EU Launches Probe Into China Legacy Chips, Following US Lead

The EU is targeting  China’s dominance of legacy semiconductor production, as the US pushes allies to progressively hem in China’s chip industry.

The bloc said at a summit in Leuven, Belgium on Friday that it is carrying out a survey of businesses on legacy semiconductors as it looks for evidence of market distortions, following a similar probe launched by the US Bureau of Industry and Security in January.

The EU will assess the “trustworthiness” of legacy chips used in everything from aerospace to automobiles and home appliances, and show how China’s large production capacity is affecting European markets.

“We will do a voluntary survey that we will coordinate [with the US] so that we are addressing some of the same issues in order to be able to compare notes,” EU competition chief Margrethe Vestager told a press conference after the sixth EU-US Trade and Technology Council (TTC) summit.

Mature-node chips

Since the 2021 introduction of US export controls targeting China’s advanced chip manufacturing, the country has been investing into expanding its production of lower-end semiconductors used in aerospace, defense, automobiles and home appliances.

A study in March 2023 from US think tank Rhodium Group found that China accounted for 30 percent of the global market for legacy semiconductors in the 50-180 nanometre process node range, and US Commerce Secretary Gina Raimondo said China was projecting a market share of 60 percent in the “next handful of years”.

“We know there’s a massive subsidisation of that industry on behalf of the Chinese government, which could lead to huge market distortion, and so that’s why we’re focused on it,” she said.

In a 12-page joint statement the US and EU said they would share market intelligence on “non-market” policies and practices – considered shorthand for China – and consult on planned action to address global supply chain distortions.

Japan-US coordination

US president Joe Biden is set to meet with Japanese prime minister Fumio Kishida in Washington on 10 April to coordinate plans for reducing reliance on China for legacy semiconductors, the Yomiuri Shimbun newspaper reported last week.

The plan is to offer government subsidies to companies to transition from using Chinese suppliers to others based in Japan or the US or allied countries, the report said.

After gathering opinions on the plan, the two countries intend to expand the framework to the G7, according to the report.