The European Union has put forward an ambitious $2 trillion plan to recover from its Covid-19 economic decline, and bolster its sovereign manufacturing.

As part of the Covid-19 economic recovery package, the $150 billion 'Digital Compass' initiative seeks to improve member states' digital infrastructure, and digital skills.

Within that is an effort to produce at least 20 percent of the world's semiconductors (by value) by 2030, up from 10 percent last year.

A homegrown semiconductor industry for the EU

The plan still requires final approval, and could change. The effort comes as the world faces an acute semiconductor shortage that has left crucial components in short supply, and meant that automotive manufacturers have left factories to idle.

Beyond the immediate supply issues, the EU is likely concerned that more than 70 percent of the world's chips come from one country - Taiwan. In an increasingly tense geopolitical environment, Taiwan's perilous proximity to China is particularly concerning.

The US also is in the midst of launching an aggressive domestic chip program, while China has sunk tens of billions into kickstarting its own efforts. But with a single fab costing as much as $40bn over a decade, and the number of companies able to develop cutting edge chips declining, large amounts of money can't easily solve the problem.

The EU is also in talks with the largest chip manufacturer TSMC, and rival Samsung Foundries, about setting up domestic facilities - with the help of large tax incentives.