Europe’s semiconductor industry at a crossroads: Industrial policy and regional clusters

The European Union has agreed to provide significant investment to the semiconductor industry in order to address issues of self-sufficiency and digital sovereignty. This comes on the back of the long-term decline in the competitiveness and size of the industry in Europe. These issues are of considerable significance to urban and regional economic development agendas as the industry is clustered around several European regions. This commentary seeks to examine the extent to which European policy intervention is likely to positively influence Europe’s semiconductor industry. It is argued that the European semiconductor industry is at a crossroads. While it has some competitive advantages and is home to several significant clusters, it faces incessant competition from producers in Asia and the United States. It is argued that European policy should not be space neutral and aim to encourage innovation and enterprise within the sector in conjunction with existing European regional economic development policy measures. Within this approach, supporting key existing clusters through triple helix models of development are likely to be the most effective modes of intervention.