EU commission investigates impact of China’s expanding chip production

Giuseppe de vita
credit: scmp

Brussels (Brussels Morning) – The European Commission is seeking the semiconductor industry’s views on China’s expansion of older chip production amid rising tensions and potential EU measures. This comes as the EU imposes provisional tariffs on Chinese electric vehicles.

How Will the EU Respond to China’s Chip Expansion?

The European Commission announced that it has started canvassing the region’s semiconductor industry for its view on China’s extended production of older-generation computer chips. The EU Commission, the EU executive, has pursued feedback ahead of two voluntary surveys for the chip industry and significant chip-using industrial firms, due in September. The EU executive had no direct comment when reached by Media.

It is unclear what measure will result from the study but stresses between Brussels and Beijing are already increasing as the European Union aims to protect its industries from Chinese competition. The EU Commission started charging provisional tariffs of up to 37.6% on Chinese electric vehicles.

What Impact Will China’s Chip Production Have on the EU?

Trade pundits say the tariffs could be just the start of a toughened EU stance towards Beijing.

Chinese industry is supporting heavily in developing the production of older chips, comprehended as legacy chips, with support from state subsidies. That’s in part because U.S.-led regulations limit its access to buying or constructing more advanced computer chips.

In the short run, China’s acquisition will reduce its reliance on foreign chips but Western governments are nervous about the long-term implications, including possible oversupply of the chips required for countless appliances and cars.

Is China’s Chip Expansion a Threat to EU Industries?

The EU Commission’s antitrust chief Margrethe Vestager revealed in April the executive might investigate legacy chips after a session in Belgium with U.S. officials. In April, the EU Commission unleashed a 712-page report on the many layers of approval it says the Chinese government provides to domestic firms. The report included research into a broader range of industries including semiconductors, telecom equipment and renewable energy.

It is comprehended that the new chip-concentrating surveys are a fact-finding mission, broader in size than a security-focused survey transmitted by the U.S. Department of Commerce to U.S. firms.

How Are EU and China Clashing Over Semiconductor Industry?

The EU Commission has desired feedback on draft questions including where industrial companies source their chips. It is pursuing information on chip firms’ products and pricing, and assessments of the same information from their competitors, including their Chinese competitors.

For equipment suppliers such as Europe’s largest tech firm ASML ASML.AS China’s expansion of legacy chip production is an essential source of revenue that mitigates U.S.-led export regulations on more advanced technology. For chipmakers such as Infineon IFXGn.DE of Germany, STMicroelectronics STMPA.PA of France and NXP NXPI.O of the Netherlands, the picture is varied: all are significant makers of chips for cars and electrical infrastructure. They face growing Chinese competition but also do business in China.

Europe’s industrial, aerospace, automotive, health-tech and energy companies may be hesitant to disclose their use of Chinese legacy chips. They may also be unsure where the chipsets they use are created, given the cross-border, multi-step nature of chipmaking and packaging. German carmakers are objected to tariffs on Chinese EVs, given their meaningful sales in China. They have aimed to diversify their chip suppliers to include production inside and outside China and Taiwan after expensive shortages during the COVID-19 pandemic.

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Giuseppe De Vita is a journalist at Brussels Morning News, He is covering European politics, Law and Technology news. Lawyer at De Vita & Partners Law Firm specializing in Criminal Law, Military and Space Law, and Cyber Security. In April 2023, he authored the monograph "Governance in Extraterrestrial Space", showcasing his extensive legal expertise. He has acquired vast experience in handling criminal and civil matters, managing litigation before various levels of jurisdiction across the national territory. In 2010, he obtained a Master's degree in Information Technology Law. Additionally, in the same year, he served as a teacher in criminal-IT subjects at the Penitentiary Police School of Portici, providing courses aimed at officials and managers of the Penitentiary Police and the Penitentiary Administration, focusing on IT security. He also serves as a Workplace Safety teacher, conducting training courses at various organizations and educational institutions. Moreover, he is a lecturer on Anti-Corruption and Transparency. The law firm, under his guidance, assists both private and corporate clients in court, accumulating significant experience in criminal and civil disputes over the years. Furthermore, it conducts Risk Management and Compliance, Cyber Resilience, and Cyber Security activities, with a specific focus on privacy protection (EU Regulation 2016/679 - GDPR). Giuseppe frequently publishes articles in legal journals, analyzing various regulatory issues. He has contributed articles to the legal journal Altalex, of which he is also a member of the Scientific Committee.