Europe's secret superpower ASML in the chip war: How a single company holds the future of EU chip AI in its hands

How is the market for AI chips developing? Opportunities for the EU market – Can the €43 billion plan end our dependence on Asia's AI chips?

Are we on the verge of the greatest technological revolution of the 21st century? The development of the AI ​​chip market clearly demonstrates that we are at a turning point in the semiconductor industry. As Chinese companies like Huawei unveil ambitious plans to double their AI chip production and American giants like Nvidia grapple with geopolitical challenges, the crucial question arises: What position can and will Europe take in this race for the technological future?

Suitable for:

• Europe's AI secret weapon is forming: Mistral AI with ASML – how this billion-dollar deal can make us more independent from the US and China

How big is the global AI chip market really?

The global AI chip market is undergoing a phase of explosive growth that exceeds even the most optimistic forecasts of the past. Current figures speak for themselves: Global revenue in the AI ​​chip segment is estimated at approximately $92.74 billion by 2025. However, this impressive figure is only the beginning of an even more dramatic development.

Experts forecast an annual growth rate of 29.11 percent for the period between 2025 and 2030, resulting in a projected market volume of $332.77 billion by 2030. These figures not only demonstrate the enormous potential of the market, but also the rapid pace at which the technology is gaining acceptance.

The distribution of market shares becomes particularly interesting when considering the geographical differences. The USA dominates the market with expected sales of $13.84 billion in 2025. Germany, Europe's largest economy, in contrast, only achieves sales of approximately $2.86 billion, which clearly highlights the challenge facing Europe.

The growth momentum is also reflected in monthly developments: Global semiconductor sales increased by 22.7 percent year-on-year to $57.0 billion in April 2025. This acceleration in growth momentum compared to previous months underscores the continued strength of the market.

What role does Nvidia play in the AI ​​chip market today?

Nvidia has become a true giant in the AI ​​chip business in recent years, dominating the market with a quasi-monopolistic position. The company controls an estimated 80 to 85 percent of the AI ​​data center chip market, a position underpinned by impressive business figures.

The financial results speak for themselves: In the first quarter of fiscal year 2026, Nvidia reported record revenue of $44.1 billion, representing 69 percent year-on-year growth. The data center segment alone contributed $39.1 billion to this success. For the second quarter, the company forecast revenue of $45 billion, which would represent annual growth of 50 percent.

This dominant market position is based on several factors. First, Nvidia has the most modern chip architecture specifically optimized for AI applications. Second, the company benefits from its comprehensive software ecosystem, especially the CUDA platform, which has created a broad developer community. Third, Nvidia recognized the strategic importance of AI chips early on and invested accordingly.

However, the first cracks are also appearing in Nvidia's seemingly indestructible position. US export restrictions have significantly impacted its business in China. According to the company's own estimates, this will result in revenue losses of eight billion dollars in the current quarter alone. This development opens the door to competitors, especially from China and other regions.

How does China react to American dominance?

China has recognized the strategic importance of the semiconductor industry and is making every effort to build its own competitive AI chip industry. At the center of these efforts is Huawei, China's largest technology company, which is making remarkable progress despite years of US sanctions.

Huawei's ambitious plans are impressive: The company plans to produce approximately 600,000 of its flagship 910C Ascend chips next year, double this year's level. Overall, production of the Ascend product line is expected to increase to up to 1.6 million die by 2026. These figures indicate that Huawei and its main partner, Semiconductor Manufacturing International Corp. (SMIC), have found ways to overcome the bottlenecks caused by US sanctions.

Huawei's technological strategy is quite innovative. While the company openly admits that its individual chips can't yet compete with Nvidia in terms of computing power, it's taking a different approach. Analysts at Bernstein estimate that a single next-generation Ascend 950 offers only six percent of the performance of Nvidia's upcoming VR200 superchip. However, Huawei compensates for this weakness with innovative networking solutions.

The company unveiled its UnifiedBus technology, which enables up to 15,488 Ascend chips to be interconnected. Huawei claims this technology enables data transfer between chips up to 62 times faster than Nvidia's upcoming NVLink144 technology. By pooling computing power, Huawei hopes to close the performance gap with Nvidia.

The Chinese government is strongly supporting these efforts. Beijing is urging domestic companies to switch to locally developed and produced semiconductors and reduce their dependence on foreign suppliers. The authorities want to replace foreign chips, especially in government data centers, and major internet companies like ByteDance and Tencent are also expected to stop using US products.

