US and EU renew cooperation over concerns about China’s legacy chip production
US and EU renew collaboration for the next three years to address disruptions in the semiconductor sector, focusing on legacy chip production in China. Discussions involve sharing market intelligence and coordinating actions to counter global supply chain distortions. Both regions aim to reduce dependence on Asian manufacturers, particularly in China, investing significantly in domestic chip production. Efforts include export controls and restrictions to limit China’s access to advanced chip technology. The US is urging the EU, particularly companies like ASML, to align with export restrictions to China.
The United States and the European Union agreed to continue their collaboration on identifying and addressing disruptions in the semiconductor sector for three years, with a focus on mainstream ‘legacy’ chips from China.
On April 4 and 5, 2024, the sixth ministerial meeting of the Trade and Technology Council (TTC) was held in Leuven, Belgium, with Commission Vice Presidents Margrethe Vestager and Valdis Dombrovskis for the EU and Secretary of State Antony Blinken and Secretary of Commerce Gina Raimondo for the US side. On Friday, the two sides issued a joint statement in which they agreed to share market intelligence about ‘non-market’ policies and practices, which they claim persist in China and to coordinate measures to tackle distortions in the global supply chain.
The US and EU are increasingly concerned about China’s massive push into legacy chips, typically produced with 28-nm equipment or above, technology introduced more than a decade ago. Legacy chips are essential to the global economy as critical components for smartphones, electric vehicles, appliances, or military equipment.
Why does it matter?
The US and Europe are trying to strengthen their domestic chip production in order to decrease their reliance on Asian manufacturers, particularly from China. They are now investing tens of billions through government subsidies such as the US Chips and Science Act to increase their chip manufacturing output.
The US has implemented comprehensive export controls to limit China’s ability to secure advanced chips, but Beijing has responded by setting aside billions to fund factories for legacy chips. The Biden administration has already taken action against SMIC to restrict the sale of chip manufacturing technology and parts to the Chinese company. Last year, the US Commerce Department even sent letters to US suppliers to Semiconductor Manufacturing International Corporation (SMIC), suspending export licenses to SMIC’s most advanced factory. This resulted in blocking shipments of chipmaking materials worth millions of dollars from at least one US supplier.
The Biden administration is pushing Brussels to align its position and reconsider how to safeguard its trade interests. Under pressure, ASML, the Dutch giant chip tool maker, could expand its partial consent to US export restrictions to China for its equipment and services.
About author
Mouloud Khelif
Based in Geneva, Switzerland, Mr Mouloud Khelif is an independent digital strategy, policy, and governance advisor/consultant with over 25 years of international experience, spanning multiple industries across public, private, and non-profit sectors. Mouloud joined the Digital Watch Observatory as a Digital Knowledge Fellow in August 2023, contributing to the technology and economic baskets. His current interests span AI governance and policymaking, the impact of disruptive technologies on the future of work, and linking geoeconomics and geopolitics to digital innovation.
