I'd imagine it won't replace the entire supply chain in one go (although I think quite a bit of semiconductor tooling is already manufactured in the EU), but I think it's a step on the path towards that. Which is probably a good thing considering how fragile it appears some of our hyper-efficient globalised supply chains can be

That part is solved:

(1) German BASF is one of the manufactures for "semiconductor chemicals".

(2) More important: Getting parts from Malaysia (etc) is no issue as I don't think they plan to attack any neighboring countries in the next decade. Also, they did not start a trade boycott against Lithuania just over the name of an trade office.

If there is a conflict with China, maritime routes will become much less reliable than they are now, after 75+ years of peace and 30+ years of a unipolar international system.

Plus, I suspect that in a The West vs China war a country like Malaysia will think twice before choosing a side, and I'm afraid they won't choose the West by default.

And the possibility port blockades.

Exactly.

Malaysia can still be a partner, however this is a big step that opens the door for replacing labor in distant countries with another EU neighbour. This is good for the entire EU.

Self sufficiency for products that are the lifeblood of your economy is attractive to governments.

Any of the things you describe can easily be replicated locally, fabs much less so.

Even more to the point is that it gives countries the chance to develop a high value competitive advantage that others cannot replicate.

Places like the EU would argue that they have the human capital to compete globally but they don't have the industry because of historical factors.

They're also creating a packaging center in Italy

https://gamingnews.cyou/here-is-intels-plan-for-europe-a-pac...

And an R&D center in France

https://www.intel.com/content/www/us/en/newsroom/news/eu-new...

There's a lot of assumptions there. Why don't you assume that it's about having as much of the supply chain locally?

Assembly services are all over the place. Here's a large one in Escondido, CA which is commonly used. https://www.qptechnologies.com/about-us/company-info-bios/

I think sourcing those things would be a lot easier than building a fab, on a time scale.