European Commission prepares Chips Act 2.0 to boost semiconductor resilience

The European Commission is preparing a Chips Act 2.0 aimed at strengthening Europe’s semiconductor resilience, reducing strategic dependencies, and supporting technological sovereignty.

The initiative builds on earlier legislation introduced after pandemic-related supply chain disruptions, but seeks to address persistent gaps in advanced chip manufacturing and fragmented governance across Member States.

A key focus of the revised framework is expanding Europe’s capacity in advanced semiconductors, particularly chips below 10 nanometres that are used in AI, high-performance computing, defence and advanced automotive systems.

The proposal also aims to improve monitoring of supply chains and market actors, while simplifying regulatory processes and enhancing investment conditions for strategic semiconductor projects.

Alongside production capacity, the initiative is expected to strengthen oversight of supply chain risks and improve crisis preparedness within the EU semiconductor ecosystem. Policymakers have identified limited visibility into supply-chain risks, including technology leakage and dependence on suppliers outside the EU, as a structural weakness.

The initiative is also expected to form part of the EU’s broader digital sovereignty agenda, including support for semiconductor research, chip design capabilities and cross-border industrial coordination.

Why does it matter? 

Semiconductors are essential components in technologies ranging from AI systems and telecommunications networks to defence equipment, energy infrastructure and vehicles. The concentration of advanced chip production in a small number of global locations has heightened concerns about supply-chain resilience and strategic dependencies.

By expanding manufacturing capacity and improving oversight of supply chain risks, the EU aims to strengthen its ability to withstand disruptions while supporting long-term competitiveness in a critical technology sector.

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EuroDIG 2026 debates Europe’s path towards digital sovereignty

European policymakers, technical experts, and civil society representatives debated how Europe can reduce its dependence on foreign digital technologies without fragmenting the open internet during a EuroDIG 2026 session on digital sovereignty.

The discussion reflected growing concern in Europe that heavy reliance on non-European cloud providers, AI systems, platforms, semiconductors, and digital infrastructure has become a strategic vulnerability affecting not only the economy but also democratic resilience and political self-determination.

Fabrizia Benini, head of unit for the Future Internet at the European Commission’s DG CONNECT, argued that Europe’s dependencies across the digital stack are the result of years of choosing to buy technologies rather than build them domestically. According to Benini, digital sovereignty should not mean isolation or digital nationalism, but ensuring that citizens, businesses, and governments retain meaningful choice and control over digital technologies, data, and infrastructure.

She stressed that Europe remains committed to an open, global, secure, and interoperable internet while seeking to manage strategic dependencies through partnerships with trusted countries and stronger European technological capacity.

Benini also pointed to upcoming EU initiatives, including a Sovereign Tech Package covering semiconductors, cloud and AI infrastructure, and open-source technologies. She described Europe’s regulatory framework, including the GDPR, DSA, DMA, and AI Act, as an important long-term foundation, while acknowledging that regulation alone cannot deliver sovereignty.

Several participants echoed that concern, arguing that Europe has become highly effective at regulating digital systems while still depending heavily on technologies built elsewhere.

João Gomes from YouthDIG said younger Europeans increasingly want opportunities not only to regulate technology, but also to build competitive European alternatives. He warned that Europe risks becoming ‘the world’s most sophisticated regulator’ without developing sufficient industrial and technological capacity of its own.

Open source, interoperability, and trusted infrastructure emerged repeatedly as key pillars of the European approach. Frank Kruger from Germany’s Federal Ministry for Digital Transformation and Government Modernization argued that maintaining critical open-source infrastructure is essential for Europe’s resilience, security, and innovation capacity.

Peter Janssen, general manager of EURid, linked digital sovereignty to practical user control over online identities and infrastructure. Using the .eu domain as an example, he said European users should be able to retain control over their digital presence, providers, and data through open standards and interoperable systems.

At the same time, several speakers warned against allowing digital sovereignty to become a justification for internet fragmentation or excessive state control. Elonnai Hickok, Managing Director at Global Network Initiative, stressed that Europe should continue supporting open standards, interoperability, portability, and multistakeholder governance while avoiding surveillance-heavy or protectionist approaches.

