The European Union is currently seeking the opinions of the European semiconductor industry regarding China’s expansion of traditional chip production, following the imposition of temporary import tariffs up to 37.6% on Chinese electric vehicles. This move aims to develop countermeasures to prevent the massive influx of low-end Chinese chips into the European market.
According to a report by Politico on Tuesday (July 16), the European Commission, the EU’s executive body, is surveying European chip manufacturers and major chip users on how China’s competitors have harmed their interests.
The EU is taking this action to protect one of Europe’s remaining technological achievements: the semiconductor manufacturing industry that provides chips for its robust automotive sector.
This could potentially become a new battleground between the EU and the Chinese Communist Party in the ongoing trade war, further intensifying tensions between the two parties.
Traditional chips typically refer to older generation chips of 28 nanometers and above, which cannot match the capabilities of 7nm or 5nm chips but are widely used in everyday tech products such as cars, washing machines, and medical equipment. China currently holds a dominant position in production and market share in this sector.
Currently, Europe maintains a leading position in the manufacturing of traditional chips for automobiles and household appliances. A report from May indicated that Germany’s Infineon, the Netherlands’ NXP, and France and Italy’s STMicro are among the top three suppliers in the automotive chip market.
EU officials are concerned that subsidized Chinese chip companies are challenging the chip suppliers in the EU.
The EU’s survey asks European major chip manufacturers if they have “alternative products” or “product lines” to Chinese competitors, and about the price differences between European chips and Chinese competitors.
US and EU officials have been warning about the unfair subsidies China provides for traditional chips. The US initiated an investigation into this matter in January this year.
In April, US Secretary of Commerce Gina Raimondo stated during a high-level meeting of the Transatlantic Trade and Technology Council (TTC) with the EU, “We know China’s government has heavily subsidized that industry, which may lead to significant market distortions.” Following the meeting, US and EU officials indicated they could take “joint action to address” the “distortive effects” in the traditional chip supply chain.
In April, the European Commission published a 712-page report detailing the multi-level support provided by the Chinese government to its domestic companies. The report covered various industries including semiconductors, telecommunications equipment, and renewable energy.
Analysts believe this signals the EU’s readiness to launch investigations into more cases.
Industry insiders warn that if China floods the market with subsidized traditional chips, Western chip manufacturers may soon be eliminated due to their disadvantage. The EU views China’s subsidies as giving Chinese companies an unfair advantage.