Dual-Use by Design or by Default?
Structural Misalignments in EU Semiconductor and Defence Policy Integration, 2023–2027
The European Union has moved rapidly from treating semiconductors as a supply-chain vulnerability exposed by the 2020–2022 shortage to framing them as a strategic asset embedded in technological sovereignty and defence readiness. This shift has produced a visible convergence between civilian semiconductor policy, centred on the EU Chips Act, and defence-industrial policy, structured around the European Defence Fund and the European Defence Industry Programme. However, this convergence remains largely rhetorical at the level that matters for industrial execution. The concept of “dual-use” has been elevated to a central organising principle, yet its operational meaning is unclear. In practice, the EU is attempting to align two policy architectures that were designed for different objectives, governed by different risk assumptions, and oriented toward different end users. The resulting configuration raises a fundamental question: whether Europe is building a semiconductor base that can sustain defence capabilities under conditions of geopolitical stress, or whether it is extending a civilian industrial policy framework and retrospectively attributing defence relevance to it without the institutional mechanisms required for actual military deployment.
The report is structured to address this question through a systematic reconstruction of the semiconductor–defence nexus from a Defence Finance Monitor perspective. It begins by analysing the transition from shortage management to strategic sovereignty framing, establishing the conceptual foundations necessary to distinguish between civilian innovation policy and defence-industrial policy. It then examines in parallel the institutional architecture of the EU Chips Act and the governance, funding logic, and access conditions of EDF and EDIP. The core sections identify the structural misalignments between these systems across governance, TRL progression, industrial incentives, access rules, and demand formation. An empirical analysis tests these misalignments through concrete cases in advanced packaging, photonics, and nanoelectronics pilot lines, followed by a comparative assessment of the United States’ approach to defence-oriented semiconductor capacity. The report concludes with scenario analysis linked to the emerging Chips Act 2.0 debate and evaluates the implications for the European Defence Technological and Industrial Base, with a final judgement on whether the current framework constitutes a credible path toward defence-relevant semiconductor sovereignty.