Taiwan's ASE announced it is expanding production capacity to meet surging demand for artificial intelligence technologies, underscoring Asia's growing dominance in the semiconductor supply chain that underpins Europe's digital ambitions.
The expansion, reported by Reuters on June 24, 2026, is driven by demand for AI technologies and related applications. ASE, a major player in chip assembly and testing, is responding to market forces that have made semiconductor manufacturing increasingly concentrated in Taiwan — a geopolitical vulnerability European policymakers have struggled to address despite years of discussion about strategic autonomy.
Europe's Dependency Problem
The announcement highlights Europe's continued reliance on Asian semiconductor suppliers at a time when the European Union has committed billions to building domestic chip production under the European Chips Act. While Brussels has pledged substantial subsidies to attract chipmakers, the reality is that companies like ASE are expanding in Taiwan to serve global AI demand — including European customers who have no alternative suppliers.
European industry depends on these advanced chips for everything from automotive manufacturing to telecommunications infrastructure, yet the continent produces less than 10 percent of the world's semiconductors. The ASE expansion reflects commercial decisions being made thousands of kilometers from Europe, with implications for European competitiveness that national governments cannot control through regulation alone.
The Competitiveness Gap
Taiwan's ability to rapidly expand semiconductor capacity stands in contrast to Europe's slower, more heavily regulated approach to industrial policy. While the EU debates subsidy frameworks and environmental standards, Asian manufacturers are responding directly to market demand. The speed differential matters: AI development is moving faster than European regulatory processes, and companies that need chips today cannot wait for European fabs that may come online in three to five years.
The report was filed by Wen-Yee Lee, with writing by Ben Blanchard and editing by Kate Mayberry and Ronojoy Mazumdar.
Why This Matters:
ASE's capacity expansion reveals the structural challenge facing European technology policy. The continent's digital transformation — from AI adoption in manufacturing to autonomous vehicles — depends on semiconductor supply chains concentrated in Taiwan and other Asian locations. This creates both economic and security vulnerabilities that European strategic autonomy initiatives have not yet addressed effectively. For European industry, the message is clear: global chip supply will continue to be determined by decisions made in Taipei and Seoul, not Brussels or Berlin. The competitiveness implications are significant. European manufacturers competing in AI-enabled sectors face the same chip supply constraints as their American and Chinese rivals, but with less domestic production capacity to fall back on during geopolitical disruptions. National governments must balance the long-term goal of building European chip capacity with the immediate reality that their industries need access to Asian suppliers today.