As I have argued before, legislation is far cheaper and far more effective at achieving change than funded R&D and manufacturing subsidy.
For example if you pass a law that says all lighting on sale in the Europe Union must be diffused in the Europe Union, you would quickly have wafer fabs sited in the Europe Union churning out LEDs. And around those wafer fabs a semiconductor ecosystem would develop.
If you passed a law that mandated AI datasets must be developed in Europe and AI chip training done in Europe for all European machine learning applications, you could quickly develop European excellence in AI. And if there were no inward investors from off-continent you would at least have ensured some level of local competence or self-sufficiency in a strategically important form of computation.
Whether such legislation is in breach of World Trade Organization agreements, and whether European politicians care in the post-Covid era, is for others to decide. But this illustrates how setting the climate is more significant and cost-efficient than trying to fund the detail.
And legislation can be crafted in various ways. It can be more nuanced and yet have tremendous impact. The creation of the Groupe Special Mobile (GSM) standard for cellular communications did far more to generate European wealth than any amount of technical funding could have done. Although I am sure grants and incentives were also handed out to help create that achievement. GSM and the arrival of the cell phone paid hundreds of thousands of engineers' and executives' salaries for a couple of decades.
In conclusion, European politicians have identified a strategic issue and there is an enduring political will to do something about it. But politicians are mainly skilled in shuffling papers and spending tax payers' money. If there is no change in the economic and/or legal landscape there will be no reason for the primary and smaller European chip companies to change what they are doing.
There needs to be bolder political thinking to reverse decades of decline. There needs to be entrepreneurial involvement from the chip companies. There needs to be decades of steady effort.
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