Semiconductors in the EU

This note is focused on the supply chain of semiconductor products, the chips, increasingly at the core of the digital transformation. It identifies EU stance in the world supply chain, its dependency on non-EU products and technologies and provides a non-exhaustive overview of its vulnerabilities, discussing the challenges of listing a complete set of dependencies. The semiconductor supply chain is highly specialized and complex with a worldwide dimension and a strong interdependency among firms. In the EU value chain, nearly 80% of input suppliers and 63% of customers to the companies in the chain are located outside the EU, defining the boundaries of EU vulnerability and its dependence on geopolitical considerations. EU dependency on foreign jurisdictions appears at different levels of the supply chain. The provision of raw materials and intermediate inputs, the dependency on water and energy are only some examples of potential sources of vulnerabilities if natural or man-made risks occur. This study is part of the activities of the European Semiconductor Expert Group, which aims at preparing the ground for the implementation of the future European Chips Act. It stems from the mapping of EU companies operating in the semiconductor supply chain undertaken at EU level, and complements the European Semiconductor value chain consultation which has been undertaken in the second half of 2022.