CHIPS Act 2.0: What’s Changing and What’s Staying

Don’t use any longer terms like “integrated production facility” or “open foundry”; instead, refer to them as “technological initiative” or “strategic project.”

The two initial terms are structural elements of the Chips Act, which has been in force since September 2023. They are notably less central in the revision proposed by the European Commission—and which the 27 member states had urged.

From the “production installation” to the “technological initiative”: toward a more encompassing “Chips Act 2.0”

Under the current Chips Act, an integrated production facility is “pioneering as regards semiconductor manufacturing.” By “pioneering,” in broad terms, one means that it “introduces an innovative element into the EU internal market.” This can relate to technological nodes, substrate materials, security level, energy efficiency, and so forth.

An integrated production facility must also, among other things:

• Have a “clearly positive impact” in terms of ensuring supply security and the resilience of the EU’s semiconductor ecosystem
• Not be bound by extraterritorial laws that would compromise its ability to prioritize European Commission orders in a crisis
• Invest in innovation within the Union and contribute to strengthening the talent pool

In place of the notion of an integrated production facility, Chips Act 2.0 substitutes the notion of a “technological initiative.” It essentially preserves the same definition, but clarifies that these initiatives must be led by European companies and should enjoy preferential access to the pilot lines established under the current Chips Act.

“Strategic Projects”: 6 priorities to reach wider

On paper, the “strategic projects” resemble the technological initiatives in their objectives. They must, however, clearly have a cross-border dimension. And participation is not strictly limited to EU entities. In the backdrop, the push for developing open foundries—an effort Intel, in particular, had pledged to support before backing away.

€20 to €40 billion for (finally?) an open foundry

These foundries sit at the heart of one of the six priorities intended to guide the scope of strategic projects. The European Commission estimates that €20–40 billion of investment will be needed to set up a plant that combines manufacturing, integration, and packaging.

€15 to €30 billion for a memory factory

The other five priorities cover:

• Development, prototyping and industrialization of AI chips and systems (accelerators, memory, networking, software)
• RISC-V processors for autonomous vehicles
• Memory fabrication plant (€15–30 billion of potential investments)
• Design capabilities (AI and HPC chips, ASICs and SoCs for 5G/6G, sectoral chiplets… Expected investment: €8–12 billion)
• Strengthening key segments of the value chain (materials sourcing, PCB assembly, back-end processes…)

Recital 47 of the “Chips Act 2.0” provides a contextual glimpse into the whole terminological shift. The implementation of integrated production facilities and open foundries has generated uncertainties, Brussels explains. Companies and EU Member States asked whether these statuses were conditioned on public funding. The revision clarifies that they are not, so long as the “pioneer” qualification applies.

Core of the Chips Act, the Chips for Europe initiative now articulated around six objectives

The proposal for Chips Act 2.0 protects photonics by assigning, in particular, a new objective to the Chips for Europe initiative: to support the development of design, prototyping and deployment capabilities for circuits that use this technology.

We don’t start from zero, Brussels notes in the annex of Chips Act 2.0. As of May 2026, a pilot line had been inaugurated. It provides access to manufacturing services across 14 sites, covering various platforms, “from silicon carbide to indium phosphide.” Demonstrators are planned, for instance in lidar sensors and in optics for AI datacenters.

The prospect of an operational cloud-based design platform by late 2026

The European Commission intends to maintain the other operational objectives of Chips for Europe—and to deepen them. Among them is the establishment of a cloud-based platform for semiconductor design. At present, the host is selected and user-support teams are formed. Negotiations are underway with EDA tool providers. Brussels expects to close them in autumn 2026, with an operational phase by year’s end. In the longer term, it mentions integrating open processor architectures.

Test benches to validate technological integration

Chips for Europe also aims to bring forward pilot lines for production, testing and validation. There are currently five, focused respectively on:

• Sub-2 nm
• FD-SOI
• Advanced packaging / heterogeneous integration
• Broadband semiconductors
• Photonic integrated circuits

The European Commission expects these pilot lines to focus more sharply on industrial deployment. It plans to add new lines, for example for AI chips, monolithic integrated circuits and ferroelectric memory. It also mentions test benches for products that combine several technologies within a single product. An example given: miniaturization, advanced optics and laser projection for connected glasses.

