Europe must manufacture its own cutting-edge chips or risk being left to build old-style chips, said EU Commissioner Thierry Breton during a keynote speech to semiconductor companies this week.

Europe must refuse "any attempt of geographical segmentation where Europe would produce mature nodes, while Asia and the US would produce advanced nodes," Breton said while speaking at the Interuniversity Microelectronics Centre's annual event in Antwerp. 

He added that Europe "cannot and will not" be considered an observer when it comes to chip manufacturing, saying "I want a Europe that knows how to lead in semiconductors."

Breton highlighted how important European research and technology has been to the advanced chips manufactured today but acknowledged that "excellent research" is not enough.

"To be industrially relevant, one needs to build factories and produce in Europe," Breton said, noting that as a result of the European Union's recently approved Chips Act has led to new projects planned by Intel, Infineon, STMicroelectronics, and Global Foundries.

"With the Chips Act now agreed, we are sending a strong signal to all of you, in Europe and outside, that Europe is open for business," Breton said.

In April, the European Council and the European Parliament reached an agreement on a deal to invest$3.6 billion in EU funds to build out the continent's semiconductor manufacturing capabilities, with the aim of attracting a further$43.7 billion in private investment.

Chip trade war continues to heat up

The European Union's Chips Act is seen as a response to similar plans to encourage semiconductor manufacturing in the US, China, Taiwan, South Korea, and Japan.

However, the plan still represents less support than is offered by both the US and Chinese governments and Breton's comments come at a time when geopolitical turmoil continues to disrupt the global chip market, causing companies to look for ways to bolster the security and continuity of the semiconductor supply chain.

The presidential administrations of both Joe Biden and Donald Trump, citing trade and security concerns, passed measures barring the use of Chinese-made hardware in US networks and imposed export controls on US computing technology - most recently, restrictions on chips and chip-making equipment. The US has also put pressure on its allies to enact similar restrictions.