The terminology itself also generated debate. Some participants preferred terms such as ‘strategic autonomy’ or ‘digital autonomy’, arguing that ‘sovereignty’ can sound nation-centric or exclusionary. Others defended the term as necessary to describe Europe’s ability to preserve democratic self-determination in a more contested geopolitical environment.

Despite differences over terminology and emphasis, the session ended with broad agreement that Europe needs a long-term strategy combining regulation, industrial policy, open standards, digital skills, infrastructure investment, and support for European alternatives.

Participants also agreed that Europe’s approach should aim for what the session’s final draft messages described as ‘resilient openness and strategic autonomy’ rather than isolation or protectionism.

EuroDIG 2026 took place on 26 and 27 May at the Charlemagne Building of the European Commission in Brussels under the theme ‘European Voices for the Future of the Internet – Celebrating 20 Years of .eu and the Beginning of a New Internet Governance Era’.

Digital Watch Observatory followed EuroDIG 2026 through a dedicated event page, featuring session information and reporting from Brussels.

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Study says AI is rewiring global trade and reshaping economic power

A new Allianz Research report argues that AI is transforming global trade, supply chains, digital infrastructure, and geopolitical influence.

The report says AI growth increasingly depends on global semiconductor production, cloud infrastructure, hyperscale data centres, and cross-border digital services. It also argues that trade is increasingly shaped by who controls AI infrastructure, data flows, and cloud capacity.

Allianz Research says exports of AI-enabling goods rose from USD 1 trillion in 2014 to USD 3.8 trillion in 2025, accounting for 15% of global trade and far outpacing overall goods trade growth. Asia dominates the supply side, accounting for 65% of global AI-related exports and seven of the top ten exporters, led by China, Taiwan, and Hong Kong.

The report also highlights the United States’ role as a centre of hyperscale AI infrastructure. It says the US has tripled its AI-related imports since 2023 and is home to 5,427 operational data centres, equivalent to 45% of the global total.

Europe faces a different challenge. According to Allianz Research, the region has less than 10GW of operational data-centre capacity, compared with 60GW in the US, while US hyperscalers already control 35% of European computing capacity and are consolidating a 70% share of the cloud market. The report points to fragmented regulation, complex permitting processes, grid connection delays, limited funding, and the absence of a domestic hyperscaler as factors that reinforce European dependence.

The study also warns that AI diffusion could widen EU-US service imbalances by requiring recurring payments to American AI providers and cloud platforms. In a high-adoption scenario, annual payments by eurozone users to US AI services providers could rise from EUR 2.7 billion to EUR 34 billion, according to the report.

Allianz Research concludes that AI governance, industrial policy, export restrictions, subsidies, and digital trade regulation are becoming central components of global economic competition. Governments are increasingly treating semiconductors, cloud infrastructure, data centres, and AI services as strategic assets linked to national security, economic resilience, and geopolitical influence.

Why does it matter?

The report frames AI as a trade and industrial policy issue, not only a technology story. Its findings suggest that control over semiconductors, cloud infrastructure, data centres, and AI services could shape which economies capture AI-driven productivity gains and which become more dependent on foreign platforms, supply chains, and infrastructure. For Europe, the key concern is a possible double dependence on US cloud and AI services and Asian hardware supply chains.

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Taiwan says power supply ready for AI growth

Taiwan’s Ministry of Economic Affairs said the country is prepared to meet increasing electricity demand linked to the AI data centre expansion. The comments followed remarks by Nvidia CEO Jensen Huang regarding the growing energy requirements of AI infrastructure development. Huang stated that sufficient power availability would be important for continued AI-related economic growth.

Construction of Nvidia’s planned Taiwan headquarters at Taipei’s Beitou–Shilin Technology Park is scheduled to begin this week.

According to officials, four gas-fired power plants are expected to gradually enter operation by the end of 2026, adding approximately 5.2 gigawatts of electricity capacity. Additional public and private power generation projects are also planned between 2027 and 2031.

The ministry said Taiwan’s experience supporting energy-intensive semiconductor industries has informed existing infrastructure planning. Officials stated that anticipated energy demand from AI-related industries had already been incorporated into long-term planning processes.

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China pushes deeper AI integration with advanced manufacturing

Chinese Premier Li Qiang has called for deeper integration between AI and advanced manufacturing as China seeks to accelerate the intelligent upgrading of its industrial economy.

