Europe is conducting a public debate on technological and military sovereignty with a determination the continent has not seen in decades. The EU Chips Act is being implemented, the European Defence Industry Programme (EDIP) is being launched, and successive Member States are announcing record defence budgets. Yet behind this narrative lies a paradox that should keep every procurement strategist in the defence, aerospace and medical sectors awake at night.
The paradox is simple: the most advanced processor manufactured in a European fab will not function without a piece of copper-glass-epoxy laminate that Europe has effectively stopped producing. The printed circuit board (PCB) is the physical platform of every electronic system — from a Patriot missile to a cardiac pacemaker. And Europe’s share of global “bare board” PCB production has fallen from 16% in 2000 to roughly 2.3% in 2022, and it continues to shrink. The number of European manufacturers has collapsed from 555 to fewer than 180 facilities.
This is not a story about a cyclical downturn. It is a story about the structural dismantling of a critical industrial capability, taking place against the backdrop of grand declarations about strategic autonomy. The analysis below sets out where the problem actually lies, why it cuts far deeper into the defence sector than official communications acknowledge, and — most importantly from a commercial standpoint — why the role of Electronics Manufacturing Services (EMS) providers is shifting from execution to strategic supply chain stewardship.
The sovereignty paradox: billions for chips, pennies for boards
The European Commission has set itself an ambitious target in rebuilding semiconductor capability on the continent. Tens of billions of euros in public and private investment have been mobilised behind this goal — Intel’s facility in Magdeburg, TSMC in Dresden, expansions at STMicroelectronics and Infineon. The logic is sound: without sovereign silicon production capability, Europe remains a political supplicant to Taiwan, Korea and the United States.
Yet a fundamental fact is being overlooked in this entire equation. A semiconductor without a PCB is just a piece of silicon. For a processor to become a component of a defence system, it must be mounted on an advanced, often multilayer printed circuit board that distributes power, routes gigahertz-frequency signals, dissipates heat and provides the mechanical foundation of the entire device. It is the laminate that determines the impedance of a radar transmission line, the thermal reliability of avionics, and the radiation tolerance of satellite electronics.
And this is precisely where Europe has been losing ground for two decades. According to reports from IPC and the Global Electronics Association, the EU today accounts for only around 2% of global “bare board” PCB production and approximately 11.5% of global electronic assembly. In the defence-grade PCB segment, Europe’s share is estimated at roughly 6%, and in advanced packaging below 8%. In strategic terms, these figures mean one thing: dependency.
Furthermore, approximately 65% of all PCBs imported into the EU originate in China. The remainder is distributed mainly between Taiwan, South Korea, Japan and — to an increasing extent — Vietnam. The European Chips Act, however necessary, is therefore akin to building a state-of-the-art airport without access roads. Without a parallel industrial policy addressing PCBs, substrates and packaging, the billions invested in silicon will become trapped in the same geopolitical dependency they were meant to dismantle.
This is precisely what an increasingly vocal segment of the industry is now flagging — the Global Electronics Association is openly calling for a “Chips Act Plus” that addresses the entire electronics pyramid rather than just its peak. The question is whether Brussels will react in time, before the foundation collapses.
The environmental squeeze: how EU standards erode competitiveness
To understand why European PCB production is in retreat, one must step inside the factory floor. Manufacturing a laminate and a finished board is not a clean precision-assembly process — it is process chemistry in the full sense of the term. A board must be laminated under pressure and heat, drilled with thousands of microvias, electrochemically metallised, etched in acid baths (typically copper(II) chloride or ammoniacal solutions), coated with soldermask, and finished with chemical gold, silver or tin.
Each of these stages generates wastewater contaminated with heavy metals, spent acids, formaldehyde fumes, galvanic sludges and photolithographic chemistry waste. Surface finishes and the laminates themselves have for decades relied on substances from the PFAS family (per- and polyfluoroalkyl substances), which remain indispensable in high-performance high-frequency laminates of the PTFE class.
This is where two unavoidable fronts collide. On one side, socially and medically justified European regulations: REACH, the Industrial Emissions Directive, the EU Emissions Trading System, and the strict IPPC integrated permitting regime. On the other, the universal PFAS restriction proposal submitted under REACH in January 2023 by five Member States (Germany, the Netherlands, Sweden, Denmark and Norway), potentially covering several thousand substances. ECHA’s decision is still pending, but the mere prospect of it is already reshaping the investment plans of premium laminate manufacturers.
