EU and US extend China chip 'watch' agreement by 3 years

Representatives from the EU and the US met in Leuven, Belgium last week to thrash out the details of their cooperation around various aspects of the global chip market. High on the agenda was what to do about China – specifically in the legacy semiconductor space.

Having been effectively locked out of the advanced chip market, China has doubled down on production of the legacy processeors that go into many consumer products. But the EU and the US believe the Chinese government is illegally supporting much of this activity. Hence their agreement to scrutinise it.

So in a joint statement published on Friday, the partners said they share “concerns about non-market economic policies and practices that may lead to “distortionary effects” in the market for legacy chips.

They said: “We intend to extend the two administrative arrangements for a period of three years to enable further coordination and to establish synergies between our support for investments in the semiconductor sector taking place under the EU Chips Act and the US CHIPS Act. Both the EU and the US are committed to continuing to engage closely with industry on the issue. We plan to convene further government-to-government discussions with likeminded countries on this topic in the near future.”

US Commerce Secretary Gina Raimondo added: "We know that based on China's own reporting, about 60 per cent of all new 'legacy chips' coming into the market in the next handful of years will be produced by China. And we know there's a massive subsidisation of that industry on behalf of the Chinese government, which could lead to huge market distortion, and so that's why we're focused on it."

The collaboration isn't all about China. The two bloc will also conduct collaborative research to find suitable alternatives to per- and polyfluoroalkyl substances (PFAS) in chips. The re are enviromentnal concerns about PFAS, which do not readily break down and can be detrimental to human health.