Li made the remarks during an inspection tour of technology companies in Beijing, where he was briefed on innovation and industrial development in intelligent robotics. He described intelligent robots as a key vehicle for integrating AI with advanced manufacturing.

The premier called for stronger basic research, breakthroughs in core technologies and further exploration at the frontier of intelligent robotics. He also urged faster innovation in complete machines, key components, and intelligent decision-making and control systems to support high-quality industrial development.

Li said China should make use of its large domestic market, complete industrial chains and wide range of application scenarios to expand the intelligent robotics sector. He also said enterprises should play a leading role in industrial transformation.

Companies were encouraged to advance intelligent upgrades across the full production process, including research and development, design, manufacturing, operations management and after-sales services.

Why does it matter?

The remarks show how China is positioning AI as part of industrial modernisation, not only as a digital services technology. By linking AI with robotics, manufacturing processes and enterprise-led upgrading, Beijing is reinforcing the role of intelligent systems in productivity, competitiveness and high-quality industrial growth.

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Malaysia sees AI demand supporting economic growth

Malaysia’s economic growth outlook remains positive, supported by foreign and domestic investment and continued demand in AI, data centres and semiconductors, according to Finance Minister II Amir Hamzah Azizan.

Amir Hamzah said Malaysia’s gross domestic product expanded by 5.4% in the first quarter, slightly above the earlier forecast of 5.3%, indicating continued economic momentum. He said foreign direct investment had started contributing to GDP, while domestic direct investment and public spending remained strong.

The minister linked the trend to the government’s MADANI Economy framework, saying the government is working to keep key economic drivers functioning smoothly. He also said Malaysia continues to attract investor interest as a trading nation, supported by digitalisation, data centres and AI.

AI and data centre activity remain strong, supported by Malaysia’s industrial ecosystem, particularly in the northern region. The government is also encouraging domestic investment from government-linked investment companies and government-linked companies, while focusing on income measures including civil service pay, the minimum wage and a transition towards living wages.

Infrastructure projects, including the Mutiara Line light rail transit, the expansion of the Juru interchange and upgrades to Penang International Airport, are expected to support worker and investor movement in the northern region. Utility improvements, including electricity transmission and water supply projects, are also being prioritised to support industrial activity.

Amir Hamzah also pointed to Intel’s expansion in Penang, including advanced packaging components, as further strengthening Malaysia’s position as a semiconductor hub.

Why does it matter?

Malaysia is linking AI and data centre demand to a wider industrial strategy built around semiconductors, infrastructure and investment flows. The remarks show how AI growth is increasingly tied to physical requirements such as power, water, transport and advanced manufacturing capacity, especially in regions trying to position themselves as hubs for digital and semiconductor investment.

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Republic of Korea and UAE deepen AI and semiconductor partnership through new investment forum

The Republic of Korea and the United Arab Emirates have expanded cooperation on AI infrastructure and semiconductors through a new bilateral investment forum focused on AI ecosystems, data centres and advanced chip technologies.

The forum, held in Seoul by the Republic of Korea’s Ministry of Trade, Industry and Resources alongside the Ministry of Science and ICT and the National AI Strategy Committee, brought together government officials, investors and technology firms from both countries. Discussions focused on practical cooperation across AI infrastructure, local-language AI models, semiconductors and industrial AI deployment.

A 25-member UAE delegation attended the event, including representatives from major investment and technology organisations such as Core42, MGX, Mubadala, the Abu Dhabi Investment Authority and the Technology Innovation Institute. Officials highlighted growing strategic competition around AI infrastructure and stressed the need for long-term international partnerships across the semiconductor and AI supply chain.

The discussions placed particular emphasis on low-power and high-efficiency AI infrastructure built around AI semiconductors, including neural processing units, alongside large-scale data centre development and AI service deployment. South Korean companies also presented investment proposals covering AI chips, infrastructure systems and industrial AI technologies during dedicated business sessions and networking meetings.

The initiative builds on expanding Republic of KoreaUAE cooperation following South Korean President Yoon Suk Yeol’s state visit to the UAE in 2025 and the UAE’s previously announced $30 billion investment commitment.

Officials from both sides argued that combining UAE investment capacity with South Korean expertise in semiconductors, manufacturing and AI infrastructure could support joint technology development and future expansion into global markets.