Add to this the cost of electricity in the EU, which since 2022 has stabilised at levels several times higher than in mainland China and Vietnam. Electroplating and laminating ovens are energy-intensive processes. Once one factors in waste disposal costs, environmental levies and labour, the European-made PCB becomes structurally uncompetitive in the volume segment.
The result? A wave of closures, symbolised by Würth Elektronik’s decision. In October 2024 the company announced the closure of its PCB facility in Schopfheim, with production ultimately wound down in 2025. The official statement from the board is brutally candid: cost pressure in the standard volume PCB segment leaves no alternative. Würth is not an isolated case — European industry statistics show a sustained, double-digit contraction of the regional PCB production base, and the Central European segment has recorded a cumulative market decline of well into double digits in recent years.
The mechanism is therefore simple and merciless. Europe imposes on its own producers environmental costs that its Asian competitors do not bear. It then imports finished boards whose environmental footprint is often significantly worse than domestic production — except that this footprint sits outside the European accounting framework. It is the export of emissions and the import of geopolitical risk in a single move.
The point here is not to argue for dismantling environmental standards. The point is to recognise that without mechanisms to level the playing field — an extended CBAM covering electronics, strategic IPCEI programmes for the PCB base, or direct co-financing of environmental modernisation at existing facilities — Europe’s remaining factories will be gone within a decade.
The geopolitical detonator: when a political crisis becomes a supply crisis
Europe’s structural weakness in PCB is not a theoretical problem that can be deferred to successive Commission mandates. It is already intertwined with a cascade of geopolitical events that expose the fragility of the global supply chain for raw materials.
In the spring of 2026, the escalation of conflict in the Middle East and a strike on the Jubail petrochemical complex in Saudi Arabia halted production of approximately 70% of the global supply of high-purity PPE resin (polyphenylene ether) — a key component of high-frequency laminates used in 5G infrastructure, AESA radars and AI servers. The market consequence: premium-segment PCB prices jumped 30–40% in April, with copper foil and glass fibre quotations rising in parallel.
For a European OEM in the defence sector, this translates into very concrete risk. A cruise missile, a reconnaissance drone, a Link-16 terminal, a tactical SDR radio — each of these devices contains anywhere from several to several dozen multilayer printed circuit boards built to IPC-6012 Class 3, often manufactured from high-frequency laminates available from only a narrow group of global producers. Their production is today located almost exclusively in the United States, Japan and Taiwan. Europe does not possess a domestic producer of defence-grade high-end laminates at a scale capable of supplying its own arms industry.
A blockade of shipping in the Taiwan Strait, escalation of sanctions on China, or new export restrictions imposed by Beijing in retaliation for European measures against electric vehicles — each of these scenarios leads to the same conclusion. The European defence industry, despite record budgets, is producing weapons systems based on components sourced from high-risk regions for which there is no physical alternative at continental scale.
This is not a hypothesis. It is the operating reality in which every tender from MON, BAAINBw, DGA or Försvarets Materielverk is now written. The question is: how does a specific OEM secure its production in this environment?
And this is where the narrative must turn. Because drawing panicked conclusions from these facts would be a mistake.
EMS as a crisis shield and stability guarantor
In public debate, two concepts — PCB production and electronic assembly (EMS) — are routinely conflated. In reality, the crisis affecting European producers of “bare” laminate has little direct bearing on the condition of European contract electronics assemblers. These are two different businesses, two different environmental profiles and two different value chains.
A PCB manufacturer operates a chemical facility. An EMS provider operates an assembly line — SMT machines, solder paste printers, reflow ovens, THT stations, conformal coating booths, in-circuit testers and AOI systems. Solder pastes are lead-free per RoHS, no-clean fluxes eliminate halogenated solvents, conformal coatings are available in water-thinned formulations. The environmental profile of a modern EMS facility in the EU fits within REACH/RoHS standards without any structural strain.
Consequently, the European EMS sector is stable, growing, and not subject to the same erosion as laminate production. According to forecasts by Fortune Business Insights and Future Market Insights, the global EMS market will grow from roughly USD 600 billion in 2025 to close to USD 1 trillion by the mid-2030s. Europe, with a roughly 11.5% share of global assembly, is a clear beneficiary of reshoring and nearshoring trends — particularly in high-value-added segments: defence, aerospace, medical, premium automotive and industrial.
From the OEM’s perspective, this entails a fundamental repositioning. A modern EMS provider in Europe is no longer merely a subcontractor for assembly operations. It is increasingly becoming a strategic supply chain integrator that absorbs market complexity on behalf of its customer. And this is today the most valuable service an EMS can provide — far more valuable than the unit cost of a minute of pick-and-place machine time.
