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European Defence Industry Faces Critical Need for Electronics Made in Europe, According to New Report by IPC
March 18, 2025 | IPCEstimated reading time: 2 minutes

Europe is becoming more reliant on electronics manufactured outside of Europe, potentially leading to vulnerabilities that impact regional security, according to a new report by IPC, the global electronics association together with DECISION Etudes & Conseil. The report, "Securing the Electronics Value Chain: The Blind Spot in the European Union’s Industrial Defence Strategy?" warns that without urgent action to strengthen the European electronics manufacturing ecosystem, the region could be critically vulnerable to supply chain disruptions for important equipment including drones, radar systems and secure communications. The report outlines 13 actionable policy recommendations, including an urgent review of electronics capacity, new financing allocations, increased European defense production, and improved access and scaling opportunities for SMEs.
European defence readiness has never been a greater priority, but key links in the defence industry’s value chain might still leave it critically vulnerable. Electronics are now foundational to the manufacturing across all industries, including defence. They now account for 17% of defence equipment value, up from 10% in 2000, and are projected to reach 25% by 2035-2040. The growing importance of electronics in defence is seen in platform upgrades for fighter jets, military communications, missiles or radar systems. Despite this, Europe’s electronics manufacturing base has shrunk dramatically, with its share of global electronics production down more than 35%, to just 11.6% of global electronics production in 2023.
“Europe’s security and defence readiness will increasingly be determined by our ability to produce critical electronics in Europe, yet that is where we are vulnerable,” said Alison James, Senior Director, European Government Relations, IPC. “Without a resilient electronics supply chain, there is no resilient European defence sector. The defence sector is of immediate strategic importance for Europe to face the new realities of geopolitical shifts. The report calls on the EU to embed electronics at the core of its future defence industrial policies as steps are taken to build out the region’s industrial base”.
The study highlights three high-risk layers of the electronics value chain:
- Advanced packaging: only 8% of global defence-related production occurs in the EU.
- Printed Circuit Boards (PCBs): just 6% of global defence-related PCBs are produced in Europe while the PCB industry is at a critical juncture with a risk of disappearing entirely from the region.
- IC substrates: only 4% of global defence-related production takes place in the EU.
The European Electronics Manufacturing Industry has called for an Electronics Manufacturing Strategy to support a sector crucial to meeting Europe’s industrial and regional security needs. Electronics manufacturing is a horizontal industry enabling not just the defence industry, but innovation and manufacturing across every sector of Europe’s economy. Electronics are essential to secure and reliable defence and aerospace systems, medical technologies, and communications infrastructure. Moreover, electronics are crucial for the digital and green transitions and a necessity for a great majority of products to sustain modern daily life.
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