Europe shakes off innovation gloom

The handful of U.S. firms that dominate global tech and artificial intelligence has almost universal name recognition. And it’s quite widely known that they rely on semiconductors manufactured in East Asia, mainly Taiwan.

But it’s safe to say that very, very few people realize that the world’s only maker of the complex lithography machines – used by Asian firms to fabricate the chips that power American tech advances – is headquartered in ... Europe. (The Netherlands, to be precise.)

Not knowing this little factoid is about more than industry trivia. It points to long-standing, and not entirely merited, views of the continent as an economic has-been, held back by red tape, capital constraints, and innovation inertia.

In fact, the European Union is making quiet, consistent progress in undoing both limiting perceptions and policies – even as global markets are more focused on multitrillion-dollar Wall Street listings (SpaceX this week, OpenAI and Anthropic up soon).

“Europe is no musty backwater,” The Economist stated in April. “It has the talent, resources and incentive to lead. It should start to think, and act, like it.”

And it is, especially after growing differences with its longtime trade and defense ally, the United States. These have arisen over U.S. tariffs, its talk of taking over Greenland, and its declining support for Ukraine’s efforts to combat Russian aggression.

In April, the EU updated its regulations to allow large-scale mergers. This past weekend, French mobile carrier SFR moved forward on a $23.5 billion sale to a consortium of telecom operators. A satellite joint venture and a banking merger are in the works, too.

The EU is also moving to harmonize regulations so European firms can operate under consistent rules anywhere on the continent. These include online registration within 48 hours for €100 (about $115.) (In the U.S., that process can take a couple of weeks and cost up to $300, depending on the state.)

“Enough gloom,” venture capitalist Suranga Chandratillake declared in The London Times recently. Europe’s tech sector, he noted, is worth almost $7 trillion and accounts for 15% of its gross domestic product.

Coordinating among 27 member countries, while upholding citizens’ values around the environment and social welfare, means the EU doesn’t exactly “move fast and break things,” as in Silicon Valley. But the EU’s caution might be an asset that is underrated.

“Patient capital, deep technical expertise and regulatory rigor are European strengths,” according to Arturo Bris, a finance professor and competitiveness expert. “Europe’s innovation model prioritizes long-term stability ... and is particularly strong in areas where technology intersects with social need,” such as pharmaceuticals and renewable energy, he wrote in Observer, an online platform.

As the continent slowly charts its own path toward both unity and innovation in a rapidly changing world, other countries and competitors might learn a thing or two from Europe.