Legacy chips and strategic autonomy: which way forward for Europe?

Staff
By Staff
4 Min Read

IndustriAll European Trade Union has long called for a more holistic approach to semiconductors in Europe. As the debate about how to ensure supplies of so-called ‘legacy’ semiconductors (over 20nm) heats up, attention is rightly shifting from niche cutting-edge chips to this less sexy but economically vital semiconductor segment.

Legacy components are critical for a wide range of applications, from industrial machinery to consumer electronics. Despite the rising demand for advanced chips, the need for these older technologies remains strong.

The impact of chip shortages was evident during the COVID-19 pandemic, especially in the automotive sector. Shortages of 40-180 nanometer chips led to factory shutdowns and significant disruptions, directly affecting workers and production lines. IndustriAll Europe, already in 2022, criticised the EU Chips Act for its narrow focus on next-generation technologies, such as artificial intelligence and 6G communication. While essential for the future, these technologies represent a minor share of the semiconductor market in the short term and overlook the current needs of European industries, like automotive manufacturing.
In recent developments, the EU is considering measures to protect its semiconductor industry, particularly in manufacturing legacy chips for the automotive sector in which the EU has a leading role. This comes with rising trade tensions with China. The European Commission has been scrutinising whether Chinese competitors might be undermining European chip manufacturers through unfair practices. According to a recent survey, the Commission is investigating how Chinese rivals might be impacting European companies by offering chips at significantly lower prices. This scrutiny is set against a backdrop of escalating trade disputes between the EU and China. The survey landed right after the European Commission proposed tariffs on Chinese electric vehicle imports after a long investigation into Chinese state subsidies.

IndustriAll Europe welcomes the new attention from the EU to focus on its automotive chip sector as this reflects its broader goal of strategic autonomy. The EU remains a leading force in manufacturing legacy chips for key industries, with major companies like German Infineon, Dutch NXP, and French-Italian STMicro among the top suppliers. However, concerns are growing that subsidised Chinese firms could threaten Europe’s position in this vital market.

IndustriAll Europe urges the EU to take decisive action against unfair pricing practices by implementing anti-dumping measures. Ensuring a level playing field is essential to maintain fair competition and prevent market manipulation that harms European workers and industries.

For IndustriAll Europe, it is a priority that the EU’s response not only addresses market distortions but also prioritises job protection and the long-term health of European industries. It is also crucial that workers have a voice in discussions about trade policies. Policies must protect workers from the adverse effects of unfair competition, including job retraining and reskilling programs to assist those affected by industry transformation,” stated Judith Kirton-Darling industriAll Europe’s General Secretary.

As Europe faces these challenges, it is essential to invest in innovation and technological advancement to counteract the effects of unfair competition. The current situation with China’s legacy chip pricing presents a critical test for European trade policy and strategic autonomy.

Maintaining fair competition and supporting our workforce are key to sustaining Europe’s industrial strength and economic resilience in the face of global challenges,” added Judith Kirton-Darling.

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