In this context, it is worth understanding the difference between a transactional EMS and a partner-grade EMS. The first executes orders in accordance with the customer’s documentation and procurement specification. The second works with the customer on procurement architecture, market signals and project resilience to disruption. In the turbulent PCB and component market environment, this distinction translates directly into production continuity.
Source diversification and dual sourcing
The first and most important layer of protection is a deliberately structured supplier base for laminates and PCBs. The principle is straightforward: no critical component should have only one source, and no source should originate exclusively from a single geopolitical region. Implementation is considerably harder and requires years of relationship building and audit discipline.
At the model level, a well-designed supplier base rests on three complementary geographic pillars.
The first pillar consists of audited partners in safer Asian regions outside mainland China — Taiwan, South Korea, Vietnam and selected Thai facilities. Taiwan and Korea deliver top-tier technological quality at competitive cost levels, while the Vietnamese PCB sector, developed for years by Japanese investors, has become a genuine alternative to mainland China in the volume segment. Each such supplier should pass a qualification process that includes a technical audit, a quality system audit (ISO 9001, IATF 16949, AS9100 where applicable), pilot batch testing and material certificate verification.
The second pillar consists of selected European PCB factories — the few that have survived and that specialise in premium production for defence, aerospace and medical applications. Working with them is more expensive on a unit basis but indispensable for projects involving ITAR requirements, classified clauses, Nadcap certification or “EU-only” sourcing obligations. A defining feature of this segment is that relationships with these facilities cannot be built ad hoc — they require years of order continuity and a jointly developed quality history.
The third pillar is strategic inventory buffering. For projects with predictable volume and critical production continuity, maintaining a safety stock of laminates and long-life components is a rational policy — particularly for those with 15–20-year lifecycles characteristic of the military sector. Vendor Managed Inventory, last-time-buy programmes and multi-year allocation contracts that grant the buyer production priority even under conditions of market shortage are increasingly becoming the industry standard.
In practice, these three layers function as a system of communicating vessels. When one region suffers a geopolitical shock, another absorbs volume. When both fail simultaneously, the buffer stock provides months of runway for reconfiguration. This is the model that the best EMS providers in Europe are now implementing as a default — and it is the question every OEM customer should be asking of their current assembly partner: from how many independent geographic regions are the laminates used in my product sourced, and how many days of production does my current safety stock cover.
Redesign and DfM engineering as an insurance policy
The second layer of protection is deeper and frequently undervalued. It concerns designing the printed circuit board in a way that does not lock the customer into a single specific laminate or a single specific supplier. This is the role of Design for Manufacturability engineering.
In practice this translates into several concrete workshop principles that a good engineering team brings to the project at the documentation review stage.
First principle: specifying the laminate by class rather than by a specific manufacturer’s datasheet. Instead of specifying a single material from one supplier, one specifies the functional parameters: dielectric constant within a defined tolerance range, loss tangent at a given frequency, glass transition temperature, CAF resistance class. This makes equivalents from multiple producers acceptable and enables selection by availability and price without triggering requalification of the finished product.
Second principle: trace geometry resilient to the production tolerances of different fabricators — conservative pad-to-track distances, realistic soldermask margins, IPC classes specified pragmatically rather than maximalistically. A board designed at the edge of one factory’s capabilities is a board the second factory will be unable to produce.
Third principle: a stack-up designed to be executable in at least two classes of copper weight and prepreg thickness, broadening the qualified fabricator pool from a handful to over a dozen.
Fourth principle: component selection that preserves form-fit-function alternatives — every critical element should have at least one approved substitute in the BOM database. Deliberately moving away from single-source components wherever the technical requirement is not absolute is one of the cheapest forms of production insurance available.
The commercial impact of this discipline is measurable. In projects executed according to DfM methodology, switching a laminate supplier or a component in a crisis situation takes days or weeks, not months, and does not require revalidation of the finished product. For a medical device under MDR Class IIb, or for an aerospace subassembly, that is the difference between production continuity and a multi-quarter certification stoppage.
DfM is thus, in effect, a geopolitical insurance policy embedded directly in the device’s design. And it is a policy that is cheapest to underwrite at the prototype stage — and most expensive to underwrite after the first supply chain shock.