What challenges do Chinese chip manufacturers face?

Despite impressive progress, Chinese chipmakers face significant technological and economic hurdles. The biggest challenge lies in manufacturing technology. While Nvidia has access to TSMC's state-of-the-art 4nm nodes, Huawei must rely on SMIC's outdated 7nm technology.

This technological gap has tangible implications for production efficiency. The chips for the 910 product line are manufactured using an improved version of SMIC's 7nm technology, which is still about two generations behind TSMC's technology. Experts therefore doubt whether Huawei can achieve its ambitious production targets at an acceptable yield.

US sanctions are further exacerbating these problems. US suppliers to Semiconductor Manufacturing International Corp. (SMIC) are no longer allowed to supply products to the company's most modern plant. These restrictions could disrupt production at the "SMIC South" plant, which experts believe is currently the only one capable of manufacturing the state-of-the-art smartphone chips, for up to nine months.

Another issue is acceptance among large customers. So far, Huawei's most important customers have largely used the company's best semiconductors only for inference purposes or to run AI models after they have been trained. Whether they are ready to fully switch to Huawei's solutions remains to be seen.

Nevertheless, alternative Chinese suppliers are already seeing initial successes. Chip designer Cambricon recorded a revenue increase of more than 4,000 percent in the first half of 2025. While this dramatic increase is partly due to the US export bans on Nvidia chips, it also demonstrates the potential of domestic solutions.

How does Europe position itself in the global AI chip race?

Europe finds itself in an ambivalent position in the global race for AI chips. On the one hand, the continent boasts some of the world's leading technology companies, but on the other, it lags significantly behind in actual chip production. Current market shares speak for themselves: Europe currently holds only about nine to ten percent of the global semiconductor market.

The EU has recognized this strategic weakness and launched an ambitious counter-program with the Chips Act. This package of measures aims to mobilize €43 billion in public and private investment to increase Europe's share of the global semiconductor market from currently around ten percent to 20 percent by 2030. 68 concrete and strategically important funding projects totaling €22 billion have already been reported in 15 member states.

A key component of this strategy is the establishment of international chip giants in Europe. TSMC, the world's largest contract manufacturer, has begun construction of a ten-billion-euro semiconductor plant in Dresden. About half of the financing will be covered by government subsidies, and production is scheduled to begin in late 2027. TSMC is already considering additional chip factories in Europe, focusing on the AI ​​chip market.

What are Europe’s strengths in the semiconductor industry?

Despite its lag in mass production, Europe boasts impressive strengths in the semiconductor industry. The Dutch company ASML exemplifies these strengths. ASML is the world's only manufacturer of lithography systems using extreme ultraviolet (EUV) technology, which is essential for the production of the most advanced sub-7-nanometer chips.

With a global market share of 80 to 90 percent for lithography equipment and an enterprise value of approximately €270 billion, ASML is Europe's most valuable technology company. The company's highly complex machines are roughly the size of a bus, require three Boeing 747s for delivery, and cost between €185 and €360 million to produce. This technology is so specialized that even the world's largest chip manufacturers rely on ASML.

Germany is home to Infineon, one of the world's leading manufacturers of power semiconductors. In 2023, Infineon invested approximately five billion euros in the construction of a semiconductor manufacturing facility for analog/mixed-signal and power semiconductors. In chip manufacturing, European manufacturers such as Infineon, STMicroelectronics, and NXP currently hold a share of approximately eight to nine percent of the global market.

Europe is also a world leader in the manufacture of machines that print tiny semiconductor tracks onto silicon circuit boards, as well as in the production of key chemicals and gases for semiconductor production. These strengths in the supply industry form an important foundation for the expansion of the European chip industry.

What challenges does Europe have to overcome?

European ambitions in the AI ​​chip sector face significant challenges. The European Court of Auditors has already expressed doubts as to whether the 20 percent target can be achieved by 2030. With more new semiconductor plants being built in Asia and the USA, the European share could even decline further.

A particularly serious setback was the indefinite postponement of Intel's Magdeburg plants. These plants were the largest European semiconductor project, with planned investments of more than 30 billion euros. Because the largest subsidies are concentrated on a few companies, individual delays or cancellations have a significant impact on the overall goal.

