Europe's Semiconductor Paradox

In September 2026, Bloomberg published a remarkable headline: “ASML Executive Says Europe’s Biggest Firm Has No Sales in Europe.”

Frank Heemskerk, ASML's executive vice-president for global public affairs, was referring to the company's sales of semiconductor manufacturing equipment. While other parts of the world are investing heavily in new chip factories, European demand for ASML's machines has been remarkably limited.

The statement concerned current equipment sales, not ASML's entire European business. Nevertheless, it illustrates an interesting situation.

ASML, based in the Netherlands, is the world's only supplier of the most advanced extreme ultraviolet (EUV) lithography machines. These are essential to manufacturing the leading-edge semiconductors used in modern computing and artificial intelligence.

Europe produces some of the world's most sophisticated chip manufacturing equipment, but most of the factories using that technology are located elsewhere.

How did we arrive at this situation, and what might change it?

Revisiting ESMC

In July 2024, I wrote about the European Semiconductor Manufacturing Company (ESMC), a joint venture between Taiwan's TSMC and European companies Bosch, Infineon and NXP.

The €10 billion investment in Dresden was intended to strengthen Europe's semiconductor manufacturing capacity, particularly for automotive and industrial applications.

At the time, I considered it an important step towards a more resilient semiconductor industry.

Two years later, the factory is taking shape. In September 2026, ESMC celebrated the topping-out of its Dresden facility, with the first manufacturing equipment expected to be installed in 2027.

The investment remains important. But it also raises a question about the different kinds of semiconductor capacity Europe needs.

Europe already makes chips

It would be misleading to suggest that Europe lacks semiconductor manufacturing.

GlobalFoundries operates a major fabrication facility in Dresden. Bosch and Infineon manufacture semiconductors in Germany. STMicroelectronics has substantial operations in France and Italy, while NXP has production facilities in the Netherlands.

Intel's Fab 34 in Ireland is another important example. It began high-volume production using EUV lithography in 2023, demonstrating that advanced semiconductor manufacturing is certainly possible in Europe.

Europe has particular strengths in automotive, industrial, power and specialised semiconductors.

These technologies remain essential. An industrial controller, electric vehicle or power management system does not necessarily benefit from the smallest available transistor dimensions. Mature manufacturing processes can be more economical and entirely appropriate for their applications.

But the most advanced processors used to train and run frontier AI models represent a different part of the industry.

Their production depends on leading-edge manufacturing processes and enormous investments in equipment, expertise and production facilities. Much of this capacity is concentrated in Taiwan, particularly at TSMC.

So the question is not whether Europe has semiconductor factories.

It is whether Europe has sufficient capabilities in the parts of the semiconductor industry that are becoming increasingly important for future computing.

An interesting idea: Eurofab

This brings me to an article I recently read by Anton Leicht, Europe's Chip Gap, published in October 2026.

Leicht explores an idea he calls Eurofab: a relatively small, research-focused semiconductor facility specialising in the rapid development and testing of advanced manufacturing processes.

He presents this as an exploratory research agenda, rather than an established industrial project.

The idea is interesting because it approaches the challenge differently.

Instead of trying to compete with TSMC on manufacturing volume, Europe might concentrate on developing capabilities that others find difficult to replace.

Leicht suggests combining Europe's expertise in advanced lithography with faster experimentation, potentially accelerated by artificial intelligence.

As AI becomes more capable of assisting with chip design and manufacturing processes, the ability to test new ideas, produce prototypes and refine processes may become increasingly valuable.

A specialised facility could concentrate on reducing the time between technological ideas and practical results, while large-scale production continues elsewhere.

This would build on Europe's existing strength in semiconductor manufacturing equipment, particularly ASML.

But there is an important qualification.

Europe already has institutions working at the frontier of semiconductor research.

In February 2026, imec in Leuven, Belgium, inaugurated its NanoIC pilot line, supported by €2.5 billion in public and private investment. The facility is intended to develop and test technologies for semiconductor generations beyond two nanometres.

In several respects, this resembles the activities Leicht envisages.

That does not invalidate his idea. It does suggest that the interesting question is not simply whether Europe needs another facility, but what capability is missing from the existing research and manufacturing ecosystem.

Could a new facility accelerate the transition from research to commercial production? Could existing institutions take on a different role? Would there be sufficient demand from semiconductor designers and manufacturers?

These questions deserve further investigation.

Building capacity is not the only option

There is another aspect to European industrial development that I think receives too little attention.

We often discuss what Europe should build. But economic capacity can also be attracted.

ESMC is a good illustration.

The factory is located in Germany, employs European workers and strengthens European manufacturing capacity. Yet TSMC, a Taiwanese company, holds a 70% stake and contributes much of the manufacturing expertise.

European partners participate, and public funding has helped make the investment possible.

