EU proposes Chips Act 2.0 and cloud law to cut reliance on US tech

Overview

Updated Jun 3

The European Union depends on non-EU suppliers for more than 80% of its core digital products. On 3 June 2026, the European Commission proposed two laws to change that: a Chips Act 2.0 to boost semiconductor production, and a Cloud and AI Development Act to triple the bloc's data-centre capacity within five to seven years.

Three US firms — Amazon, Microsoft and Google — run about 70% of Europe's cloud market. Brussels wants European alternatives in place before a foreign government or company can, in the words of EU tech chief Henna Virkkunen, 'flip a kill switch' on hospitals, fighter jets or government systems. The proposals now go to the European Parliament and the 27 member states, where France and Germany want stricter EU-only rules and the Nordics and Ireland want a lighter touch.

Why it matters

If these laws pass, US hyperscalers face new curbs in Europe, and European chipmakers get a 12-month permitting fast track worth tens of billions in state aid.

Questions about this story

Free account needed to ask — your question is kept and asked for you right after sign-up. Answers are public.

No questions yet — be the first to ask.

Key Indicators

70%

US share of EU cloud market

AWS, Microsoft Azure and Google Cloud together run roughly seven in ten EU cloud workloads.

<10%

EU share of world chip output

Europe makes under a tenth of global semiconductors and almost none of the most advanced nodes.

80%+

EU reliance on non-EU digital tech

Share of core digital products, services and IP the bloc imports from outside Europe.

Data-centre capacity target

CADA aims to at least triple EU data-centre capacity within five to seven years.

€120B

Chips Act 2.0 investment target by 2035

Combined public and private investment goal across member states and industry.

12 months

Max permitting time for chip projects

Chips Act 2.0 caps national permitting at one year for qualifying semiconductor sites.

Voices

Curated perspectives — historical figures and your fellow readers.

Ever wondered what historical figures would say about today's headlines?

People Involved

Henna Virkkunen

European Commission Executive Vice-President for Tech Sovereignty, Security and Democracy

Leading the sovereignty package through the EU legislative process

Ursula von der Leyen

President of the European Commission

Backing the package as a pillar of her second-term industrial agenda

Stéphane Séjourné

European Commission Executive Vice-President for Prosperity and Industrial Strategy

Co-leading the Chips Act 2.0 file with Virkkunen

Organizations Involved

European Commission

EU executive body

Author of the Technological Sovereignty Package

The EU executive that proposes legislation and enforces the bloc's rules.

AWS, Microsoft Azure and Google Cloud

US cloud providers

Hold roughly 70% of the EU cloud market

The three US hyperscalers most directly affected by CADA and the sovereignty label rules.

European Parliament and Council of the EU

EU co-legislators

Will negotiate and vote on the two proposals

The two bodies that must agree on the final text of Chips Act 2.0 and CADA.

Timeline

June 2020 June 2026

7 events Latest: June 3rd, 2026 · 3 months ago

Tap a bar to jump to that date

June 2026
EU unveils Technological Sovereignty Package
Latest Legislation

Commission proposes Chips Act 2.0, the Cloud and AI Development Act, an Open Source Strategy and an energy AI roadmap.
June 3rd, 2026
May 2026
Commission previews demand-side chip strategy
Statement

EU officials brief that Chips Act 2.0 will lean harder on guaranteed European buyers, not just subsidies for fabs.
May 28th, 2026
January 2026
US Section 232 chip tariff takes effect
External pressure

A 25% tariff on a narrow band of advanced chips re-exported to the US starts, hitting EU buyers and sellers.
January 15th, 2026
February 2025
Trump signals 25% semiconductor tariffs
External pressure

President Trump says US chip tariffs will start at 25%, sharpening EU concerns about supply chain exposure.
February 18th, 2025
July 2024
Commission forecast shows EU chip share will fall short
Analysis

Internal projection puts the EU's share of advanced chip output at 11.7% by 2030, well below the 20% target.
July 1st, 2024
September 2023
Original European Chips Act enters into force
Legislation

The 2023 act targets €43 billion in public investment and a 20% global share of cutting-edge chips by 2030.
September 21st, 2023
June 2020
GAIA-X launched as Europe's cloud answer
Background

France and Germany unveil GAIA-X, a federated cloud project meant to cut dependence on US hyperscalers. It later struggles to deliver production services.
June 4th, 2020

Scenarios

Both laws pass largely intact by end of 2027

Possible Resolves by End of 2027

Discussed by: Tech.eu, Silicon Republic, CNBC reporting on Commission timeline

France, Germany and the Commission hold the line. The Parliament's industry committee leads a fast track, the Council agrees a general approach by spring 2027, and both files are signed into law before the end of 2027. Hyperscalers absorb the sovereignty label rules. The 12-month chip permit cap goes through.