The complexity of the semiconductor value chain presents a further challenge. Without a comprehensive strategy that encompasses integrated production in Europe, the goal will remain only half-heartedly implemented. The complex and labor-intensive testing, assembly, and packaging of the chips continues to take place almost exclusively in low-wage Asian countries.

Europe is currently heavily dependent on Asian semiconductor supplies. 62 percent of the semiconductors used in Germany come from just five Asian countries, with Taiwan as the largest supplier (23 percent). This dependence makes the European industry vulnerable to geopolitical tensions and supply chain disruptions.

What role do AI inference chips play in future development?

AI inference chips represent a particularly dynamic and fast-growing segment of the AI ​​chip market. These specialized processors are optimized to run pre-trained AI models and make decisions in real time. The global AI inference chip market is estimated to be worth approximately $15 billion to $18 billion by 2025 and is expected to grow at a CAGR of 35 percent to 40 percent until 2032.

The application areas for inference chips are diverse and growing rapidly. Image and speech recognition dominate the market with approximately 45 percent market share, followed by natural language processing (NLP), which benefits from the increasing integration of AI-driven chatbots, virtual assistants, and language translation services.

Edge computing is further driving demand for inference chips. Processing AI models directly on end devices such as smartphones, surveillance cameras, or autonomous vehicles requires specialized, energy-efficient chips. This development enables real-time decision-making without dependence on cloud servers while simultaneously improving data protection and reliability.

Industry focus: B2B, digitalization (from AI to XR), mechanical engineering, logistics, renewable energies and industry

More about it here:

• Xpert Business Hub

A topic hub with insights and expertise:

• Knowledge platform on the global and regional economy, innovation and industry-specific trends
• Collection of analyses, impulses and background information from our focus areas
• A place for expertise and information on current developments in business and technology
• Topic hub for companies that want to learn about markets, digitalization and industry innovations

How are market shares developing between the major chip manufacturers?

Market dynamics among the major chip manufacturers are showing significant shifts. AMD is steadily gaining market share from Intel, especially in the lucrative server segment. According to recent data from Mercury Research, AMD has steadily increased its market share in Epyc server processors, and is expected to reach 40 percent by 2027.

Particularly noteworthy is AMD's success in the cloud business, where the company already holds over 50 percent market share. In the desktop segment, AMD achieved a market share of 32.2 percent in the second quarter of 2025, its highest in recent times.

Intel, on the other hand, is in a difficult situation. The once largest chip company in the world achieved a 99 percent market share in server processors in 2017. Today, experts estimate that it only accounts for around 55 percent, and the trend continues to decline.

The financial figures reflect this market development. AMD boasts a gross margin of around 51 percent, while Intel struggles with margins that have shrunk to 33 percent. While Intel posted a net loss of $20.5 billion last year, AMD remained profitable at $2.73 billion.

TSMC, the world's largest contract manufacturer, benefits from this development, as both AMD and Nvidia have their most advanced chips manufactured by the Taiwanese company. In January 2025, TSMC became the third company to achieve global revenue exceeding $200 billion.

Suitable for:

• AI offensive of the EU and the EU AI Champions Initiative: Large Groups, SMEs and Startups are moving together

What significance do proprietary AI chips have for technology companies?

Developing their own AI chips is increasingly becoming a strategic imperative for major technology companies. Apple's M-series processors are impressively demonstrating how successful this strategy can be. Since the introduction of the M1 chip in 2020, Apple has not only revolutionized the performance of its Mac computers but also ushered in a new era of chip integration.

The success of Apple Silicon is based on the co-encapsulation of GPU, CPU, and memory, as well as the maximum number of in-house developed cores. This highly integrated architecture offers both low power consumption and high performance, making the M1 Mac products significantly more powerful than their predecessors with Intel processors.

Apple is already working on the next generation of its own chips. The M6 ​​processors, codenamed "Komodo," and the M7 chips, codenamed "Borneo," are currently in development. Both are expected to represent a major leap forward, particularly in the area of ​​AI capabilities. At the same time, Apple is developing "Sotra," a chip that could set new performance standards.

Apple's work on specialized AI chips for smart glasses is particularly interesting. The company is developing its own chips specifically for augmented reality applications for the first time, based on the energy-optimized architecture of the Apple Watch. These chips are expected to be able to control multiple cameras simultaneously and are optimized for smart glasses, which are expected to launch in 2026 or 2027.

