A Geopolitical Race for Technological Power

The global race for technological leadership has evolved into a full-fledged geopolitical contest. The latest report from Natixis CIB, led by Alicia García Herrero, Chief Economist for Asia-Pacific and member of the Bruegel think tank, paints a clear yet troubling picture: the United States holds the lead in artificial intelligence (especially in generative AI and machine learning) and quantum computing, while China is accelerating in semiconductors. The European Union, however, seems to have pulled over on the shoulder.

Technological dominance is decided in the details: who registers the most critical patents, who adopts them fastest, and who turns innovation into marketable products. In all these fronts, Europe is moving with the handbrake on.

The Numbers That Worry Europe

One figure from the report should sound every alarm: in 2023, the EU produced only 804 critical innovations, compared to nearly 3,000 generated by both the U.S. and China.

Europe also takes longer to replicate external patents and disseminates its own innovations more slowly. This inertia reflects structural fragmentation in the single market and a lack of traction between academia and industry.

Meanwhile, the U.S. and China are exchanging and replicating innovations at surprising speed, even amid trade restrictions. The report notes that “radical innovations” flow fluidly between the two giants despite U.S. export controls on high-tech goods to China.

United States: Consolidated Leadership in AI and Quantum

In the field of artificial intelligence, the United States outpaces China in most subfields — particularly in generative AI (the backbone of language models like GPT and Claude) and quantum computing, where American labs maintain several years of advantage.

This dominance rests on a virtuous triangle: vast private capital, a tightly connected academic-industrial ecosystem, and global talent attraction. Silicon Valley, Boston, and Austin act as interconnected innovation nodes where universities, startups, and corporations exchange knowledge in real time.

China: Productive Power, Speed, and Specialization

China, however, holds control over the semiconductor production chain, a critical pillar of the digital economy. While it still depends on advanced lithography technologies produced abroad, the country dominates mass manufacturing of mid- and low-range chips essential to the global industry.

China also excels in fields such as intelligent aerial vehicles, computer vision, and recommendation systems, where its vast data volume and coordinated state strategy enable rapid progress.

The contrast with the West is striking: while the U.S. and China operate under national industrial strategies, Europe remains fragmented across 27 innovation policies.

Europe: Talent Without Scale, Strategy Without Muscle

Europe faces the risk of becoming trapped in technological dependence. It has talent, world-class universities, and cutting-edge labs, but lacks critical mass. Its R&D efforts are scattered across redundant projects, and its tech startups struggle to scale due to insufficient funding.

The result: Europe innovates but fails to capture the value. Great ideas are born in Europe but turn into products, companies, and jobs elsewhere. In AI, quantum computing, and semiconductors, the continent risks becoming a user of foreign platforms rather than a creator of its own technologies.

What This Means for Spain and the EU

For Europe — and particularly for Spain — the priority must go beyond investment. The focus must shift to execution speed and strategic coherence. It’s not enough to build supercomputers or data hubs; these must be linked to real industrial projects.

Examples like the European AI Factory for Health in Galicia or national PERTE programs are steps in the right direction, but Europe needs both scale and velocity:

  • More coordination among Member States to avoid duplication.

  • Funding mechanisms tied to outcomes, not spending.

  • Talent policies that enable fluid movement between academia, business, and government.

  • And, above all, innovative public procurement as a driver of demand.

Where Europe Can Still Win

Europe’s comparative advantage doesn’t lie in copying Silicon Valley models but in turning regulation into value.

In AI applied to healthcare, energy, or mobility, Europe can lead through its ethical and regulatory frameworks, which translate into trust, certification, and transparency. In quantum computing, the EU’s edge lies in quantum sensing and communications, areas with lower infrastructure barriers.

In semiconductors, Europe’s best opportunities lie in specialized design, edge computing, and advanced packaging, where precision and sustainability can become its distinctive strengths.

The Race Against Time

The technological gap is not static — it widens with every year Europe delays execution. The U.S. and China aren’t waiting; they advance with aggressive funding and agile policy frameworks.

For Europe, the only viable strategy is to accelerate and concentrate: fewer fragmented projects, more solid alliances, and measurable goals. In technology, those who arrive late don’t compete — they depend.

Based on the report “Radical Innovations in Critical Technologies and Spillover Effects: Where Do China, the U.S., and the EU Stand?” published by Natixis CIB.