforts will take years before producing enough **graduates** to close the gap with the industrial needs projected under the **Chips Act 2.0**.

### Global competition to attract top talent

This skills shortage fits into a fierce competition among **Europe**, the **United States** and **Asia** to attract and retain the best engineers and researchers in this highly specialized field, with **salaries** and **working conditions** often more attractive across the Atlantic and in East Asia.

Without a coherent strategy to retain this talent on the continent, even massive investments in new production capacity risk running into a wall of skilled-labor shortages once they come online.

*We talk a lot about billions and factories, but we too often forget that without the minds to run them, these investments will remain empty shells. Training should be at the center of any serious industrial strategy.*

## Conclusion: a strategic window that is closing

### A harsh diagnosis, but not an irreversible one

This joint report from the Institute for Security Studies and the **Institut Montaigne** paints a harsh picture, but not necessarily a hopeless one: Europe retains real assets, starting with companies of excellence like ASML, but it must urgently resolve its structural weaknesses, its political fragmentation and its excessive strategic dependence on partners whose interests don't always align with its own.

The time left to correct this trajectory is shrinking fast, as the United States and China continue to invest massively to consolidate their respective positions in this **technological race** that will define the coming decades.

### What this decade will decide for technological Europe

The decade now opening will determine whether Europe manages to turn its stated ambition of technological sovereignty into tangible industrial reality, or whether it resigns itself to the status of a **captive market**, dependent on strategic decisions made in Washington and Beijing. This choice involves far more than the semiconductor sector alone: it involves the continent's overall **strategic autonomy** for generations to come.

*I'll close on a simple conviction: Europe still has the means to choose its technological destiny, but every additional year of hesitation narrows its options. Silicon, today, is worth far more than its weight in political speeches.*

**By Maxime Marquette, columnist**

## Columnist's transparency note

### Editorial stance

I am not a journalist but a **columnist and analyst**. My expertise lies in observing and analysing the geopolitical, economic and strategic dynamics that shape our world. My work is to take political strategies apart, to understand global economic movements, to put the decisions of international actors in context and to offer analytical perspectives on the changes that are redefining our societies.

I do not claim the cold objectivity of traditional journalism, which stops at reporting facts. **I claim analytical clarity**, rigorous interpretation and a deep understanding of the complex issues that concern us all. My role is to give meaning to the facts, to place them in their historical and strategic context, and to offer a critical reading of events.

### Method and sources

This text keeps the basic distinction between **verified facts and interpretive analysis**. The rule never changes: a factual claim is published only when a verifiable source supports it, and the sources this article actually used are listed under **Sources**, never here.

**Primary source families** used by the publication, when the story has them: official statements from governments and international institutions, public statements by political leaders, reports from intergovernmental organisations, dispatches from recognised international news agencies.

**Secondary source families**: specialised publications, internationally recognised news media, analyses from established research institutions, reports from industry organisations.

When an article cites statistical, economic or geopolitical data, it comes from the institutions that produce it (intergovernmental organisations, central banks, national statistics offices), and the exact institution is named under **Sources**.

### Nature of the analysis

The analyses, interpretations and perspectives in the analytical sections of this article are a **critical, contextual synthesis** based on the information available, the trends observed and the expert comments cited in the sources consulted.

My role is to interpret these facts, to set them in the context of today's geopolitical and economic dynamics, and to give them a coherent meaning within the larger story of the changes shaping our time. These analyses reflect expertise built through continuous observation of international affairs and an understanding of the strategic mechanisms that drive global actors.

This article describes a documented state of affairs on its publication date, not a prediction: later developments may shift its outlook. No update is promised in advance; when an article is corrected or completed, the change is dated in the text.

## Sources

### Primary sources

- Institut Montaigne, EU Semiconductor Geopolitical Risk Survey Outlook 2026-2031

- Institut Montaigne, full text of the policy paper on European semiconductor geopolitical risks

### Secondary sources

- Reuters, Chinese, US risks mean EU chip sector faces bleak future, report says — July 2, 2026

- Tekedia, EU faces bleak future in global chip race as China curbs supplies and US dependence deepens

- Anthropic, news on the global race for artificial intelligence — 2026

- The Kyiv Independent, ongoing coverage of Western technological and geopolitical issues — July 2026

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Source: Maxime Marquette, MadMax. When citing, name the author and link https://mad-max.co/en/article/les-puces-europeennes-prises-en-etau-entre-pressions-chinoises-et-americaines