Apple is also pursuing an independent strategy when it comes to mobile chips. Since 2019, the company has been working on its own 5G modems and acquired Intel's modem division for one billion dollars. The goal is to create a single component that combines cellular, Wi-Fi, and Bluetooth, and can later be fully integrated into Apple's M-series system-on-a-chip.

How are the requirements for AI chips changing?

The requirements for AI chips are evolving rapidly and becoming increasingly specific. While early AI applications primarily relied on general GPU power, modern applications require highly specialized solutions for different application areas.

Training large AI models still requires extremely powerful chips capable of massively parallel computations. Nvidia's H100 and upcoming H200 chips continue to dominate the market. These processors are designed to train complex neural networks with trillions of parameters.

For inference applications, however, other characteristics are more important. These include energy efficiency, low latency, and the ability to execute pre-trained models quickly and cost-effectively. Edge computing applications also require compact designs and the ability to operate without a permanent internet connection.

The automotive industry is driving the development of specialized automotive AI chips. These must be able to withstand extreme temperature fluctuations, operate with high reliability, and make safety-critical decisions in real time. Companies like Tesla, as well as traditional automakers, are investing heavily in the development of their own AI chips for autonomous vehicles.

What geopolitical factors influence the AI ​​chip market?

The AI ​​chip market is heavily influenced by geopolitical tensions that significantly influence market dynamics. The US has continuously tightened its export controls on semiconductor technology to China, imposing the most comprehensive restrictions to date in December 2024.

The new US regulations prohibit access to 24 different types of chip manufacturing equipment and three software programs. Particularly significant is the removal of the previous 25 percent threshold for US components in foreign chip manufacturing facilities. In the future, all equipment containing US technology will be subject to export restrictions.

These measures have far-reaching consequences. Experts believe the new regulations could have devastating effects on Chinese chip factories and immediately halt any further expansion of Chinese production capacity. Existing manufacturing facilities could be severely restricted or rendered inoperable within six months.

China is responding with its own countermeasures. The Chinese government has launched an investigation into Nvidia for possible violations of anti-monopoly law. At the same time, Beijing is urging domestic companies to switch to locally developed and produced semiconductors.

Europe is attempting to develop an independent position in this area of ​​tension. The EU Chips Act aims to reduce strategic dependence on other regions. However, important European allies of the US, such as the Netherlands and Japan, are reluctant to support new US sanctions. They have so far shown little interest in further measures, even though both countries partially supported previous sanctions.

What does this development mean for consumers and businesses?

The rapid development of the AI ​​chip market has direct implications for consumers and businesses. Smartphones are increasingly being equipped with specialized AI chips that enable local AI functions such as image recognition, speech processing, and intelligent camera features. These so-called NPUs (Neural Processing Units) are becoming standard at Apple, Google, Qualcomm, and other manufacturers.

This opens up new opportunities for companies, but also presents challenges. The increasing availability of powerful and energy-efficient AI chips makes it possible to implement AI applications directly in production facilities, monitoring systems, or autonomous vehicles. This can lead to significant efficiency gains and new business models.

At the same time, new dependencies and risks are emerging. Companies must choose between different chip architectures and ecosystems, with each choice having long-term strategic consequences. Geopolitical tensions can disrupt supply chains and lead to supply bottlenecks.

The cost of AI hardware remains a key factor. While chip performance is increasing exponentially, prices for the most advanced solutions remain very high. This can exclude smaller companies from access to cutting-edge AI technology and increase market concentration.

What future scenarios are conceivable for the EU market?

Various future scenarios are conceivable for the European AI chip market, which will depend on political decisions in the coming years. In the most optimistic scenario, Europe will succeed in building an independent, competitive AI chip industry through the Chips Act and targeted investments.

In this scenario, European strengths in the supplier industry, especially at companies like ASML, would be used as a basis for vertical integration. TSMC and other Asian chip giants would significantly expand their production capacities in Europe and establish local supply chains. At the same time, European companies like Infineon, STMicroelectronics, and NXP would intensify their activities in the AI ​​chip sector and develop new, specialized solutions.

A more realistic scenario sees Europe as an important, but not dominant, player in the global AI chip ecosystem. In this case, Europe would build on its strengths in niche areas, such as energy-efficient edge computing chips or specialized automotive AI processors. The region would benefit from its strong automotive industry and leading industrial companies that have specialized requirements for AI hardware.

