Semiconductor group says China chipmaking sanctions should be the 'last resort,' cautions EU against further restrictions

The European Commission recently asked for the semiconductor sector feedback as it is trying to formulate the European Economic Security Strategy amid geopolitical tensions and strategic dependencies of the industry. SEMI Europe, a semiconductor industry association, responded to the call and issued a paper that calls for the chip industry international collaboration, establishing a structured dialogue between the industry and legislators and also warning the EU from imposing further restrictions against China.

Although SEMI Europe supports the European Economic Security Strategy's focus on establishing a common framework for achieving economic security, minimizing risks, and plans to support the European microelectronics industry (the so-called European Chips Act) export controls that, among other things, prevent technology leakage, the group stresses that maintaining free trade partnerships is the most effective strategy to ensure security during geopolitical crises. As a result, the new European Economic Security Strategy should not prevent investments from foreign entities and to foreign entities or restrict sales of certain items internationally.

"The success of the European and global semiconductor industry is built upon a complex supply chain and that export controls should indeed be a last resort for cases with genuine concerns for national security," a statement by SEMI reads. "For this reason, in conjunction with increased EU coordination on export controls, the EU should continue to advocate for a multilateral and rules-based global order."

Instead, SEMI contends that export controls should be coordinated between all member states and focused on clearly identified risks, not on hypothetical risks of weaponization of certain technologies. Such risk assessment could be handled by a forum akin to the Wassenaar Agreement, which is said to be no longer capable of establishing and enforcing export control rules that are agreed upon multilaterally and without placing unjustified burdens on the industry.

In addition, SEMI Europe emphasizes the importance of international cooperation and maintaining competitiveness and stresses the need for the European semiconductor industry to have the liberty to make investment decisions without excessive restrictions. The group argues that any limitations on investment could diminish the agility and relevance of European semiconductor companies, ultimately affecting their long-term competitive positions.

The association also raises concerns about the potential negative impact of rigorous vetting of inbound investments. Such measures, according to SEMI Europe, could deter companies from investing in the region and undermine the objectives of the European Chips Act, which aims to bolster the semiconductor industry in response to similar initiatives in China, South Korea, Taiwan, and the United States. The document also recommends measures to strengthen the high-tech ecosystem, such as targeted funding and public-private partnerships. 

Finally, SEMI Europe calls to initiate ongoing structured discussions with the industry to avoid imposing unnecessary due diligence, risk management, and reporting requirements that increase the administrative load for businesses and ultimately slow down innovation.