Conclusion: sovereignty is a question of business partner selection
The conclusions of this analysis are uncomfortable but clear. Europe will not rebuild a sovereign “bare board” PCB production base at a scale that would neutralise its dependency on Asia — certainly not within the coming decade. The structural factors — energy costs, environmental regulation, labour costs, lack of economies of scale — are too deep to be reversed by subsidies alone. The EU Chips Act, while necessary, addresses only the top of the pyramid and leaves its foundation in the hands of non-EU producers. Global supply chains for laminates and components will be exposed to increasingly frequent geopolitical shocks in the coming years — the 2026 PPE resin crisis is not an exception but a foreshadowing of the new normal.
Yet from the same facts emerges a conclusion opposite to panic. The security of electronics production in Europe today does not hinge on whether Brussels adopts another support package. It depends, to a substantial degree, on which EMS partner a given OEM chooses — here and now, in the live procurement process. Because it is the EMS provider, not the regulator, that is the entity actually managing component risk on the customer’s behalf.
A mature EMS firm possesses what an individual OEM typically cannot build on its own: a diversified, audited supplier base for laminates across multiple continents, long-term relationships with European premium manufacturers, the capability to buffer strategic inventory, DfM competence that decouples projects from a single source, and a procurement team that monitors market signals in real time. The sum of these capabilities forms a real buffer — one the customer does not see in the price list during calm periods, but which protects production during periods of crisis.
TSTRONIC observes these market shifts from inside the industry and treats the conversation about supply chain risk as a natural element of the customer relationship. Information flow, engineering discipline at the DfM stage, transparency regarding component origin and a partnership approach to long-term planning — these are the dimensions of cooperation that, in the conditions of 2026, determine whether a customer’s production programme will withstand the next market shock or not.
If your organisation is preparing for a multi-year production programme whose continuity is critical, it is worth subjecting the current supply chain to an honest audit. Not in order to alarm the board with yet another risk presentation, but in order to know precisely where the single-sources sit, which alternatives are realistically available, and how deep the exposure to individual geographic regions actually runs. We invite you to a conversation about what such an audit could look like in relation to your specific product — and which elements of cooperation with an EMS provider are worth discussing before the next crisis puts them on the agenda.
Europe’s technological sovereignty will or will not be built at the level of directives. Your company’s production sovereignty, on the other hand, is built in every contract with an EMS provider — the one signed today and the one to be signed tomorrow.
Sources:
Global Electronics Association (formerly IPC) – “An IPC Report on EU Industrial Policy”, July 2023; industry position paper “Europe needs a Chips Act Plus”.
Evertiq – “65% of all imported PCBs in Europe come from China”; “Europe loses another PCB factory” (Würth Elektronik closure coverage).
PCIM / Mesago – “What’s driving the European PCB industry crisis?”.
PCD&F (Printed Circuit Design & Fab) – “Würth Elektronik finalizes Schopfheim PCB plant closure”; “There is no drop-in replacement for China PCB manufacturing – yet”.
Würth Elektronik – official press releases regarding the consolidation of production at the Schopfheim site (October 2024 and 2025).
European Commission, Directorate-General for Communications Networks, Content and Technology – materials related to the European Chips Act.
Electronics.org / Global Electronics Association – “EDIP opens the door: EU funding now available for defence electronics”.
DigitalEurope – position paper “Chips Act 2.0: from emergency response to strategic industry development”.
Connect Electronics – “The European electronics industry risks falling behind”.
EPP Europe – “Decline in European electronics manufacturing threatens EU goals”.
GlobalSMT – “The European PCB industry 2026”.
European Chemicals Agency (ECHA) – dossier on the universal PFAS restriction under REACH, submitted by Germany, the Netherlands, Sweden, Denmark and Norway, January 2023.
European Commission, DG Environment – materials related to PFAS policy and REACH revision.
Reuters – “Iran war disrupts the circuit board supply chain, raises costs for tech firms”, April 2026.
Manufacturing Digital – “Iran war: PCB manufacturing faces supply shortages”.
The Silicon Review – “Semiconductor supply chain disrupted by Iran war as PCB prices soar”.
Fortune Business Insights – “Electronic manufacturing services market size, forecast 2034”.
Future Market Insights – “Electronic manufacturing services market trends 2025–2035”.
Grand View Research – “Electronic contract manufacturing & design services market report”.
Industry standards: IPC-A-610, IPC-6012 (Class 2 and 3), IPC-2221, AS9100D, IATF 16949, ISO 13485, MDR Regulation 2017/745, RoHS Directive 2011/65/EU, REACH Regulation 1907/2006.
