Europe in the Intelligent Age 2025

Europe’s position in the semiconductors value chain FIGURE 10 Early-stage R&D Materials Equipment Chip design Front-end manufacturing (foundries) Back-end manufacturing Early-stage applied research/pre-competitive R&D Some of the world’s leading applied research institutes within the field Raw and processed materials needed to produce semiconductors and their machinery (e.g. silicon and germanium) Stronghold for some raw materials used in wafers Materials used for dopants such as germanium and gallium is typically sourced from Asia (e.g. China) Machines, equipment and servicing of computer chips (e.g. photolithography machines) Leading equipment manufacturing of some segments, i.e. lithography, atomic layer deposition and advanced packaging (~$30 billion total revenue for European top two players vs ~$44 billion for the two leading US players) Intellectual property, development of design and performance of chips through specialized software Moderate European presence with ~10% of global chips designed in Europe (~$3 billion total revenue for European leaders vs ~$50 billion for US leaders, but limited in terms of true leading-edge design) Converting a blank wafer into a complete wafer (e.g. cleaning, oxidation, photolithography, doping and metallization steps) Limited European presence within front-end manufacturing, with Europe accounting for <10% of global production capacity, mainly by foreign players This value-chain step is dominated by Asia (e.g. Taiwan) and the US – especially for leading-edge Key value chain steps Description Europe’s competitiveness Assembly, testing and packaging Most IDMs² have moved back-end manufacturing to Asia (while one player still has some sizeable activity in Europe) Some European facilities are operated by foreign companies Leading Europe’s starting point Lagging Strategic focus area 1. By company mapping across value chain 2. Integrated device manufacturers Source: The Future of European Competitiveness, DigitalEurope: The EU’s critical tech gap, McKinsey Technology Trends Outlook 2024, expert interviews Europe in the Intelligent Age: From Ideas to Action 29