EU Weighs Joining US in Reviewing Risks of Chinese Legacy Chips

Alberto Nardelli, Bloomberg News

Images of semiconductor wafers at the Taiwan Semiconductor Manufacturing Co. (TSMC) Museum of Innovation in Hsinchu, on Tuesday, Jan. 11, 2022. TSMC reported a sixth straight quarter of record sales, buoyed by unrelenting demand by Apple Inc. and other customers for chips produced by the world’s largest foundry. Photographer: I-Hwa Cheng/Bloomberg , Bloomberg

(Bloomberg) -- The European Union is considering a formal review of how widely its businesses use mature or lower-end chips from China, joining the US in flagging a potential risk to national security and global supply chains.

The EU is weighing whether to investigate how deeply such semiconductors are embedded across industry networks, according to a draft working statement seen by Bloomberg News. Such a move would mirror a Biden administration initiative to assess the risks of relying on the chips, which aren’t cutting-edge but are vital to militaries and sectors from electric-vehicles to infrastructure.

A European Commission survey could mark a first step toward joint measures with the US, including restrictions or other curbs. Washington is concerned that growing Chinese investment in that field will help the Asian nation’s companies dominate supply much as they have in solar and steel.

“The EU and US will continue to collect and share non-confidential information and market intelligence about non-market policies and practices, commit to consult each other on planned actions,” according to the draft, which isn’t finalized and is intended to be presented during April’s EU-US Trade and Technology Council conference in Belgium. The two “may develop joint or cooperative measures to address distortionary effects on the global supply chain for legacy semiconductors.”

Representatives for the commission didn’t immediately respond to requests for comment.

So-called legacy chips are essential throughout the global economy. China has poured investment into factories to increase supply, and there are concerns on both sides of the Atlantic that this may distort the market or lead to critical dependencies.

The potential assessment is one of several agenda items planned for next month’s EU-US conference, according to the draft statement. As part of the summit, the EU and US will aim to extend for a further three years their collaborative arrangements on an early-warning mechanism aimed at identifying supply chain disruptions, as well as a mechanism for sharing information on public support provided to the semiconductor sector.

Elsewhere at the TTC conference, the two allies will also:

Reaffirm their commitment to a risk-based approach to AI, and the development of a framework for evaluating generative AI models
Concur on shared principles and standards for the research and development of 6G wireless communication systems
Cooperate on standards for emerging technologies including biotech
Further align work on enforcing trade restrictions imposed on Russia following its invasion of Ukraine, including by exchanging information on licensing
Share information on inbound and outbound investment screening initiatives as well as export controls
Call upon technology companies and online platforms to uphold information integrity, including in the run-up to elections across the world
Help nations in the Western Balkans develop their response to foreign interference and information manipulation.

--With assistance from Debby Wu.