Six pilot lines for quantum technologies

Chips for Europe will also advance the industrialization of quantum chips. Recent updates indicate there are six pilot lines.

Chips for Europe also includes in its missions the creation of a network of competence centers. All Member States now have one (as does Norway). Action has begun to coordinate their work, with a skills/training working group. Brussels aims for better cooperation with higher education. And with the Industrial Alliance for Semiconductors. This body, which it plans to create through the Chips Act 2.0, is intended to bring together representatives from the semiconductor value chain (large companies, startups, research, technology organizations) having a presence on the European market or pledging to establish one.

Chips for Europe must also continue implementing the funding actions under the Chips Fund. These are currently split into two thematic vehicles. On one side, a European Innovation Council accelerator program, with subsidies and equity for deeptechs within the Horizon Europe envelope. On the other, the InvestEU fund, managed by the European Investment Fund, for equity (seed to growth) under the Digital Europe Programme. The first scheme involved a budget of €300 million, deployed across 24 startups (including €62 million in subsidies). The second brought together four financial partners, for a total €116 million of funding for 31 companies.

The Chips Act integrates the notion of “grand challenges”

Raising competitiveness and the talent pool, green and digital transitions… Most of the strategic objectives of Chips for Europe should align with the Chips Act 2.0. The latter adds at the top the principles of technological sovereignty and resilience.

Other additions looming on the horizon include the notions of “grand challenges,” “demand accelerators” and “demand forum.”

The well-known mechanism of “grand challenges” will notably enable the integration of the efforts of the pilot lines and ensure technology transfer.
The Industrial Alliance for Semiconductors will implement the “demand accelerators.” Brussels may, in this framework, facilitate the development of common roadmaps and co-design.
The “demand forum” will enable the demonstration of projects. Beginning with those from “technological initiatives” and “strategic projects.” As well as integrated production facilities and open foundries.

Labeling competence centers is replaced by labeling regions

The Chips Act allows the European Commission to award labels of excellence to competence centers. The revision proposal abolishes this option. It creates another label, called “European Regions of Excellence.” Regional authorities could, with the approval of their member state, apply. They would then be required to present an investment plan for semiconductors.

In the same vein as with competence centers, Chips Act 2.0 opens the path to a network of “regions of excellence.” At the same time, it codifies, at the Member State level, the principle of a single gateway for permitting procedures.

Tighter rules for public procurement… with exceptions

Under the current Chips Act, Member States are required to prioritize authorization requests for integrated production facilities and open foundries. The Chips Act 2.0 sets a maximum deadline of 12 months.

At the same time, the text tightens the requirements for certain public-procurement procedures deemed critical. Authorities and contracting entities could require operators to submit, with their bids, a declaration of supply-chain security. They would have to detail, among other things, their strategy for supplier diversification.

The Chips Act 2.0 does not propose to change the market-surveillance mechanism. But it would authorize the European Commission to issue recommendations to authorities and contracting entities in case of identifying a potential risk. If that risk endures, Brussels could, while respecting the principles of necessity and proportionality, list the systems for which a supply-chain-security declaration would be required.

Contractors would still be able to refrain from requesting this declaration, for at least one of the following reasons:

• No reasonable alternative to a product or service that can only be provided by specific economic operators
• No suitable bids, including in response to calls for bids issued in the past two years
• Disproportionate cost (more than a 25% gap with other suitable offers)
• Risk of technical incompatibility disrupting operation and maintenance

A digital twin of the supply chain in the making

The European Commission does not plan to overhaul crisis-response mechanisms. It does intend to establish a “B2B platform” that would operate as a digital twin of the semiconductor supply chain. It would serve as an observatory, while enabling alerts and guidance.

The European Semiconductor Office’s remit is broadened accordingly by the creation of this platform, by the Industrial Alliance for Semiconductors and by the network of competence centers. The Chips Act 2.0 also clarifies its role in the domain of international cooperation.