After analysing strengths and weaknesses in the United States and European Union’s digital value chains, this paper compares these countries’ industrial policy strategies in the semiconductor industry. We study the characteristics of the US CHIPS Act and the EU Chips Act by analysing the protagonists, objectives, instruments, conditionalities, and beneficiaries of these industrial policy initiatives. The EU has major vulnerabilities across the entire value chain. The United States is in a stronger position, but it is increasingly challenged by China’s fast expanding capabilities. Both industrial policy initiatives focus predominantly on boosting the capacity for intermediate products. The United States employs a centralized model, with robust funding for direct subsidies and stringent conditionalities, including on labour standards and domestic production mandates. Conversely, the European Union relies on a decentralized approach where the European Commission operates mostly as an orchestrator of cross-country and cross-sectoral production networks. A primary role is assigned to member states which provide targeted funding to firms under the framework of the Important Projects of Common European Interest. The EU's conditions are notably less stringent, which may impact the effectiveness of its strategy. The analysis highlights the EU's need for increased supranational funding for digital industrial policy to strengthen its position between global leaders and emerging powers.

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