- China produces around 60% of legacy chips.
- US and EU to look into non-market practices prevalent in China.
The United States and the European Union have agreed to extend their collaboration for three more years to identify disruptions in the semiconductor sector, particularly focusing on mainstream ‘legacy’ chips from China. After a two-day session of their Trade and Technology Council, they issued a 12-page joint statement outlining the outcomes of the meeting.
The statement highlighted their intention to share market intelligence about ‘non-market’ policies and practices prevalent in China. They will consult on planned actions to address distortions in the global supply chain. European Commission Vice President Margrethe Vestager, responsible for EU technology policy, stated that the EU and U.S. are taking ‘the next steps’ concerning legacy semiconductors.
Legacy chips are the semiconductor chips used in cars, household appliances and medical devices. According to a report by the Center for Strategic and International Studies (CSIS), legacy chips at the 40 nm node or larger make up most of the current U.S. and global chip production. The U.S. automobile industry, for example, relies almost entirely on legacy chips, which account for 95 percent of its total semiconductor consumption.
U.S. Commerce Secretary Gina Raimondo informed a news conference that China produces around 60% of legacy chips, which are used in cars, household appliances, and medical devices. She emphasised the importance of focusing on this issue due to the massive subsidization of the industry by the Chinese government, which could lead to significant market distortion.
Raimondo also mentioned that the Commerce Department has initiated a survey to assess market distortion, and the EU will conduct a similar exercise soon. The two partners plan to share their results and have committed to collaborating on research to find alternatives to per- and polyfluoroalkyl substances (PFAS) in chips. PFAS are known as ‘forever chemicals’ because they do not readily break down and have been shown to harm human health.
According to the South China Morning Post, the U.S. and Europe are growing increasingly concerned about China’s accelerated push into the production of older-generation semiconductors. This is in response to the strategic importance of legacy chips and the challenges posed by their production. They are debating new strategies to contain China’s expansion in this sector and are working to reduce their dependence on foreign firms for both mature and advanced chips.