The most pessimistic scenario would see Europe become a dependent importer of AI chips from Asia and the US. In this case, the ambitious goals of the Chips Act would be missed, and Europe would continue to rely on external suppliers. This would undermine strategic sovereignty and make Europe vulnerable in future technological conflicts.

What strategic recommendations emerge for Europe?

The analysis of global AI chip development yields several strategic recommendations for Europe. First, Europe should consistently build on its existing strengths. ASML, as an indispensable supplier to the global chip industry, should be further strengthened and protected from foreign takeovers. Technological leadership in EUV lithography represents a tremendous strategic advantage.

Second, Europe should focus on specialization rather than direct competition with the US or China. Instead of trying to outdo Nvidia in high-end training chips, Europe should focus on niche areas such as automotive AI, industrial IoT chips, or energy-efficient edge computing solutions. This is where Europe can leverage its industrial strengths.

Third, closer coordination among EU member states is essential. The success of the Chips Act depends on national interests taking a back seat to common European goals. Germany, France, the Netherlands, and other key technology hubs must better coordinate their activities.

Fourth, Europe should invest in research and education. The shortage of qualified specialists in the semiconductor industry is a critical bottleneck. Universities and research institutions must be strengthened and more closely integrated with industry.

Fifth, a pragmatic approach to international partnerships is important. Europe should cooperate selectively with trusted partners such as Japan, South Korea, or Taiwan, without completely isolating itself from other regions. Technological sovereignty does not mean technological isolation.

What chances does Europe have in the global AI chip race?

The development of the AI ​​chip market presents Europe with one of the greatest industrial policy challenges of the coming decade. With a projected market volume of over $330 billion by 2030, the stakes are high. Europe has both significant strengths and significant weaknesses in this race.

The strengths are undeniable: ASML as a technological gatekeeper, a strong automotive industry as a buyer of specialized AI chips, leading industrial companies with specific requirements, and the political will to invest €43 billion in the semiconductor industry. These factors provide a solid foundation for building a European AI chip industry.

At the same time, the challenges are considerable. The existing market dominance of Nvidia, TSMC, and other Asian players cannot be overcome in the short term. Geopolitical tensions between the US and China create additional uncertainties, and complex global supply chains cannot simply be relocated to Europe.

Europe's success will ultimately depend on its ability to set realistic goals and pursue them consistently. Instead of trying to become a leader in all areas, Europe should focus on specialization and leveraging existing strengths. The automotive industry, industrial automation, and energy-efficient edge computing solutions offer promising niche markets.

The coming years will show whether Europe can make the leap from an importer to a major producer of AI chips. The foundations are there, but implementation requires political will, industrial coordination, and strategic patience. In a world where AI chips determine technological sovereignty, Europe cannot afford a sideline.

☑️ Our business language is English or German

☑️ NEW: Correspondence in your national language!

 

I would be happy to serve you and my team as a personal advisor.

You can contact me by filling out the contact form or simply call me on +49 89 89 674 804 (Munich) . My email address is: wolfenstein ∂ xpert.digital

I'm looking forward to our joint project.

 

 

☑️ SME support in strategy, consulting, planning and implementation

☑️ Creation or realignment of the digital strategy and digitalization

☑️ Expansion and optimization of international sales processes

☑️ Global & Digital B2B trading platforms

☑️ Pioneer Business Development / Marketing / PR / Trade Fairs

Here you will learn how your company can implement customized AI solutions quickly, securely, and without high entry barriers.

A Managed AI Platform is your all-round, worry-free package for artificial intelligence. Instead of dealing with complex technology, expensive infrastructure, and lengthy development processes, you receive a turnkey solution tailored to your needs from a specialized partner – often within a few days.

The key benefits at a glance:

⚡ Fast implementation: From idea to operational application in days, not months. We deliver practical solutions that create immediate value.

🔒 Maximum data security: Your sensitive data remains with you. We guarantee secure and compliant processing without sharing data with third parties.

💸 No financial risk: You only pay for results. High upfront investments in hardware, software, or personnel are completely eliminated.

🎯 Focus on your core business: Concentrate on what you do best. We handle the entire technical implementation, operation, and maintenance of your AI solution.

📈 Future-proof & Scalable: Your AI grows with you. We ensure ongoing optimization and scalability, and flexibly adapt the models to new requirements.

More about it here:

• The Managed AI Solution - Industrial AI Services: The key to competitiveness in the services, industrial and mechanical engineering sectors