The European Union and the United States will not be able to achieve their goals of reducing their companies’ reliance on China’s legacy chips (28 nanometers or above) as the products have a price advantage, say Chinese state media and commentators.
The comments have come after Bloomberg reported on Monday that the EU-US Trade and Technology Council, established in 2021, will hold a meeting in Belgium in April to discuss whether western firms are over-relying on China’s mature or lower-end semiconductors.
The EU is considering joining the US in flagging a potential risk to national security and global supply chains, the report said, citing a draft working statement. It may investigate how deeply China’s legacy chips are embedded across industry networks.
“The EU and US will continue to collect and share non-confidential information and market intelligence about non-market policies and practices, and commit to consult each other on planned actions,” according to the draft.
The European Commission may launch a survey to try to understand the situation in the industry before launching any joint measures with the US, such as restrictions and other curbs.
At the beginning of this year, the US Commerce Department’s Bureau of Industry and Security (BIS) had already conducted a new survey to identify how US firms are sourcing current-generation and legacy chips.
China’s commentators in articles published Tuesday and Wednesday criticize the US for trying to suppress the growth of the Chinese legacy chip sector.
“It seems that the US has begun to adjust its strategy, consulting its allies to combat China’s chip exports,” Hu Weijia, a Chinese writer, says in an article published by the Global Times on Tuesday. “But it won’t be easy for the US side to score points.”
“After the US failed to restrict China’s semiconductor production capacity, it may put more focus on restricting semiconductor sales,” he says.
“However, Washington will find it more difficult to crack down on the sales of semiconductors, even if it pressures its allies to label those chips as a threat to national security, partly due to Chinese chips’ price advantages over their Western counterparts,” he says.
A Fujian-based columnist writes in an article published Wednesday that US President Joe Biden banned the export of advanced chip-making equipment to China but he failed to predict that China would expand its legacy chip production.
“Legacy chips can be widely used in cars, medical equipment and machines,” he says. “Many Chinese chipmakers, including the Semiconductor Manufacturing International Corp and Huahong Group, are now focusing on the production of these chips.”
He adds that some Chinese chipmakers are significantly expanding their production capacity while their US counterparts, including Qualcomm, Nvidia, Intel and Micron are losing market shares in China.
China has 44 operational semiconductor wafer fabs, with an additional 22 under construction, according to a report released by research firm TrendForce in January. The increase is more than the total for the rest of the world combined. By the end of this year, 32 Chinese wafer fabs will expand their capacity for making 28nm and older mature chips.
At the end of last year, China’s global market share for mature chips was 31% and will increase to 39% by 2027, said TrendForce. For the same period, Taiwan’s global market share for legacy chips will decrease from 44% to 40%.
Last December, US Commerce Secretary Gina Raimondo said that the US had seen signs of potentially concerning Chinese practices that could expand PRC-based firms’ legacy chip production and make it harder for US suppliers to compete.
On January 11, Chinese Commerce Minister Wang Wentao told Raimondo in a phone call that China is seriously concerned by Washington’s latest move to probe American companies’ purchase of mature chips.
The House Select Committee on the Strategic Competition Between the US and the Chinese Communist Party on January 8 suggested that the US implement “component tariffs” on China’s legacy chips within finished products.
Read: US-China chip war may extend to legacy chips
Follow Jeff Pao on Twitter at @jeffpao3
How is this different from all of social media, financial companies, and credit cards selling all your personal data to advertisers? Or Google asking if it can track your movements?