China's Legacy Chips In EU's Crosshairs

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The Chinese government and automakers said they will negotiate with the EU on the matter. So far China has launched anti-dumping probes for imports of pork and brandy from Europe. Spain and France are the two major exporters of pork and brandy, respectively, in the region.

Last December, the United States Commerce Department said its Bureau of Industry and Security (BIS) would launch a survey in January 2024 to identify how US firms are sourcing current-generation and legacy chips.

The BIS said in a study that the Chinese government had provided its chipmakers with about US$150 billion in subsidies over the past decade, which it estimated is likely to create a non-level global playing field for US and other foreign competitors.

After meeting with US Commerce Secretary Gina Raimondo at the sixth ministerial meeting of the EU-US Trade and Technology Council in Belgium on April 4-5, European Commissioner for Competition Margrethe Vestager said the EU will coordinate with the US to do a voluntary survey on China's legacy chip matter.

“China has built its mature chip industry with its huge downstream industry demand,” a Chinese IT columnist writing under an Uncle Biao pseudonym said in an article published on Sunday.“Even if the US and the EU will join hands to suppress China with non-market means, they won't be able to change the fact that China is about to dominate the legacy chip market.”

“As long as China keeps its market open, it will not only gain a dominant position in the legacy chip market, but also make technological breakthroughs in the advanced chip sector,” he wrote.

China's global market share for mature chips will increase from 31% at the end of last year to 39% by 2027, according to a TrendForce analysis.

According to the Ministry of Industry and Information Technology, China's integrated circuit production rose 32.7% to 170.3 billion units in the first five months of this year from a year earlier. China's customs data shows its exports of integrated circuits grew 10.5% to 113.9 billion units, over the period.

Global semiconductor industry sales surged 19.3% to US$49.1 billion in May 2024 from a year ago, the Semiconductor Industry Association (SIA) said on July 5. Year-to-year sales were up in the Americas (43.6%), China (24.2%), and Asia Pacific/all other (13.8%), but down in Japan (-5.8%) and Europe (-9.6%).

While the US and EU are still investigating the case, some commentators said the duo may impose tariffs on China's legacy chips in the near future.