This is international industrial cooperation rather than a purely European technological undertaking.

And there is nothing inherently wrong with that.

Companies decide where to establish research centres, factories and other activities based on a combination of commercial and practical considerations.

Access to customers, specialised suppliers, skilled employees, infrastructure, research institutions, capital and predictable regulations all influence those decisions.

A region that brings these factors together becomes attractive to investment.

This also raises a question about the meaning of a European company.

Is a company European because its headquarters are located here? Because European investors own it? Because it manufactures here, employs European workers or develops technology within Europe?

These distinctions matter, particularly when discussing technological sovereignty.

A foreign-owned factory can make a substantial contribution to the European economy. Conversely, a European-headquartered company can create much of its economic activity elsewhere.

Ownership, location and control are related, but they are not interchangeable.

For industrial development, we need to understand not only where companies are registered, but where knowledge develops, where people work, where investment takes place and who controls critical technologies.

What is the role of government?

Discussions about European technological sovereignty often move quickly towards what the European Union or national governments should do.

That is understandable. Semiconductor manufacturing requires substantial capital, involves strategic dependencies and faces competition from countries providing significant public support.

But there is a risk of treating Europe as though it were a single organisation capable of designing and implementing an industrial strategy from the top down.

In reality, industrial development involves many independent actors.

Companies invest, innovate and compete. Research institutions develop knowledge. Investors provide capital. Customers create demand.

Governments establish the legal, educational and infrastructural conditions within which those activities take place.

Public investment can certainly play a role. Fundamental research, shared infrastructure and activities involving substantial technological risks may benefit from government support. There can also be situations where strategic considerations justify more direct intervention.

But supporting industrial development is not the same as directing it.

I think the more useful question is what makes Europe an environment in which companies, researchers and investors want to develop new capabilities.

Are there barriers to investment? Is sufficient capital available? Can research be translated into commercial applications? Do companies have access to the expertise, infrastructure and markets they need?

And where existing conditions are inadequate, what would actually improve them?

These questions may be less immediately appealing than announcing another large industrial project, but they are fundamental to sustaining economic development.

From resilience to relevance

Looking back at my earlier article about ESMC, I still consider resilience an important objective.

Semiconductor supply chains are highly international and vulnerable to disruption. Having manufacturing capacity closer to European customers can reduce certain dependencies.

But resilience is only one consideration.

Leicht makes an interesting distinction between becoming more self-sufficient and becoming indispensable within a global supply chain.

Europe already demonstrates the second possibility through ASML.

The world's leading semiconductor manufacturers depend on equipment developed and produced in Europe. This gives Europe an important technological position without requiring it to manufacture every advanced chip itself.

Yet technological indispensability does not automatically translate into broader industrial capacity, European control or economic benefits throughout the supply chain.

That is precisely why the ASML headline is so interesting.

It suggests that having an exceptional technological capability does not necessarily attract the associated manufacturing activity.

The challenge, then, is not merely to replicate what other regions have already built. It is to understand how Europe's existing strengths can support further technological and industrial development.

This may involve building new facilities, expanding existing ones or attracting international companies to establish activities here.

It may also involve creating stronger connections between research, investment, manufacturing and commercial demand.

Eurofab is one possible idea within that broader discussion. Whether it offers a genuinely new capability remains to be established.

Looking ahead

The semiconductor industry illustrates a broader challenge for European technological development.

Europe has considerable scientific expertise, established industrial companies and important positions within global technology supply chains.

But these strengths do not automatically result in a leading position in every emerging technology.

Nor does strengthening that position necessarily require producing everything ourselves.

Economic development takes place through relationships between companies, researchers, investors, customers and public institutions. These relationships extend across national borders, and there is considerable value in attracting international expertise and investment.

For me, the interesting question is how Europe can build on what it already does well while creating the conditions for new capabilities to develop.

That is not exclusively a task for the European Union or national governments, although they have an important part to play.

Ultimately, industrial capacity must also make technological and commercial sense to the organisations that develop and sustain it.

Perhaps the next stage of Europe's semiconductor debate should therefore begin with three questions:

What capabilities should we develop ourselves? What capacity can we attract from elsewhere? And where can Europe make a contribution that the rest of the world genuinely depends on?

Those questions extend well beyond semiconductors.

Sources and further reading

• ASML Executive Says Europe's Biggest Firm Has No Sales in Europe, Bloomberg, 22 September 2026.
• Strengthening Europe's Semiconductor Backbone: The Role of ESMC, Rob Hoeijmakers, 30 July 2024.
• Europe's Chip Gap, Anton Leicht, 28 October 2026.
• EU invests €700 million in newly opened NanoIC, European Commission, 9 February 2026.
• Intel's New Fab in Ireland Begins High-Volume Production, Intel, 29 September 2023.
• ESMC topping-out ceremony, Saxony State Government, 14 September 2026.