Building a Resilient Electronics Industry in Europe

By Kate Koger, IPC public affairs coordinator and Chris Mitchell, IPC vice president, global government relations

Key Summary

• Europe is entering a transformative era in electronics manufacturing, highlighted by TSMC’s €10B semiconductor plant in Germany.
• Findings from IPC (Now Global Electronics Association)’s white paper show that Europe must strengthen its entire “silicon to systems” ecosystem—not just semiconductors.
• Europe’s PCB production share has fallen from 13.8% to 2.2% since 2000, threatening competitiveness across OEM, ODM, and EMS sectors.
• Germany and the EU are investing heavily in semiconductor capacity, but broader ecosystem modernization is still needed.
• Building resilience requires expanding capabilities across chips, PCBs, EMS, and advanced packaging to reduce dependency on external suppliers.

Amid the “chip war” tensions between the U.S. and China, Europe has found itself in a surprising transformative era in electronics manufacturing. The recent groundbreaking of Taiwan Semiconductor Manufacturing Co.'s (TSMC) €10 billion plant in eastern Germany is a critical development in this effort. With Germany leading the charge, the European Union (EU) aims to position itself as a major player in the global electronics industry by addressing vulnerabilities and creating a robust electronics manufacturing ecosystem. 

This momentum aligns with the findings of IPC's recent white paper, "Securing the European Union's Electronics Ecosystem," highlighting the importance of strengthening Europe’s electronics supply chain across all levels, from silicon to systems. As Europe works to build a self-reliant and sustainable ecosystem, the TSMC investment is only the beginning of what could be a wave of industrial advancements.

The TSMC plant in Germany marks the company’s first European site, a milestone for TSMC and the EU. The timing is no coincidence. In a world reshaped by COVID-19, the global chip shortage exposed the fragility of supply chains. Semiconductor production became a top priority for governments as industries worldwide faced major disruptions. The global geopolitical climate, characterized by pressure between the United States and China, further highlighted Europe’s vulnerabilities in relying on external suppliers for critical technologies. The establishment of TSMC's German plant is a signal to other global players that Europe is serious about becoming a semiconductor hub. German carmakers such as Volkswagen AG and Porsche AG have expressed interest in boosting domestic chip production. This could lead to further investment from other tech giants and automotive leaders, accelerating Europe's path toward becoming a semiconductor powerhouse.

Europe has set its sights on a lofty target: by 2030, the EU aims to produce 20 percent of the world’s semiconductors. Achieving this will require significant investments and policy support. The strategic focus on semiconductors is part of a broader push to strengthen Europe's electronics manufacturing ecosystem across the entire value chain. As outlined in IPC's white paper, Europe’s share of global printed circuit board (PCB) production has dwindled in the last two decades, and the region risks falling behind in other critical areas of electronics manufacturing. Since 2000, global PCB production has more than doubled. However, during this time, Europe's share of global PCB manufacturing has plummeted from 13.8 percent to just 2.2 percent. This decline threatens the competitiveness of original equipment manufacturers (OEMs), original design manufacturers (ODMs), and electronics manufacturing services (EMS) companies, all of which are key drivers of innovation and economic growth.

German Chancellor Olaf Scholz emphasized that semiconductors are essential for Europe’s future technologies, but the region cannot remain dependent on other parts of the world for these vital components. His government has committed €20 billion to strengthen the country’s semiconductor industry, including a €5 billion subsidy for the TSMC fab in Dresden and €10 billion in aid for Intel's planned plant in Magdeburg. While semiconductors are critical, focusing solely on them neglects other key areas of the electronics ecosystem, like PCB production, EMS, and advanced packaging. Strengthening these industry segments is essential for building a resilient European electronics industry beyond just the manufacturing of chips.

For TSMC and other companies to be successful with European operations, the region needs to adopt a "silicon to systems" perspective that covers the entire lifecycle of electronics manufacturing beyond just the chip.  At the moment, many European manufacturers lack the resources to modernize their facilities to meet the increasing complexity of semiconductor packages and electronic assembly. The EU's commitment to the semiconductor industry, supported by national governments and private sector investments, is a promising start. However, there is still much work to be done to ensure Europe’s electronics manufacturing ecosystem remains competitive and resilient in the face of global challenges.

• Read more about TSMC’s new plant here.
• Find IPC’s EU Electronics Ecosystem white paper here.
• Join our call to action.