EU to invest €525 million in chip startups in bid to close the gap with the US and China
The European Union will put €525 million into chip startups, including €440 million in grants and €85 million for a new European Chips Design Platform, as Brussels tries to strengthen a sector where its design firms hold less than 1 per cent of global revenue.
The European Union will invest €525 million ($590 million) in chip startups to help them scale up faster, EU tech chief Henna Virkkunen said on Wednesday, in the latest step in Brussels’ effort to close the gap with the United States and China in the industry that powers almost every modern device.
The announcement, made at the launch of a new European Chips Design Platform in Brussels on 4 November, splits the money into two parts. The European Commission and EU member states will provide €440 million in grants to startups to help them meet the cost of developing chips for commercial use, while a further €85 million will fund the design platform itself.
That platform is aimed at the earliest, hardest stage of building a chip company. It will give startups access to chip design tools, design support services, intellectual property blocks and access to manufacturing capacity — the expensive infrastructure that small firms usually cannot afford on their own, and that often decides whether a promising design ever reaches production.
Virkkunen, the European Commission’s executive vice-president for tech sovereignty, security and democracy, put the case for the programme in blunt terms at the launch. “We know that Europe can’t strengthen our position in the global semiconductor industry if we don’t succeed in chip design,” she said, identifying design — the work of conceiving and laying out a chip before it is manufactured — as the weak link in Europe’s chain.
The figures behind that warning are stark. According to the Commission, European chip design companies account for less than 1 per cent of global revenue in this segment, even though Europe is home to world-class research institutes and to ASML, the Dutch company whose lithography machines are essential to making advanced chips. Europe, in other words, helps build the tools of the chip age while capturing only a tiny share of the design business itself.
The new money sits inside a much larger European push. The broader EU Chips Act effort has mobilised over €52 billion in investment, with the aim of increasing Europe’s share of global semiconductor production from around 10 per cent to 20 per cent by 2030. The startup funding is a small part of that total, but it is aimed at a different problem: not the giant fabrication plants that dominate headlines, but the young companies that could become the next generation of chip designers.
The timing reflects a chip industry that is booming on demand linked to artificial intelligence. Data centres, AI accelerators and the servers that train large models all need advanced semiconductors, and that demand has turned chips into a strategic asset — and a geopolitical one, as Washington and Beijing both pour public money into their own industries and restrict each other’s access to technology.
For European startups, the practical question is whether the platform genuinely lowers the barriers they face. Designing a chip requires costly software licences, testing and access to a foundry willing to run small production batches, and many startups fail not because their ideas are weak but because they cannot afford the journey from design to a working, manufacturable product. Grants plus shared tools and manufacturing access are designed to attack exactly that bottleneck.
There are also limits to what €525 million can do on its own. It is a fraction of the subsidies available in the United States and China, and its success will depend on how quickly the money reaches firms, how the platform is run, and whether member states follow through on their share of the funding. Design is also only one link in the chain: Europe still depends on manufacturers elsewhere, above all in Taiwan and South Korea, to fabricate the most advanced chips.
What happens next will therefore be watched in two places: in the grant rounds, where startups will compete for the €440 million, and in the design platform itself, where the test will be whether small firms can actually get their chips designed, tested and manufactured more cheaply and quickly than before. If it works, Brussels hopes the programme will grow a generation of European chip designers; if it does not, the continent’s share of the design business is likely to stay where it is — under 1 per cent — while its rivals pull further ahead.
More in Technology & AI
Photo: Tencent headquarters (file image)
Technology & AITencent releases Hy4 AI model with cybersecurity training limited to defensive uses
Chinese technology company Tencent has released Hy4, a new open-source artificial intelligence model whose cybersecurity training was deliberately limited to defensive work, in an effort to reduce the risk that it could help carry out cyberattacks.
Photo: India Gate in New Delhi (file image)
Technology & AIIndia launches three homegrown AI models, EKA-1 and Dhir 2B and 5B, under the IndiaAI Mission
India’s electronics and IT ministry has released three indigenous foundation models under the IndiaAI Mission: EKA-1, a 26.3-billion-parameter model for Indian languages, banking and cybersecurity, and the compact Dhir 2B and 5B models designed to run offline on mobile phones.
Photo: A locked computer, illustrating cybersecurity (file image)
Technology & AICrowdStrike moves to buy Fiddler AI and Dreadnode in reported $495 million bet on AI agent security
CrowdStrike has signed agreements to acquire AI agent observability firm Fiddler AI and AI security testing startup Dreadnode, adding monitoring and pre-deployment testing to its Falcon platform alongside a new AI kill switch.