Has it though? Last time I checked EU still is the worlds main producer of semiconductor lithography - which is arguably the basis for all tech worldwide

It hasn't. Multipolar world, expertise exists everywhere.

But user-facing innovation is coming from the US. No EU Apple, Google, Amazon. And infrastructure R&D in China is unprecedented. They are reaping a multi-decadal investment in higher education.

The US has infinite VC money, a hypercompetitive environment that rewards first-movers, an appetite for letting these first-movers reap the benefits of their monopoly, and a political class that aligns with business interests. China has a coherent STEM education story and protections/state support for key industries. The EU sits at an awkward inbetween spot. It's raison d'etre is enabling free markets, and consequently it doesn't allow national champions and strong industrial politics. But it also doesn't have the same hypercompetitive culture as the US, and it's political class is less aligned with business interests.

The thing is, I don't really want the EU to compete with China and the US on these issues. If you have one system that makes people happy, but where eggs cost 1.20€ and iPhones have a smaller screen resolution, and one where people are miserable but eggs cost 1.10€ and iPhones have a higher screen resolution, then in a free market the system that makes people miserable wins.

I believe there are hard questions, no easy answers, and the EU, being a consensus mechanism for national states that hold the power, is not the best institutional set-up to tackle them.

China, Japan and USA all have their chip machines, just ASML is making the most advanced ones.