European-preference rules watered down in trilogues

Likely Resolves by Q2 2028

Discussed by: Reuters, Politico Europe coverage of Nordic and Irish positions

Ireland, Sweden, Finland, the Netherlands and Denmark, all of which host large US hyperscaler operations, push back. The final text drops or softens the strictest EU-only procurement and sovereignty label requirements. US firms keep most of their EU public sector business. Chips Act 2.0 survives in a recognisable form, but CADA's strongest sovereignty teeth come out.

Council deadlock stalls both files past 2028

Unlikely Resolves by End of 2028

Discussed by: Euronews, Agence Europe reporting on Franco-German vs Nordic split

Member states cannot agree on how strictly to favour European suppliers. Hungary and Slovakia link the files to other disputes. The Council never reaches a general approach. Both proposals carry over into the next Commission term in late 2029 with no adopted text.

US retaliates with new tariffs or trade action

Possible Resolves by End of 2027

Discussed by: CNN Business, Tax Foundation tariff tracker, Politico

The Trump administration treats CADA's sovereignty tier as a non-tariff barrier targeting US firms. Washington responds with new Section 232 or 301 tariffs on EU tech goods, or with retaliatory measures against EU digital regulation. Commerce Secretary Lutnick has already publicly tied tariff relief to EU digital rules rollbacks.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

December 1970

Airbus consortium (1970)

France, Germany and later the UK and Spain pooled state money and industrial capacity to build a European passenger jet maker to rival Boeing and McDonnell Douglas. The A300 launched in 1974 after years of political and funding fights. Member states accepted joint procurement and long-term subsidies in exchange for European industrial control.

Then

Slow A300 sales nearly killed the project, but state-backed orders kept it alive.

Now

Airbus became one of two global commercial jet makers and is now Europe's flagship case of successful industrial sovereignty.

Why this matters now

Airbus is the model EU sovereignty advocates cite when arguing that Europe can build globally competitive industries if it accepts joint subsidies, joint procurement and a long horizon. Critics counter that chips and cloud move faster than aerospace and may not give Brussels that runway.

June 2020

GAIA-X cloud sovereignty project (2020)

France and Germany launched GAIA-X to build a federated European cloud as a counterweight to AWS, Microsoft and Google. AWS, Microsoft and Google were soon admitted as members, and the project never shipped production services at scale. EU providers' share of the European cloud market fell from 26% in 2017 to about 10% by 2020.

Then

GAIA-X became a standards and certification body rather than a working cloud. Germany pulled funding from several pilot projects.

Now

Hyperscalers entrenched their position. Brussels concluded that voluntary federation could not deliver sovereignty, which set the stage for a binding law like CADA.

Why this matters now

CADA is the legislative answer to the policy lesson Brussels drew from GAIA-X: federation and labels did not move market share, so the 2026 package leans on hard rules, public procurement and capital.

September 2023

European Chips Act 1.0 (2023)

The original Chips Act mobilised more than €43 billion in public and private money to lift Europe's share of cutting-edge chip production to 20% by 2030. By 2024, the Commission's own forecast put the likely share at 11.7%, and the European Court of Auditors said the 20% goal was out of reach.

Then

Some flagship projects, such as Intel's planned Magdeburg fab, were delayed or scaled back. State aid approvals reached only about €13.75 billion by early 2026.

Now

The Commission concluded the original act was too supply-focused and lacked guaranteed European demand for the chips it subsidised.

Why this matters now

Chips Act 2.0 is the explicit course correction: faster permitting, a demand-side push from European buyers, and a stated 'priority' for an advanced foundry inside the EU.