High-tech Industrial (semiconductor and batteries)

Sections: Overview Project activity Key considerations

High-tech Industrial (semiconductor and batteries)

Sections: Overview Project activity Key considerations

Despite constraints, Europe offers clear strengths in its business environment, including a highly technical skilled workforce, strong transparent ecosystems, robust infrastructure and a commitment to sustainability goals.

Kim Hegarty Senior Director, Europe

Overview

Using strategic frameworks, Europe is investing heavily to build resilient, self-sufficient supply chains in order to strengthen the region's position in these future-focused technologies.

Europe’s high-tech industrial sector, which includes semiconductors and battery manufacturing, is undergoing a transformation driven by technological advancements, evolving demand, geopolitical developments, policy support, and sustainability goals. With strategic frameworks like the 'European Chips Act' and the 'Net Zero Industrial Act', the region is investing heavily, with the target to build resilient, self-sufficient supply chains to strengthen their position in these future-focused technologies.

While momentum is strong, both semiconductors and battery manufacturing face shared challenges around project execution, and global competition. Rapid technological advancements can result in shifts to project design and scope, often leading to delays or adjustments in final investment decisions. Geopolitical tensions are reshaping global supply chains, and uncertainty around tariffs continues to create investment headwinds.

In semiconductors, demand from AI-driven applications remains in its early stages, but is expected to grow rapidly, requiring agile planning and scalable infrastructure. Conversely, the European battery industry has been experiencing some sobering setbacks recently and is struggling to compete with more experienced Asian players, who are now expanding their footprint in Europe.

Europe’s competitiveness in this sector is also tempered by high operating and construction costs. However, increasing regional supports via local governments, as well as the European Commission, aim to increase investment attractiveness and cement the region as a key player in these sectors.

Semiconductor public policy support

The 2023 European Chips Act, which aimed to to double its share of global semiconductor production to 20% by 2030, was recently described as ‘essentially aspirational’ in a special report by the European court of auditors. They expect an actual share of just 11.7% to be realised by 2030.¹
Despite this reality check, the EU-wide investment commitments since the Act’s proposal have exceeded €80 billion, primarily supported through national state aid.² While some initial projects have experienced delays, new developments are moving ahead, particularly in Germany, France, and Italy.
The EU is now in the process of preparing a ‘Chips Act 2.0’, and there are multiple new initiatives in-train on a national and regional level. For example, 9 EU member states have recently launched the ‘Semiconductor Coalition’ to support research, expand production capacity, and develop a highly skilled workforce.²
In May 2025, Ireland's government launched 'Silicon Island: A National Semiconductor Strategy' which is aligned with the European Chips Act, and is focused on expanding the sector’s ecosystem, building a future-ready talent pipeline and seising emerging opportunities.³
Meanwhile in the UK, the government’s ‘Semiconductor Strategy’ focuses on strengths like chip design, materials science, and power electronics. The strategy includes a £1 bn commitment over 10 years to support innovation and advanced manufacturing.⁴

Battery public policy support

Europe's battery sector is seeking to distinguish itself as a global leader in green energy solutions, built on its strong sustainability and localised supply chains focus, which are becoming central to industrial policy in region. The sector could be a driving force in the global shift to clean energy, fuelled by growing demand for electric vehicles (EVs) and Battery Energy Storage Systems (BESS).⁵
By way of example, advocates for clean transport and energy, Transport and Environment (T&E) estimates that a lithium-ion battery produced in Europe in 2023 had a 28% lower carbon footprint than one made in China, with Sweden achieving up to a 38% reduction.
As one of 19 key net-zero technologies under the ‘EU’s Net Zero Industrial Act (NZIA)’ within the ‘Green Deal Industrial Plan (GDIP)’, the sector aims to achieve a manufacturing capacity of at least 0.55 TWh per year by 2030.⁶
Recently the European Commission and the European Investment Bank (EIB) announced a partnership, providing €3bn in public support for the battery manufacturing sector, including €1bn in grants from the Innovation Fund.⁷
Battery manufacturing projects may also qualify for policy support under other EU wide and country specific clean manufacturing support schemes.
The Clean Industrial Deal, launched in February 2025, aims to mobilise over €100bn to support clean manufacturing and industrial decarbonisation across the EU.⁸
At a country level, Germany recently finalised a €500bn infrastructure plan, to enhance industrial competitiveness, including support for clean tech sectors.⁹
The UK also announced the ‘Advanced Manufacturing Plan’, backed by £4.5bn, to support battery production and clean energy innovation.¹⁰

