Rethinking EU Tech Policy: Lessons from Asia’s Success
The European Union is often compared to the United States and China as a technological power. For example, in Digital Empires, Professor Anu Bradford discusses three digital models: the free market-driven US model, the state-led Chinese model, and the citizen-centric EU model. EU politicians also frequently emphasize the importance of catching up with Washington and Beijing in emerging technologies. For instance, the Draghi Report states that “closing the innovation gap with the US and China, especially in advanced technologies” is crucial for driving European economic growth. The underlying assumption is that the EU is a similar beast to the US and China, and with the right conditions and strategies, it could compete with them in the realm of great power technological competition.
However, this outlook misinterprets how tech power works and overlooks the existing strong asymmetry in technological power between the EU vis-à-vis the US and China. The EU is currently behind the US and China in several key technological indicators. Of the 30 largest tech companies by market capitalization globally, only two are European. In 2024, the US produced 40 notable AI models and China produced 15, while the EU produced three. In 2016, China surpassed the EU in gross domestic expenditure on R&D and is now on par with the US. Moreover, in 2023, China’s growth in R&D expenditure was 8.7%, compared to 1.6% in the EU.
Beyond lagging indicators, it is important to understand what the EU actually is in geopolitical terms: a hybrid creature—stronger than a typical middle power, but falling short of being a fully unified great power. Thanks to the Union, the EU has advantages in pooling resources and aggregating power in comparison to other middle powers. However, the EU has never become a sufficiently integrated actor comparable in economic, demographic and military terms to superpowers such as the US and China. There are no signs that it will achieve profound integration in the near future, especially with the rise of integration-skeptic far-right forces.
In the current geopolitical environment, major technological powers such as the US and China aim to be hegemonic leaders in emerging and disruptive technologies like AI, quantum or biotechnology. They seek to be the dominant actor in these sectors to maximize economic benefits and gain geostrategic leverage through control of critical technologies. The EU has also been working towards a similar goal. This is reflected in some of the EU policies and plans. For example, the European Chips Act aims to increase the EU’s global market share in semiconductors to 20%. However, the EU’s share in chips actually decreased from 9.9% in 2019 to 9.8% in 2022 and, according to a report from the European Court of Auditors, is only expected to increase to 11.7% by 2030. The report also states that the European Chips Act was “prepared in urgency” and without “clearly defined targets”. In fact, the European Chips Act was a reactive response to similar initiatives in the US (the U.S. Chips and Science Act) and long-term initiatives and subsidies in China.
To increase its influence in technology, the EU should stop comparing itself with the US and China. It should consider adopting a different path: thinking strategically rather than thinking big. There are countries beyond the US and China that have been able to benefit from the complexity of current technological value chains and have positioned themselves as critical and indispensable nodes, without the need to seek absolute domination. For the EU, a more realistic and effective model, one that could provide more economic benefits and more geopolitical leverage, is the one represented by East Asian middle tech powers: Japan, South Korea and Taiwan.
The Silicon Cats
The three Silicon Cats—Japan, South Korea, and Taiwan—are not big powers. A cat is not as powerful or dominating as an eagle or a dragon. However, following Deng Xiaoping’s metaphor, a cat is adaptive, smart and focused on its goal: catching mice. These middle powers do not attempt to compete with big beasts such as Washington and Beijing in controlling key technological and digital sectors. Instead they play a different game. Their objective is not to become giants but to become indispensable.
Japan, South Korea and Taiwan have taken advantage of the complexity of existing tech value chains and international innovation ecosystems. Rather than striving for hegemony in whole sectors, they specialize and dominate crucial nodes within the value chain that are essential to entire industries. Their game is not to own and control the entire factory but to be the ones providing the small yet irreplaceable component without which the factory cannot function.
Controlling a critical part of the supply chain provides leverage due to its irreplaceability, which can be translated into economic and geopolitical power. The Silicon Cats’ moderate economic size is amplified by their essential role in certain technology components where they excel. Their influence in technology does not come from overwhelming dominance like that of the US and China, but through strategic specialization. Thus, positioning becomes more important than size.
Take the semiconductor industry as an example. Japan is a leader in certain semiconductor equipment and silicon wafers (53%) and photoresists (50%). South Korea dominates the memory chips sector, with 60% of the market share of DRAM and NAND chips. Taiwan is a leader in advanced chip manufacturing, with more than 90% of the most advanced semiconductors produced on the island. Strategic positioning in these critical sectors and processes provides advantages and leverage.
However, this does not mean they are immune to external pressures or coercion. For instance, the Taiwanese chip manufacturer TSMC has been compelled by the Trump administration to invest in the US. Similarly, Japan faced pressure from the Biden administration to stop selling advanced chipmaking equipment to China. Despite not being entirely immune to external forces, the Silicon Cats' positioning as critical nodes provides them with influence beyond their economic or military size.
An “Asianized” Europe
The EU should consider adopting the targeted East Asian tech model instead of playing the game of giants of the US and China. Europe is already an influential player in certain technological segments of the global value chains. Going back to the semiconductor industry, the EU excels in advanced manufacturing equipment, with the Dutch company ASML leading the market, and holds a strong position in high-purity materials and automotive chips. Dominance in these niche areas provides geostrategic power to the EU. The same logic could be extended to other technological industries and innovation sectors. Therefore, identifying critical chokepoints characterized by their complexity and indispensability should be a key objective of the EU. Rather than promoting industrial policies aimed at building industries as a whole, such as the European Chips Act, a more targeted approach may be more realistic and advantageous.
However, this requires a change of culture and self-perception. Europeans need to stop seeing themselves as a sluggish giant and instead embrace the role of an adaptive, strategic middle power. Obsessing on emulating the US and China will only perpetuate the mostly reactive tech policies that the EU has adopted in recent years. Conversely, following the example of the Silicon Cats requires less economic brute force and more long-term strategic planning. It entails combining the mission-oriented nature of industrial policy with the advantages of globalization and international supply chains. Japan, South Korea and Taiwan have historically succeeded by combining state capacity and integration into international markets. Their technological success has arisen from this balance between the market and the state.
Of course, following the Silicon Cats model will not solve all problems. The EU will continue to face challenges such as conflicting priorities among member states, fragmented capital markets and a low rate of talent attraction. Nevertheless, considering and studying the models of Japan, South Korea and Taiwan may help the EU in setting more realistic goals and avoiding the trap of attempting to lead in all areas, while the gap with the US and China continues to widen.
Javier Borràs Arumí is a researcher and editor at CIDOB, focusing on the impact of emerging technologies on democracy and geopolitical competition. He also researches relations between the European Union and China.
He has worked in research at IESE Business School's PPP for Cities, as an external consultant for the European Commission, and as a researcher at the Center for the Study of Democracy in Bulgaria. He also worked as a correspondent for the EFE news agency in Beijing and has contributed as a columnist to newspapers such as El País, Diari ARA, El Mundo, and La Vanguardia.
He holds a Master's degree in Public Policy from University College London and a Bachelor's degree in Journalism from the Autonomous University of Barcelona, with a one-year academic exchange program at the Pontifical Catholic University of Chile.
The opinions expressed in this blog are solely those of the author and do not reflect the views of EU-VALUES Network.