BRUSSELS — The European Union is eyeing action against Chinese rivals to protect one of Europe’s remaining tech successes: chips for its mighty car industry.
This could open up a new battleground in an escalating trade war with Beijing, adding to tension over EU import duties on Chinese electric vehicles.
The European Commission has been asking European semiconductor producers whether and how Chinese rivals might be undermining them, according to a questionnaire seen by POLITICO.
Europe is still a leading force in manufacturing legacy chips for the automotive industry and household appliances. A May report showed that German Infineon, Dutch NXP and French-Italian STMicro are three of the five largest suppliers in the car chip market.
EU officials are now worried that subsidized Chinese firms are gunning for the bloc’s champions.
The EU’s draft survey asks leading manufacturers of low-tech chips in Europe whether an “alternative product” or “product family” from a Chinese competitor exists and what the price difference is, in percentages, between the European chips and Chinese competitors.
The survey also suggests that the EU executive is considering supporting extra chip-making capacity in Europe. It asks whether European producers would be open to a “common wafer fabrication facility” or a “common packaging facility.”
United States and EU officials have been warning of potentially unfair Chinese subsidies for legacy chips. The U.S. already launched a survey on the topic in January.
“We know there’s a massive subsidization of that industry on behalf of the Chinese government, which could lead to huge market distortion,” U.S. Commerce Secretary Gina Raimondo said in April on the margins of a high-level transatlantic Trade and Technology Council (TTC) meeting between EU and U.S. officials.
The U.S. and the EU said after the meeting that they could take “cooperative measures to address distortionary effects” in the legacy chips supply chain.
The Commission confirmed in a statement that it is “investigating potential excessive dependencies” in the area of legacy chips and is carrying out “a targeted consultation” of the industry.
Survey results could land as soon as the end of the summer.
The chips industry, however, fears European action against Chinese companies could distort chip supply chains.
Christophe Fouquet, chief executive officer of Dutch microchip printing giant ASML, said in an interview with Handelsblatt on Wednesday that Europe needs the legacy chips produced in China.
“Europe cannot even meet half of its own demand. So we need it from elsewhere, and factories are currently being built in China,” he said, adding that German cars, too, rely on low-tech microchips.