Project activity

Semiconductor manufacturing

According to ‘Semiconductor Equipment and Materials International’s’ (SEMI) latest forecast, 18 new fabs are projected to begin construction globally in 2025, with 3 located in the EMEA region.¹¹ While Europe's share of new fabs lags behind other regions, its leadership in semiconductor equipment and specialised segments helps maintain a strong strategic position. In 2023, European suppliers accounted for 28% of the market for semiconductor devices.¹²

Germany’s Saxony region leads as a semiconductor hub, while the Netherlands and Belgium have recently focused on expanding clean room capacity to bolster chip production.

Italy has also recently received €1.3bn in EU State aid for a ‘first-of-its-kind’ advanced packaging and testing facility in Europe.¹³

Ireland continues to host cutting-edge semiconductor projects, and is expected to witness increased activity in the advanced manufacturing nodes production.

Battery manufacturing

In the battery manufacturing domain, announced capacities for battery cell manufacturing have reduced significantly from 1.9 TWh in December 2023, to 1.4 TWh in 2024. Taking into account additional project cancellations since then, and adjusting for risks related to funding, industrialisation, and other factors, some market analysts estimate that Europe's cell manufacturing capacity could be as low as 740 GWh by 2030.¹⁴ This dramatic reduction is attributed to weak EV demand, industrialisation challenges, global overcapacities, and fierce market competition.

Still, even this reduced outlook means that cell manufacturing capacities in Europe are set to multiply compared to the currently installed capacities of 190 MWh.¹⁴ Germany, Hungary, France, the Iberian peninsula, and the UK are witnessing most of the development

In the battery manufacturing domain as of mid-2024, around 50 companies, 55% of which are European, had announced plans that could deliver 1.4–2 TWh of production capacity by 2030, far exceeding projected needs.¹⁵

Despite a strong pipeline, there are significant hurdles which could slow the progress. T&E estimates that 53% of planned capacities are at risk due to construction delays, project downsizing, or cancellations due to market uncertainties, weak demand and resource constraints. Germany, Hungary, Spain, the UK, and France are witnessing most of the development followed by Nordics and Poland.

Notably, Europe's highest regional concentration of gigafactories is taking shape in Northern France's 'Battery Valley', where six gigafactories within a 100km radius are planned or already in ramp-up or operation.

Key considerations

01 Contractor availability

The construction of new semiconductor fabs at the current scale has not been seen in Europe for decades, meaning that there is a limited number of experienced contractors available to take on complex, large-scale fab projects. Combined with strong demand from other industries requiring similar capabilities, like battery manufacturing or the life sciences, there is growing competition for such contractors.

To maintain a competitive edge, project developers should consider strategies like early collaboration with EPC or EPCM (Engineering, Procurement, and Construction Management) partners, or expanding the contractor pool through market-adapted package scoping.

02 Labour and skills shortage

Construction of these high-tech facilities demands a workforce skilled in specialised areas such as cleanroom environments, precision engineering, and advanced manufacturing processes. However, Europe is already facing significant labour shortages, particularly in MEP trades. Additionally, an ageing workforce and challenges in attracting new talent, have exacerbated the situation leading to a tightening of the labour market. This growing demand is prompting companies to invest in workforce development through upskilling initiatives and collaborations with technical institutions across the continent.

This skills shortage is also prompting construction companies to invest in workforce development, to further increase the use of modularisation and prefabrication, and to more aggressively embrace advanced construction technologies to bolster productivity.

