The United States and the European Union have expressed concerns over China’s attempts to control the global market for legacy semiconductors. Legacy semiconductors refer to chips that are 28 nanometers or larger and are manufactured using mature technologies that have been around for 10 to 20 years. These chips are still widely used in various industries, including automobiles, consumer electronics, household appliances, and medical devices.
Commerce Secretary Gina Raimondo highlighted that China is projected to produce about 60 percent of all new legacy chips in the coming years. She also pointed out that the Chinese government is heavily subsidizing its semiconductor industry, which could lead to significant market distortion. In response to these concerns, the United States and the European Union are working together to address national security risks associated with China’s dominance in the legacy semiconductor market.
To gather data and assess the impact of China’s policies on the global supply chain, the United States launched a semiconductor supply chain survey under the Defense Production Act. This survey aims to identify how U.S. companies procure legacy chips and understand any market distortions caused by China’s subsidies. The European Union has also initiated a similar voluntary survey. The data collected from both surveys will be shared between the two regions to develop joint measures and make supply chains more resilient.
Imposing tariffs on imports containing Chinese legacy chips is a complex issue. The Center for Strategic and International Studies highlights the difficulties that would arise from implementing tariffs on inbound items containing Chinese chips. It could potentially affect products manufactured in partner countries that include Chinese chips, and it may also push Chinese legacy chips into other foreign markets, undermining efforts to strengthen domestic chip supplies.
In January, representatives from both major U.S. political parties raised concerns about Chinese legacy semiconductors. They questioned whether the United States has the authority to impose tariffs specifically on Chinese legacy chips rather than finished products.
The joint EU-U.S. statement released on April 5 acknowledges the shared concerns about non-market economic policies and practices that could lead to distortionary effects or excessive dependencies in the legacy semiconductor market. The two sides plan to continue sharing information, consult each other on planned actions, and explore joint or cooperative measures to address any distortionary effects on the global supply chain.
The concerns surrounding China’s attempts to control the legacy semiconductor market highlight the importance of ensuring a level playing field in the industry. Collaboration between the United States and the European Union is crucial in addressing national security risks and promoting fair competition. By collecting data, sharing information, and potentially implementing joint measures, these two major economic powers aim to protect their interests and maintain a resilient global supply chain for legacy semiconductors.
