Following the publication of the Draghi report, the European Union is undergoing a critical reassessment of its industrial strategy, with a strong emphasis on reducing dependency on foreign technologies to secure its digital sovereignty and economic future. The report indeed argues that the EU urgently needs to strengthen its capacity to make technological choices in accordance with its rules and values and maintain its economic competitiveness. A central challenge in this effort is addressing the EU’s reliance on foreign semiconductor industries—a vulnerability painfully highlighted by global supply chain disruptions starting during the COVID-19 pandemic, which had profound consequences for European manufacturers, particularly in the automotive sector.
THE NEW CHIP WAR
Semiconductors lie at the heart of modern digital infrastructures, playing a pivotal role in consumer electronics as well as in critical domains such as artificial intelligence (AI) and high-performance computing. The value chains in the semiconductor industries are at the same time complex, globalized and concentrated —leading to an industry dominated by a few key players at different design and production segments.
The highly concentrated market for chip production is closely tied to historical strategies of externalizing production within global value chains. Companies outsourced manufacturing to specialized firms, leading to the emergence of a few dominant foundries like the Taiwan Semiconductor Manufacturing Company (TSMC), which have since optimized their operations to an extraordinary degree. Chip production now demands enormous capital investment in cutting-edge facilities—such as clean rooms spanning the size of more than 20 football fields—and substantial R&D spending to cater to the industry’s need for customized designs.
This customization is driven by the reliance on abstract chip architecture solutions. These designs are protected by intellectual property (IP) rights and licensed to manufacturers. Clients pay significant licensing fees and royalties to access the detailed instructions necessary to implement these designs for specific applications. These dynamics have created high barriers to entry, further consolidating market power among a limited number of advanced players, making the chip manufacturing industry increasingly difficult for new competitors to penetrate.
CAN OPEN SOURCE HARDWARE CLOSE THE GAP?
Following the COVID-19 supply shock, governments have worked to tackle two key challenges: the unequal geographical concentration of chip manufacturing and limited access to essential intellectual property for chip design. Many countries have provided significant subsidies to attract microchip factories and secure their supply chains. For example, under the Chips Act adopted by the EU in 2023, Germany allocated €5 billion to support the construction of a TSMC chip plant in Dresden. Similarly, the U.S. government, under its own Chips Act, granted $6.6 billion to TSMC to establish a third facility on American soil.
But governments are also increasingly looking to close the gap in the field of chip designs. In this context, several countries are turning to RISC-V, an open source alternative to proprietary designs in the field[1]. Established at the University of California, Berkeley, RISC-V was designed to create an open source Instruction Set Architecture (ISA) that is royalty-free, enabling its use in both academic and commercial contexts. Since its inception, RISC-V has evolved into a global non-profit organization.
The initiative aims to level the playing field by pooling public and private research efforts that cannot individually compete with leading semiconductor firms. As highlighted in a staff working document accompanying the European Chips Act:
“open source tools are essential for introducing new companies and more developers into the field.”
Moreover, open source hardware offers significant security advantages by allowing greater transparency and enabling verification of designs, thus mitigating risks from hidden vulnerabilities.
The initiative has drawn significant participation from Chinese companies, including ZTE, Huawei, and Alibaba, which are actively exploring RISC-V technology. The Chinese government even established the “China RISC-V Alliance,” which seeks to promote the development and adoption of the RISC-V open source architecture as an alternative to foreign proprietary architectures like ARM[2] and x86[3]
x86 is a family of Complex Instruction Set Computer architectures widely used in most desktop and laptop computers. While some x86 designs are open, some features require licensing from two U.S. companies: Intel, which originally designed x86, and AMD (Advanced Micro Devices, Inc.).. As a result, Chinese firms have started to produce special-purpose chips based on the RISC-V architecture. Programs like “One Student One Chip” mobilize open source principles to foster local skills and reduce the costs of chip design.
EU INVESTMENTS IN RISC-V
According to the Free and Open Source Silicon Foundation (FOSSi Foundation), a UK-based non-profit, Europe already benefits from great expertise in open source hardware designs in the field: many prominent initiatives such as “Coriolis, Edalize, FuseSoC, GHDL, Klayout, Litex, NextPNR” are “created and developed primarily by Europeans”. The open source processor design community saw significant growth since 2015, fueled by opportunities from the RISC-V open standard. Since then, many European designs have been adopted in research and commercial products.
