From Marginalization to Strategic Autonomy? A Historical-Institutionalist Analysis of Europe's Semiconductor Trajectory and the Strategic Implications of the European Chips Act

Abstract

Semiconductors power most modern electronics and are essential for geopolitical security, economic competitiveness, and technological development. Despite leading technological capabilities in the early semiconductor industry, Europe failed to keep up with rapidly developing technology and never fully recovered to a leading position. This thesis traces the historical causes of the EU’s marginal position in semiconductor manufacturing and assesses whether the European Chips Act represents a break from its historical trajectory.The research adopted a historical institutionalist approach, applying process tracing to examine the divergent semiconductor trajectories of the U.S. and Europe. A documentary research strategy was used to gain an in-depth historical understanding. To guide the analysis, a conceptual framework was operationalized through four causal mechanisms grounded in the theoretical literature: state-directed innovation, support for commercialization, patient capital, and risk-sharing with private firms.The analysis reveals that Europe failed to keep pace with the U.S.’s semiconductor development due to a lack of recognition of the strategic and economic importance of semiconductors. Without robust funding programs, long-term public-private collaboration, and coordinated policy objectives, Europe did not promote a dynamic semiconductor ecosystem to foster the advanced technological development needed to keep up. Consequently, the absence of state intervention during key periods entrenched Europe in path-dependent trajectories, leaving it behind the advanced technological frontier. The European Chips Act represents a critical reorientation for Europe, recognizing the strategic role of semiconductors and setting ambitious targets. However, it is weighed down by a fragmented governance and funding structure, and a lack of clear, long-term strategy formulation. Efforts to break Europe from its historical trajectory are unlikely without measures to overcome these challenges. These findings have broader implications for the EU’s capacity to innovate, implement industrial strategies, and remain competitive.