Europe wants its own AI chips factory as the European Union prepares a new push to reduce dependence on foreign semiconductor production and strengthen its position in technologies seen as essential for artificial intelligence, digital infrastructure and economic security.
A European chips project designed for AI autonomy
The European Commission is preparing a large-scale plan for a new microchip factory in Europe, with member states expected to be able to join the project from May. According to Henna Virkkunen, the European Commission’s executive vice-president responsible for digital affairs, the initiative is intended to bring together interested governments and companies around a project too large for a single business or member state to carry alone.
Virkkunen said the factory could cost tens of billions of euros, reflecting the scale of investment needed to compete in the most advanced segments of semiconductor manufacturing. The aim is not only to increase production capacity, but to ensure that Europe can manufacture the types of advanced chips used in artificial intelligence and other strategic technologies.
Microchips are now embedded in almost every digital product and industrial process, from smartphones and vehicles to defence systems, data centres and medical devices. The pandemic and recent geopolitical tensions exposed the vulnerability of global supply chains, particularly Europe’s reliance on production concentrated in Asia and on technology controlled by global competitors.
Why semiconductor manufacturing has become a European priority
The EU has already made semiconductors a central part of its industrial strategy through the European Chips Act, which entered into force in 2023. The legislation set the objective of increasing Europe’s share of global semiconductor production and mobilising public and private investment across research, design, pilot lines and manufacturing.
The new factory proposal would fit into this broader effort to build European semiconductor autonomy. Europe remains strong in research, development and chip design, but it has limited capacity in advanced manufacturing. This gap is increasingly seen as a strategic weakness as artificial intelligence systems require high-performance processors and stable supply chains.
For the EU executive, semiconductor policy is also linked to broader economic security. Advanced chips are essential for cloud computing, defence technologies, electric vehicles and industrial automation. Without reliable access to them, Europe risks depending on suppliers and political decisions outside its control.
Finland sees an opening through Oulu’s chip design expertise
The project could also create opportunities for Finland’s microchip sector, particularly in Oulu, a northern city with a long history in mobile technology and semiconductor design. Virkkunen visited Oulu this week during a sector seminar and described the city as a long-standing engine of technological development in both Finland and Europe.
Oulu’s expertise is closely linked to Nokia’s history. The city played a central role in the development of Nokia mobile phones, and the company’s investments in microelectronics left behind a strong base of engineers, researchers and companies. That legacy still shapes the region’s position in European chip design.
Aarno Pärssinen, professor at the University of Oulu, said the city has capabilities that exist in only a limited number of places in Europe. According to him, Oulu is one of the most significant centres able to design highly complex microchips using the latest technologies.
Oulu’s Nokia legacy could shape Europe’s chip strategy
If the EU succeeds in expanding its own semiconductor industry, Finnish design could become more visible in everyday European technology. Pärssinen said it is possible that more products used in Europe could contain components designed in Finland and Oulu. Virkkunen also said Oulu’s design expertise has already had major European and international significance and could continue to do so in the future.
That does not mean the proposed factory would necessarily be built in Finland. The project is expected to involve competition and cooperation among several member states, with decisions depending on industrial capacity, financing, energy availability, supply chains and the role each country can play in a wider European ecosystem.
For Finland, the opportunity may lie less in hosting the entire facility and more in positioning Oulu as a key node in Europe’s semiconductor value chain. In a sector where design, research and manufacturing are deeply interconnected, specialised regional expertise can become strategically important even when production takes place elsewhere.
