EU report warns: Chip supply chain constrained by US-China relations, outlook grim

(Taipei, Taiwan - July 3, 2024) A report funded by the European Union warned today that China's export controls, reliance on US technology, and structural weaknesses in Europe's chip industry mean the future outlook for the EU's chip sector is "grim." Without swift action to strengthen domestic supply capabilities, it faces greater risks.

According to Reuters, the report, jointly published by the European Union Institute for Security Studies and the French think tank Institut Montaigne, stated that China's export controls on critical minerals and the risk of war in the Taiwan Strait both pose threats to chip supply.

The report pointed out that the EU's high dependence on US technology also constitutes another vulnerability. Furthermore, the potential for the US to demand that ASML, Europe's most valuable company and a major manufacturer of chip production equipment, stop exporting related equipment to China would expose Europe to more risks.

Currently, the US Congress is deliberating a bill that, if passed, would authorize Washington to impose export controls on allies and their companies.

Joris Teer, a policy analyst at the EU Institute for Security Studies and a co-author of the report, stated, "While Beijing appears to remain the biggest threat, dependence on Washington has become a more worrying issue under a second Trump administration."

The European Commission is actively strengthening the EU's semiconductor industry and proposed the "Chips Act 2.0" in June this year, aiming to provide incentives to boost demand for domestically manufactured chips in Europe.

Additionally, the EU has joined the US-led "Pax Silica" initiative, collaborating with allies to ensure the security of semiconductor supply chains.

Laith Altimime, President of SEMI Europe, expressed his agreement with the report's emphasis on the importance of building more reliable supply chains.

He said, "Without stable access to critical raw materials, Europe's chip ecosystem will not be able to compete, drive innovation, or sustain growth."

Teer pointed out that in addition to cooperating with allies to address China's challenges, Europe's "only viable path" is to leverage its existing advantages in areas such as chip manufacturing equipment to further enhance its influence. (Compiled by Xu Rui-cheng) 1150703

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