Europe’s Chips Act Stumbles
Europe’s Chips Act Stumbles Over Its Own Rigidity
When the European Commission (EC) approved nearly €3 billion in French state aid for the STMicroelectronics–GlobalFoundries megafab in Crolles, France, in June 2023, the project was hailed as the flagship of Europe’s semiconductor revival. Now, just two years later, the partnership has been placed on hold, revealing how Europe’s push for semiconductor sovereignty can be slowed by the very structures designed to support it.
A flagship falters
The Crolles fab was meant to produce chips based on fully depleted silicon-on-insulator (FD-SOI), a technology that combines power efficiency and resilience—attributes that are particularly valuable in automotive, industrial, and edge AI applications. The €7.5 billion project, of which €2.9 billion was French state aid approved under the EU Chips Act, qualified as one of seven “first of a kind” projects intended to boost Europe’s manufacturing autonomy.
“First-of-a-kind facilities bring an innovative element to the internal market through new manufacturing processes or products that improve computing power, energy efficiency, or reliability,” an EC spokesperson told EE Times Europe. The Crolles site merged FD-SOI and GlobalFoundries’ FDX process on shared equipment to improve yield and resource efficiency.
But in mid-2025, GlobalFoundries quietly slowed its participation. When asked about the decision, the company replied to EE Times Europe that “the rate and pace of expansion in Crolles will be aligned with customer demand and market conditions.” Said: École Centrale de Lyon’s Ian O’Connor
Ian O’Connor, distinguished professor at École Centrale de Lyon, is among the industry observers who argue that the stall reflects market cycles more than a lack of interest in the technology itself. “The pause is driven by ecosystem and supply chain uncertainties combined with global demand fluctuations, not by technical limitations of FD-SOI,” he told EE Times Europe. “Consequently, manufacturers are cautious about ramp-up risk for such a large investment.”
O’Connor also pointed to a deeper force at play: Europe’s slow-moving policy machinery. “Once funds are allocated, they can’t easily be redirected without new approvals,” he said. “That lack of agility is part of the challenge. Success requires alignment—[of] political will, financial readiness, and market timing. If any [single element] weakens, the whole structure becomes fragile.”
Market demand for automotive and industrial chips—core FD-SOI sectors—has softened since post-Covid peaks, but project approvals and subsidies were based on boom-era forecasts. By the time market conditions shifted, the funding mechanisms were already locked in.
Under the current framework, Chips Act subsidies are treated as state aid, a mechanism tightly bound to the original proposal. The EC spokesperson confirmed that, while national authorities manage the funds, “it is the responsibility of the member state to ensure the aid is granted in line with the Commission’s decision.” And although “funding approved for first-of-a-kind projects can be allocated according to national procedures and budget availability,” it still must remain within the boundaries of the original authorization.
In practice, that means that when a project stalls—as in Crolles—money sits idle. Neither France nor the EU can easily reassign those billions to another semiconductor initiative without restarting the entire approval process.
For the Grésivaudan Valley, the Crolles pause has more than symbolic significance. The region, home to STMicroelectronics, Soitec, and Schneider Electric, had prepared for rapid expansion.
“We were expecting transformative impact,” Jean-François Clappaz, vice president for economic and industrial development for the Grésivaudan Valley Community, told EE Times Europe. “In microelectronics, one job represents between two and two-and-a-half indirect jobs—suppliers, logistics, gas providers, transporters, and so on.”
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