Out now: Curbing China's legacy chip clout - Reevaluating EU strategy
The European Union is increasingly concerned about strategic dependencies on Chinese technology. Central to this discussion, and closely linked to the geopolitical rivalry between the United States and the People’s Republic of China (PRC), are semiconductors. This competition over semiconductors is entering a second phase: in the first phase, export controls considerably restricted Chinese access to and ability to develop advanced semiconductors, particularly those needed for Artificial Intelligence accelerators. The second phase focuses on mature node semiconductors, also known as ‘legacy chips’. These chips are technologically inferior but no less critical. Legacy chips are widely used across a range of industries including automotive, medical devices, drones, robotics, aerospace and defence to name just a few. In the coming years, legacy chips will continue to account for around three quarters of global semiconductor demand. Legacy chip shortages during the pandemic highlighted how the scarcity of even a single chip can disrupt entire manufacturing lines.
In contrast to advanced semiconductors, China already possesses the technological capability to produce legacy chips and holds around 30% global market share (compared to the EU’s 13%) (4). Hence, export controls are not as effective in hindering China as they were in the first phase of the semiconductor competition. So, how can the European Union effectively de-risk its legacy chip dependencies on China?
In two new publications, I address this subject: