A new study by DIGITALEUROPE paints a worrying picture of Europe's performance in key technology areas. Titled “The EU's Critical Gaps: Rethinking Economic Security and Putting Europe Back on the Map”, the study analyses the EU's position in eight key technology areas outlined in the EU Economic Security Strategy: semiconductors, AI, manufacturing, quantum computing, biotechnology, energy technology, space technology and advanced connectivity.
Cecilia Bornfeld Dahl, Executive Director of Digital Europe, said:
“The EU needs a new approach to economic security. The EU lags behind global rivals in seven out of eight key technologies. Diagnosing the EU's weak economic security simply as supply chain security is only a half-truth and will lead to the wrong treatment of a disease, relying solely on restrictive trade and investment measures. Ironically, this will only put further strain on European companies that are in leading positions in their fields and further weaken Europe's position in supply chains. Europe still has many strengths across the value chain: world-class research, a strong manufacturing base, a thriving scale-up ecosystem, etc. But, partly due to a lack of investment, it lacks the capacity to foster large, successful technology companies. To thrive, we need to actively 'promote' and 'partner' rather than simply focus on 'protection'. We need to enable technology companies to be born, expand and compete on the global stage, supported by partnerships with like-minded countries, while remaining in Europe. ”
Key findings of the study:
The EU is lagging behind in the technologies that matter most: Europe lags behind global rivals in seven of the eight technologies we analyzed, leading only in advanced connectivity, but even here investments and gains are mainly captured by the US. The EU has advantages in advanced manufacturing, health biotech, energy tech, space tech and quantum, but there is no room for complacency as the EU could lose ground quickly. It also lags further behind in AI and advanced semiconductors due to a lack of presence in key supply chain choke points. Investment gaps hinder innovation: The study reveals a significant lack of public and private investment, especially in several key technologies, including AI, quantum computing and space technology. For example, private investment in EU AI startups and scaleups is about one-seventh that of the US, and about one-third that of the US for quantum. This funding gap is hindering the EU's ability to develop a strong industry and compete globally. R&D capabilities not matched by commercialization: While excelling in R&D in many technology areas, including advanced connectivity, advanced semiconductors, and quantum and space technologies, the EU struggles to translate that into manufacturing and commercialization. This limits our ability to realize the full economic value of these innovations within Europe. Regulations stifle growth: Complex regulations impede European companies' ability to grow and scale, often forcing them to seek more lucrative markets. Talent shortages threaten our future: Europe faces severe talent shortages in key areas such as AI engineering, quantum computing, and additive manufacturing. This limits our ability to compete and innovate in these rapidly evolving sectors.
Promotions and Partnerships:
The study highlights the importance of strategic cooperation to strengthen the EU's position. Strengthening partnerships within the EU and with global leaders is essential to limit supply chain disruptions and build a competitive technology ecosystem. Furthermore, the EU's leadership in developing global standards could give it a significant advantage.
