Europe's digital sovereignty. It could cost $700 billion over a decade in semiconductors alone

The digital sovereignty of the Old Continent in the area of ​​semiconductors may cost USD 700 billion within a decade, while assuming support only in key areas, the costs are estimated at USD 300 billion – according to the report of the Institute of Digital Transformation and Innovation of the Thinktank Leaders Hub entitled “In pursuit of digital sovereignty: a map of the technological dependencies of Poland and Europe.”

For Europe, the report estimates the costs of digital sovereignty at $240 billion to $300 billion in initial investments and an additional $25-60 billion annually to sustain these investments.

According to the report, for a 10-year period, this amounts to approximately USD 700 billion of additional investments. Assuming limited investments to support only key areas, the estimate is approximately USD 300 billion. It was also indicated that these amounts are significantly higher than the estimates in the Eurostack report, which estimates the total investments in digital sovereignty across the entire technology stack at EUR 300 billion.

In turn, for the USA, which, according to the authors of the document, has a relatively good starting position due to its strong presence in most areas of the value and supply chain, the cost of achieving self-sufficiency in the area of ​​semiconductor systems is between USD 350 and USD 420 billion of the initial investment.

“To this should be added the annual cost of maintaining these investments, estimated at USD 5-15 billion. Assuming a 10-year horizon, we would obtain an amount of approximately USD 500 billion needed in addition to what is already invested,” it was written.

It was added that from the perspective of digital sovereignty in the area of ​​semiconductor systems, another significant risk has recently emerged – dual use.

“Due to the possibility of dual use of high-power computing systems, which, in addition to commercial applications, can be used to develop military and offensive potential, and in view of numerous reports of the ineffectiveness of trade restrictions regulating the export of processors (mainly GPU systems), there are voices in the USA about the need to introduce hardware elements enabling remote control of the operation of systems,” it was written.

The discussion on this topic has been going on for many years, but the implementation of this concept has so far been rejected by companies producing semiconductor systems.

“The discussion returned in 2024, when it became clear that export restrictions did not block China's ability to build LLM models with comparable performance to the leading models of American companies, and according to estimates, 140,000 GPU systems were smuggled to China in 2024 alone,” it said.

The proposal for the new American Chip Security Act regulation includes the concept of “hardware-enabled governance mechanisms” which involves building elements into high-power semiconductor systems that allow them to control their location and influence their operation.

“Taking into account the course of the American administration and the takeover of shares in Intel by the United States, which will translate into greater pressure from the administration, the risk associated with building such functionality into the systems cannot be ignored,” they wrote.

In addition, the report includes a set of recommendations regarding European digital sovereignty.

It was indicated that the first priority should be to strengthen the resilience of the supply chain and ensuring the availability of necessary materials and semi-finished products for factories located in Europe.

“This should lead to a review of the supply chain and support appropriate investments in the chemical industry and solutions related to semi-finished products for the preparation of silicon wafers,” it explained.

The next goal should be strengthening the research ecosystem related to reducing the scale of systems and developing technologies and devices for the production of semiconductor systemsto ensure that European companies maintain a strong position in the value chain of production equipment for the next generations of semiconductor chips

Another priority suggested in the report is building competences to create software for designing semiconductor systems with a view to preparing them for production.

The authors of the document also propose: supporting and deepening cooperation between key European companies dealing with the design of systems and solutions (mainly companies in the field of automotive, telecommunications equipment, industrial solutions), in order to: exchange experiences, take advantage of opportunities related to the market transition towards Software Defined Infrastructure solutions and strengthen the development of projects using the aggregation of systems in the System on Chip (SoC) model, to open the way to the creation of more advanced systems.

Furthermore, it is proposed supporting cooperation and unification of possible areas between various European companies producing semiconductor systems.

The report also shows that an important element of building digital sovereignty in the semiconductor segment will be, among others, continuation of cooperation with TSMC, Intel and Samsung to support the construction of factories operating in the most advanced technological processes and to support the European production and assembly of RAM and mass memory chips.

The report also indicates that no region is currently independent or even close to achieving independence and self-sufficiency. The US, China and South Korea are more advanced, and Europe and Japan would face an even greater challenge. (PAP Business)

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