The EU is already supporting RISC-V development through initiatives like the European Processor Initiative (EPI) and the EuroHPC Joint Undertaking. Since 2018, these programs have advanced open source designs and tools, with EuroHPC allocating €270 million in 2022 for high-performance RISC-V processors designs. Current EU projects supporting RISC-V are the Codasip High-end processor IP and high-level design tools for RISC-V project funded under the European Innovation Council (EIC), TRISTAN (Together for RISc-V Technology and ApplicatioNs), a Digital, Industry and Space programme co-funded by the French government through BPI France as part of its “France 2030” or the “High Performance, Safe, Secure, Open Source Leveraged RISC-V Domain-Specific Ecosystems” (ISOLDE) project funded under Horizon Europe.
Additionally, European countries have launched national programs to support open source in the semiconductor industry. One example is Germany’s „Design Instruments for Sovereign Chip Development with Open Source (DE:Sign)” program. The program supports open source EDA tools, IP libraries, and innovative chip designs. Since May 2024, 15 selected De:Sign Initiative R&D projects have been running, with a total amount of grants of €29.6 million.
TENSIONS BETWEEN OPENNESS AND DIGITAL SOVEREIGNTY
The economic benefits of openness in industrial strategies were recognized early in the 21st century. Yochai Benkler, in his well-known book The Wealth of Networks, argued that “commons-based peer production” would eventually surpass traditional proprietary systems in creating both social and economic value. Digital technologies reduce transaction costs, making collaboration and knowledge-sharing easier than ever before. This means research and innovation in open environments can be far more efficient than within the closed, proprietary settings of firms. Since the early 21s century, Digital Commons – from open source software to open data, open knowledge or open protocols and standards – have transformed to become a key part of modern digital infrastructures.
The uptake of Digital Commons in chip designs highlights their transformative potential in industrial strategies. Open source frameworks like RISC-V, by fostering collaboration and mutualizing innovation investments, present a viable solution for regions like the EU and China to reduce dependencies and accelerate technological progress. Just as open source software now constitutes 76% of all software code, the principles of mutualized innovation may extend to hardware, where collaborative efforts supported by states and private competitors could eventually rival today’s dominant firms.
The RISC-V initiative exemplifies the strategic interplay between openness and sovereignty. While Digital Commons offer opportunities, they also raise questions about governance and control, as noted by Marco Berlinguer in his report on industrial policies in the field of cloud computing. The relocation of the Risc-V Foundation to Switzerland, against the risk of American sanctions limiting Chinese involvement in the project, while the U.S. continues to promote efforts like Open RAN to counter Chinese technological dominance in 5G, reflect the strategic interplay between Digital Commons and national industrial interests.
China, famous for bypassing some constraints of IP rights and using joint venture rules (such as limited foreign ownership) to facilitate technology transfer and economic catch-up, is integrating openness into its industrial strategies. Initiatives like RISC-V in semiconductors and Gitee as a GitHub alternative demonstrate how China strategically combines openness with targeted investments and protective measures to strengthen its position.
The EU’s historical commitment to openness and collaboration, exemplified by projects like Galileo, which emphasize public standards, transparency, and the demilitarization of infrastructure, is now under pressure from global tensions and cybersecurity challenges. Balancing the ideals of open access with the need to establish local ecosystems is a significant challenge.
While the EU should continue to support international collaboration on open standards and digital infrastructures, it should also link this support to conditionalities to ensure their governance remains in the public interest and the value these infrastructures create is shared. In our upcoming work within the NGI Commons project, we will dive deeper into how the EU can not only support Digital Commons as part of innovation investments, but also support their maintenance and deployment – aligning these efforts with other strategic priorities and investments, such as environmental policies.
Footnotes
- RISC-V stands for Reduced Instruction Set Computer – Fifth generation.^
- ARM is a UK-based company that designs CPU cores using the ARM (short for Advanced RISC Machines) architecture, widely found in mobile devices and servers. Owned by the Japanese SoftBank Group, ARM licenses its designs to manufacturers globally. A proposed Nvidia takeover in 2020 collapsed in 2022 due to “regulatory challenges”.^
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x86 is a family of Complex Instruction Set Computer architectures widely used in most desktop and laptop computers. While some x86 designs are open, some features require licensing from two U.S. companies: Intel, which originally designed x86, and AMD (Advanced Micro Devices, Inc.).^
