The European Commission has started gathering input from the semiconductor industry in the region regarding China’s increased production of older generation computer chips.
The Commission has requested feedback in preparation for two voluntary surveys for both the chip industry and major chip-using industrial firms, set to take place in September.
There was no immediate comment from the EU executive when contacted by Reuters.
The outcome of the study remains uncertain, but tensions between Brussels and Beijing are escalating as the European Union aims to safeguard its industries from Chinese competition.
On Friday, the Commission began implementing provisional tariffs of up to 37.6% on Chinese electric vehicles.
Trade analysts suggest that these tariffs might just be the beginning of a more stringent EU approach towards Beijing.
Chinese industry is heavily investing in expanding the production of older chips, also known as legacy chips, with assistance from state subsidies. This is partly due to restrictions imposed by the U.S., limiting China’s access to more advanced computer chips.
While China’s investment may lessen its reliance on foreign chips in the short term, Western governments are concerned about long-term implications, including the possibility of oversupply of chips essential for various appliances and vehicles.
In April, the Commission’s antitrust chief Margrethe Vestager hinted at the possibility of investigating legacy chips after meeting with U.S. officials in Belgium.
The Commission previously released a 712-page report detailing the numerous forms of support provided by the Chinese government to domestic firms across various industries, including semiconductors, telecom equipment, and renewable energy.
These chip-focused surveys are seen as a fact-finding mission, broader in scope compared to a security-focused survey conducted by the U.S. Department of Commerce with U.S. firms.
The Commission is seeking feedback on draft questions, such as where industrial firms acquire their chips, information on chip firms’ products and pricing, and estimates of the same details from their competitors, including those in China.
For equipment suppliers like ASML from Europe, China’s expansion of legacy chip production serves as a vital revenue source, helping to offset U.S.-led export restrictions on more advanced technology.
For chipmakers including Infineon of Germany, STMicroelectronics of France, and NXP of the Netherlands, the situation is complex. While they face increasing Chinese competition, they also conduct business in China.
European industrial, aerospace, automotive, health-tech, and energy firms may be hesitant to disclose their use of Chinese legacy chips, given the multi-step, cross-border nature of chipmaking and packaging which can make it difficult to determine the origin of chipsets.
German automakers are against tariffs on Chinese EVs due to their significant sales in China. They have been working to diversify their chip suppliers to include production both inside and outside China and Taiwan after facing costly shortages during the COVID-19 pandemic.
(With Inputs From Reuters)
