“Chip war” between the US and China has spread to Europe

Two important European deals have been put on the back burner due to competition between the US and China in technology, writes Dünya. Their confrontation in the chip industry reached a peak and spread to Europe. And chip manufacturers are waiting for an "implicit war," the author of the article believes.

(ORDO NEWS) — The two deals have been shelved amid growing concern in the West over potential Chinese control over Europe‘s critical infrastructure.

Last week, the new owner of Britain’s biggest chip maker was told to end its takeover after the sale of the chip factory was blocked in Germany. Both deals came under fire for reasons of national security and related to the acquisition of companies owned by China.

The future of chipmakers is uncertain

In the UK, Nexperia, the Dutch subsidiary of Shanghai-based semiconductor manufacturer Wingtech, has been instructed by the government to sell at least 86% of its stake in Newport Wafer Fab more than a year after taking control of the plant. Employees have been protesting the decision ever since, claiming it jeopardizes nearly 600 jobs.

Meanwhile, in Germany, the economy ministry has banned Elmos Semiconductor, an automotive chip maker, from selling its plant in the city of Dortmund to Silex, the Swedish subsidiary of China’s Sai Microelectronics.

Chip production has become a new front of tension between the US and China. The two troubled deals show how pressure is mounting in Europe as well, especially as Western officials face calls to keep China out of key sectors of the economy.

These decisions signal a move towards a tougher stance on China’s investment in critical industries in Europe.

White House pressure on European chip makers

US pressure certainly played a role in these decisions. These moves are also likely to spark a growing sense of technological sovereignty. Governments around the world are increasingly viewing the semiconductor industry as a strategic resource and seeking to protect it from foreign takeovers.

On the other hand, as noted by legal experts, these two decisions in Europe are remarkable in that initially both transactions did not raise any questions or concerns.

In the United States, the Biden administration recently introduced comprehensive export controls that prohibit Chinese companies from purchasing unlicensed advanced chips and equipment for their production. The rules also prohibit US citizens and US green card holders from supporting the development or production of chips at certain manufacturing facilities in China.

Litigation can take years

International trade lawyers argue that chip makers, if objected in the current situation, could face an “implicit war” that could last for years.

On the other hand, attention is now shifting to the Netherlands. The Dutch government is currently under pressure from the US to require ASML, the semiconductor equipment manufacturer that dominates the lithographic machine market, to restrict exports to China, experts say.

The question arises: where, against the backdrop of ongoing events, is the US-Chinese technological war evolving, which has reached its peak due to the mutual steps of the parties in the chip industry recently?

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