EU Grapples with China's Legacy Chip Production: Risks and Opportunities!

The European Commission is seeking feedback from the region's semiconductor industry on China's increased production of older-generation computer chips. This comes amidst rising tensions between Brussels and Beijing, as the EU aims to protect its industries from Chinese competition. The new surveys aim to gather extensive data on the chip market.

The European Commission has initiated a detailed consultation with the region's semiconductor industry regarding China's surge in older-generation computer chip production, according to sources familiar with the matter.

The Commission is gathering data ahead of two voluntary surveys that will be distributed to the chip industry and major chip-using firms in September. While it's unclear what actions may result from this initiative, tensions between Brussels and Beijing are escalating, particularly as the EU seeks to shield its industries from Chinese competition. This week, the Commission began imposing provisional tariffs of up to 37.6% on Chinese electric vehicles.

Trade analysts suggest these tariffs may be the first step in a more stringent EU policy towards China. Beijing's heavy investment in legacy chip production, bolstered by state subsidies, is partly a response to U.S. restrictions on advanced chip technologies. While China's strategy could reduce its dependency on foreign chips in the short term, Western governments are concerned about the potential for long-term oversupply, which could impact numerous sectors including automotive and consumer electronics.