Why does it matter?

AI competition is increasingly centred on infrastructure, semiconductors and strategic investment alliances instead of only AI models and software. The Republic of Korea-UAE agreement highlights growing efforts by countries to secure influence across the global AI supply chain through cross-border partnerships involving data centres, specialised AI chips and industrial deployment.

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Canada invests in AI and quantum technology firms in British Columbia

Gregor Robertson, Minister of Housing and Infrastructure and Minister responsible for Pacific Economic Development Canada (PacifiCan), announced more than C$17.3 million in funding for eight British Columbia technology companies to accelerate the commercialisation and adoption of AI and quantum technologies.

Through PacifiCan, the federal government is supporting projects focused on robotics, semiconductor manufacturing, AI infrastructure, and quantum supply chains as part of a broader strategy to strengthen domestic innovation and sovereign technology capabilities.

A major share of the investment will support Human in Motion Robotics, which received CAD$3 million to commercialise its AI-powered XoMotion wearable robotic exoskeleton. The company plans to integrate AI into mobility systems, expand manufacturing, and move the technology beyond clinical environments into homes and community settings for people with spinal cord injuries and neurological conditions.

Another funded company, Dream Photonics, will receive more than CAD$1.1 million to establish pilot manufacturing for optical interconnect technologies used in AI and quantum chips. The project aims to strengthen Canada’s domestic semiconductor and quantum ecosystem while creating skilled technology jobs in British Columbia.

The announcement also highlighted the rapid expansion of British Columbia’s AI ecosystem, which now includes nearly 600 AI companies. Canadian officials linked the investments to broader efforts to secure domestic compute infrastructure, strengthen AI supply chains, and position Canada competitively in emerging technologies ahead of events such as Web Summit Vancouver.

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China opens a new era of computing with fourth generation quantum machine

China has launched its fourth-generation superconducting quantum computer, marking a further step in the country’s push to scale advanced computing infrastructure. Developed by Origin Quantum, the system, named Origin Wukong-180, has begun accepting quantum computing tasks from users worldwide.

The machine is built around a 180-qubit superconducting chip and integrates fully self-developed core systems, including the chip architecture, measurement and control systems, environmental support, and operating software. According to the company, the platform represents full-stack domestic capability across the quantum computing chain.

Origin Wukong-180 builds on earlier generations of the system, following the third-generation version that has already processed tens of millions of remote accesses and hundreds of thousands of computing tasks across more than 160 countries.

The company also reports milestones such as China’s first export of quantum computing services and the establishment of the country’s first quantum chip production line.

Researchers and developers view systems like Origin Wukong-180 as part of a broader shift toward practical quantum computing applications in areas such as AI, cryptography, finance, biochemistry, and engineering design, where large-scale computational power could reshape existing technological limits.

Why does it matter? 

The development signals a broader shift in global technological competition, where quantum computing is becoming a strategic layer of future digital infrastructure alongside AI and advanced semiconductor systems.

As countries race to build scalable quantum capabilities, control over this technology could influence breakthroughs in secure communications, complex simulations, and financial modelling, while also reshaping supply chains for high-performance computing.

Wider global access to such systems may accelerate scientific discovery, but it also raises questions about technological dependence, standards-setting, and long-term geopolitical balance in the digital economy.  

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Norway joins Pax Silica initiative to secure AI and semiconductor supply chains

The Pax Silixca initiative, which focuses on secure AI, semiconductor, and critical raw materials supply chains, has expanded with the addition of Norway. The partnership aims to strengthen technological innovation while protecting sensitive technologies.

Norway joins a group of 14 participating countries, including the USA, Japan, the UK and India. Norwegian officials said participation could improve market access for domestic companies operating in advanced technological sectors and strengthen economic security cooperation with strategic partners.

Minister of Trade and Industry, Cecilie Myrseth, said the initiative aligns with Norway’s goal of expanding cooperation with leading countries in AI and emerging technologies. Norwegian ambassador to the USA, Anniken Huitfeldt, is expected to formally sign the agreement on behalf of the country.

The move also complements broader Norwegian and European efforts to secure access to critical technologies and supply chains. The government highlighted initiatives linked to the European Chips Act and the EU Critical Raw Materials Act as part of a wider strategy to strengthen technology resilience and industrial competitiveness.

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