Navigating divergent strategies amidst a rapidly evolving global semiconductor landscape.
www.eetimes.com, Jul. 14, 2025 –
Broadcom canceled its planned $1 billion ATP facility in Spain this month due to negotiation breakdown, showing the opportunistic project wasn’t central to its global strategy.
Europe is positioning itself as a significant player in the global semiconductor market, striving to reduce reliance on external sources and enhance its regional capabilities. Yet, a critical analysis reveals a substantial divide in how these ambitions are translating into investment realities across the continent, particularly between its northern and southern regions.
The global semiconductor landscape has undergone a dramatic transformation in the early 2020s, shifting from a purely economic sector to an arena of intense geostrategic competition.
In response to pandemic-exposed supply chain vulnerabilities, governments worldwide have launched massive subsidy programs to re-shore and diversify chip production.
The European Union’s ambitious EU Chips Act, aiming to double its global semiconductor market share to 20% by 2030, stands at the forefront of this industrial policy push.
While the EU Chips Act projects over €43 billion in combined public and private funds, and some officials have even touted potential pledges reaching as high as €115 billion, the European Court of Auditors (ECA) points to a profound funding discrepancy.
The European Commission directly manages only about 5% of the total announced funding, or approximately €4.5 billion, with the vast majority expected from national budgets and private corporations.
This decentralized financial model means the Commission lacks a direct mandate to coordinate national investments, rendering the “EU strategy” largely an aggregation of disparate national projects. The ECA has explicitly labeled the EU’s 20% market share target “very unlikely” and “overly ambitious,” with the Commission’s projections forecasting a modest rise to just 11.7% by 2030.
Furthermore, the Act’s primary mechanism for incentivizing manufacturing—the “first-of-a-kind” (FOAK) designation for state aid—inadvertently reinforces existing industrial concentrations.
Companies making multi-billion-euro investments prioritize minimizing risk, naturally gravitating towards regions like Dresden, Germany, known as “Silicon Saxony,” which already possesses mature ecosystems of suppliers, research institutions, and a trained workforce.
It effectively funnels investment towards established hubs, making it significantly harder for challenger regions, particularly in Southern Europe, to attract the large-scale projects needed to build their own ecosystems.
In parallel with the EU-level push, Spain launched its own ambitious “Strategic Project for the Recovery and Economic Transformation of Microelectronics and Semiconductors” (PERTE Chip).
Approved in May 2022, this €12.25 billion public investment program, financed primarily through EU pandemic relief funds, aimed to bolster Spain’s entire semiconductor value chain. Its objectives ranged from strengthening scientific capacity and fostering “fabless” design companies to, most ambitiously, attracting investment for large-scale semiconductor production plants.
After more than two years, the PERTE Chip program has yielded a mixed record. It has successfully channeled funds to reinforce Spain’s existing technological strengths, supporting human capital development with grants for 15 university chairs and training over 1,000 experts.
Targeted investments have also been made in niche but strategically important sectors, such as the €17.2 million for SPARC Foundry in Vigo for III-V photonic integrated circuits, and support for KDPOF in Madrid for optoelectronic chip packaging and testing for the automotive market.
However, the program’s central ambition—to attract a major semiconductor fabrication plant—has not materialized. Analysts have noted the “stark absence of any manufacturing initiatives in Spain on the scale of the multi-billion-euro projects underway by Intel and TSMC in Germany,” leading some domestic stakeholders to describe the goal of attracting a large-scale fab as “utopian in the short term.”
The program has proven adept at strengthening what is already present. Still, it has been unable to overcome the formidable barriers to entry required to create a new, large-scale manufacturing industrial pillar from a relatively nascent base.
The disparity between ambition and achievement has contributed to a “valley of disillusionment” among Spanish stakeholders, as the initial framing around the challenging goal of landing a fab created conditions for perceived failure despite successes in other crucial areas.
The investment decisions of major industry players like Broadcom, Intel, and TSMC underscore this North-South divide.
Broadcom’s proposed $1 billion back-end assembly, testing, and packaging (ATP) facility in Spain was an opportunistic investment in a less capital-intensive segment of the value chain, framed as “unique in Europe.” Crucially, its cancellation this month, following a “breakdown” in negotiations with the Spanish government, indicate that the project was not core enough to Broadcom’s global strategy to be pursued at any cost.
Intel initially unveiled a sweeping €80 billion plan across Europe. In Spain, however, its tangible investment has been strictly confined to research and development. The company committed €400 million over 10 years to a joint laboratory with the Barcelona Supercomputing Center (BSC) to pioneer zettascale computing and develop processors based on the open-source RISC-V instruction set.
It leverages Spain’s excellence in high-performance computing but contrasts sharply with Intel’s delayed capital-intensive manufacturing plans elsewhere, such as the €30 billion “mega-fab” in Magdeburg, Germany.
Taiwan Semiconductor Manufacturing Company (TSMC) has pursued the most strategically clear European investment. Its global expansion decisions are driven by “the needs of its customers, the availability of necessary government support, and access to global talent,” heavily influenced by geopolitical imperatives to diversify beyond Taiwan. TSMC deliberately chose Dresden, Germany, for its first European fabrication plant.
The “Silicon Saxony” region met all its criteria, offering a dense, pre-existing semiconductor ecosystem, proximity to key automotive and industrial customers, and a substantial €5 billion subsidy from the German government.
TSMC structured its €10 billion investment as a joint venture, the European Semiconductor Manufacturing Company (ESMC), with key European customers like Robert Bosch, Infineon Technologies, and NXP Semiconductors, ensuring long-term demand.
There is a complete absence of any TSMC investment plans or even exploratory talks in Spain or other Southern European nations, highlighting the company’s disciplined, ecosystem-centric approach.
The collapse of the Broadcom deal in Spain serves as a stark illustration of how external geopolitical forces, particularly U.S. trade policy, can derail European industrial projects.
It suggests that the shift towards a more protectionist, “America First” stance and the prospect of a new tariff regime directly influenced Broadcom’s corporate risk assessment, making a significant new overseas commitment in Spain strategically and financially untenable.