China’s rapid progress in semiconductor technology poses a security risk to Europe. This is evident from a new research report that will be presented in Berlin on Wednesday. According to the report, European governments must make significant changes to their plans to develop the chip industry further.
Current European Union proposals to build advanced chip factories, among other things, “will not be enough,” said report authors Jan-Peter Kleinhans of think tank Stiftung Neue Verantwortung and John Lee, a former member of the Mercator Institute for China Studies.
While subsidizing the construction of chip factories is necessary, the EU should also build strategic partnerships with East Asian economies that play a vital role in the chip supply chain, including Taiwan and South Korea and Japan, Singapore or Malaysia, the researchers said.
An important goal of the EU Chips Act, to be drafted by mid-2022, is that the economic bloc will account for 20 percent of the global market share of semiconductors by 2030, including through the design and production of its own advanced chips.
Kleinhans and Lee are urging the EU to invest more throughout the supply chain, with a focus on assembly, testing and packaging, to gain a better grip on the chip supply chain and avoid further bottlenecks and shortages. Europe also needs to “invest significantly” in chip design by improving the conditions for local start-ups, small and medium-sized enterprises, and spin-offs from research institutions. These areas “are neglected in current debates, but are crucial for Europe’s technological competitiveness and security,” said Kleinhans and Lee.
In the meantime, China is making great strides in the field of chips with large Chinese technology companies such as Alibaba, Tencent and Baidu, which are increasingly designing their own chips for, among other things, artificial intelligence and cloud computing. That design capability of the Chinese has implications for national security, the researchers say, because it gives the Chinese military access to potentially more powerful and efficient chips, which can be used in supercomputers to simulate missile trajectories.