EU Reconsiders Semiconductor Strategy and Merger Rules to Support Global Scale

European Union industry ministers will discuss the next phase of the bloc’s semiconductor strategy on 24 September, alongside the European Commission’s review of merger-control rules. The two issues are formally separate, but they increasingly form part of the same competitiveness debate: how to build European companies with enough capital, technology and production capacity to compete globally while preserving competition within the single market.

The discussion comes as Brussels is broadening its industrial policy beyond subsidies for individual projects. Chips Act 2.0, the proposed Industrial Accelerator Act, the European Competitiveness Fund, the review of merger guidelines and plans for an optional EU-wide corporate regime are being developed against the same backdrop of concern over Europe’s ability to turn research and industrial expertise into companies operating at global scale.

A broader semiconductor strategy

The European Commission proposed Chips Act 2.0 on 3 June, building on the European Chips Act adopted in 2023. The new proposal seeks to increase semiconductor production in Europe, reduce strategic dependencies and strengthen the bloc’s position across the wider semiconductor value chain.

The policy challenge has also changed since the first Chips Act was adopted. Semiconductors are now closely tied to artificial intelligence, defence systems, telecommunications, vehicles, industrial automation and energy infrastructure. This makes access to advanced chips a question not only of industrial competitiveness but also of economic security, particularly as Europe remains dependent on suppliers outside the bloc in areas such as advanced manufacturing and chip design.

Chips Act 2.0 is therefore intended to move beyond the initial emphasis on attracting fabrication plants. The proposal aims to reinforce Europe’s existing semiconductor strengths while expanding capabilities in more advanced technologies, reflecting the growing importance of chips for the EU’s broader digital and industrial strategy.

The scale problem

The semiconductor debate is closely connected to a wider structural issue facing European industry: the difficulty of scaling companies across national borders. Semiconductor production and advanced chip development require very large investments, long development cycles and access to international markets. European companies therefore face competitors whose operations and capital bases can extend across much larger markets.

This is one reason why Brussels is reconsidering how its competition framework treats corporate consolidation. The European Commission published draft revised Merger Guidelines on 30 April, beginning the final stage of the most extensive review of the EU’s merger framework in two decades. The existing horizontal and non-horizontal guidelines date from 2004 and 2008.

The review reflects changes in the economic environment since those rules were introduced. Digitalisation, artificial intelligence, decarbonisation, global supply chains and state-backed industrial strategies have altered competitive conditions, while sectors such as semiconductors, telecommunications, aerospace and clean technologies increasingly require large amounts of capital before companies can reach commercial scale.

The Commission is consequently examining a broader set of factors, including competitiveness and resilience, innovation, digitalisation, efficiencies, sustainability and security. Its economic study on the dynamic effects of mergers, published in August, specifically considers how corporate transactions can affect investment, innovation, market entry and future competition.

Competition rules remain in place

The review does not amount to a move away from EU competition enforcement. The Commission has stressed that the fundamental purpose of merger control remains unchanged: ensuring that transactions do not distort competition in the internal market. The revised guidelines are intended to update the way that objective is applied to economic conditions that have changed significantly since the current framework was introduced.

The distinction is particularly relevant for strategic industries. A larger company may have greater resources to invest in research, manufacturing capacity and international expansion, but greater concentration can also reduce the number of competitors and potentially weaken incentives for innovation. The Commission’s review is therefore examining both the possible benefits and risks of mergers rather than treating greater corporate scale as an objective in itself.

The issue has become more visible across the European economy. In September, EU officials also highlighted the need for European banks to scale up and remove barriers to cross-border consolidation in order to compete with much larger US institutions. The same structural concern — fragmented national markets limiting the ability of European companies to build scale — is appearing across several sectors.

Part of a wider competitiveness agenda

The merger review and Chips Act 2.0 are also being developed alongside other measures intended to reduce fragmentation within the EU. The proposed 28th corporate regime, for example, is designed to provide companies with an optional European framework that could make cross-border operations easier instead of requiring businesses to navigate 27 different national systems.

Financing is another part of the same equation. The proposed European Competitiveness Fund and negotiations over the EU’s 2028–2034 budget are intended to determine how much public funding can be directed towards strategic technologies, industrial capacity and other areas considered important for European competitiveness. Those choices will take place alongside competing demands for resources, including defence and support for Ukraine.

The objective is therefore broader than creating more European chip factories. Brussels is attempting to address several stages of the problem at once: access to capital, technological development, manufacturing capacity, cross-border expansion and the regulatory conditions under which companies can grow.

From resilience to global competitiveness

The semiconductor strategy illustrates a broader shift in the EU’s industrial policy. Earlier initiatives focused heavily on reducing supply-chain vulnerabilities and attracting investment into Europe. The current debate increasingly asks whether European companies can develop enough scale to compete with global leaders in sectors where capital intensity and technological investment are particularly high.

This does not mean abandoning the EU’s traditional competition framework. Instead, the Commission is trying to adapt that framework to an economy in which innovation, investment capacity and resilience can influence competitive conditions over a much longer timeframe than prices and market shares alone. The revised merger guidelines are intended to incorporate those factors while maintaining the underlying objective of protecting competition.

The next stage will depend on two separate processes. Chips Act 2.0 still needs to proceed through the EU legislative process, while the Commission expects to complete its review of the Merger Guidelines in the fourth quarter of 2026. The 24 September ministerial discussion will therefore be part of a longer policy process rather than a final decision on Europe’s industrial model.