In the semiconductor sector specifically, meeting the EU’s target of capturing 20% of the global chip market will require an estimated 400,000 additional professionals. To support this ambition, the European Commission has established 27 ‘Chips Competence Centres’ across 24 member states and Norway.¹⁶ These centres will play a pivotal role in strengthening technical capabilities, fostering R&D, and providing specialised training to bolster Europe’s semiconductor ecosystem.⁷

03 Cost pressures

European semiconductor fabs and battery cell gigafactories face cost pressures from global competition.

In the battery industry, global overcapacities and Asian competitors with higher cost-efficiencies and technological experience make it difficult for European newcomers to compete cost-wise. Battery cell factories in Europe are up to 47% more expensive in CAPEX, while cathode active material plants face 27% higher capital costs compared to China.⁵ Operation costs are also elevated. Battery cell production is up to 70% more expensive, and cathode material plants incur 13% higher OPEX than in China.¹⁸

In the semiconductor space, subsidised fab construction costs in Europe are comparable to those in Taiwan, while combined utility, maintenance and labour costs are more than 70% higher.

European manufacturers in both industries have to focus on process innovation, automation and advanced data analytics to reduce the gap. Emphasising energy efficiency is another important aspect, that not only reduces costs, but drives sustainability as a differentiator of European production.

04 Site selection

Semiconductor manufacturing is highly resource-intensive, with modern chipmaking demanding significantly more water and energy. A single fab can consume up to 10 million gallons of ultra-pure water daily and 100 megawatt-hours of power per hour. During semiconductor manufacturing, chips must be rinsed with ultra-pure water and cooled. The power requirement will increase with technologies like EUV lithography, which uses up to 10 times more energy than older methods.¹⁸

Locating a semiconductor or battery project near established industrial ecosystems can significantly accelerate project execution by enabling easier access to specialised talent, established supply chains, critical support services and shared infrastructure.

05 Competitive landscape

Both the semiconductor and battery industry are innovation-driven fields characterised by rapidly evolving technology. Due to their strategic economic importance, changing government incentive schemes also influence a fab's or a gigafactory's relative competitiveness. At the same time, demand patterns can be hard to predict. Focusing on speed to market for a faster production start and revenue generation can be an important element. Amongst other things, this can be achieved by prioritising core scopes, leveraging common building blocks and modular construction, as well as securing the supply of high-in-demand components and using advanced digital delivery methods. Selecting the right contract model and partners, and integrating scalability through phasing can also provide adaptability.

Sources

Microchips: EU off the pace in a global race, European Court of Auditors, April 2025
Strengthening Europe's Semiconductor Future, European Commission, March 2025
National semiconductor strategy targets 34,500 new jobs by 2040, Raidió Teilifís Éireann (RTE), May 2025
New £1 billion strategy for UK's semiconductor sector, Gov.UK, Last updated May 2023
An industrial blueprint for batteries in Europe, European Federation for Transport and Environment AISBL, May 2024
Net-Zero Industry Act, European Commission,
Commission and EIB announce new partnership to support investments in the European battery manufacturing value chain, European Commission, December 2024
A Clean Industrial Deal for competitiveness and decarbonisation in the EU, European Commission, February 2025
Germany’s €500 Billion Infrastructure Fund: Practical Insights and Opportunities, Latham & Watkins LLP, March 2025
Advanced manufacturing plan, Gov.UK, Updated December 2023
Eighteen New Semiconductor Fabs to Start Construction in 2025, SEMI Reports, SEMI, January 2025
Underappreciated EU suppliers lead the semiconductor equipment market, Yole Group, April 2024
EU approves €1.3bn funding for semiconductor advanced packaging facility, Innovation News Network, December 2024
Porsche Consulting- Gigafactories, giga-challenges March 2025
Powering the EU's future: Strengthening the battery industry, European Parliamentary Research Service, January 2025
Chips competence centres to strengthen semiconductor expertise across Europe about to kick-off, European Commission, November 2024
Semiconductors have a big opportunity but barriers to scale remain, McKinsey & Company, April 2025

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