At a high-level summit between European Union and U.S. top officials in Belgium in April, U.S. Commerce Secretary Gina Raimondo warned these “workhorse” chips were on Beijing’s radar as the next area to conquer.
“We know there’s a massive subsidization of that industry on behalf of the Chinese government, which could lead to huge market distortion,” Raimondo said, estimating that China will produce around 60 percent of the legacy chips coming to the market in the “next handful of years.”
In the past two years, the first round of the global chips war focused on more advanced chips. Washington rolled out a strategy in the past two years to cut off China from accessing high-tech microchips technology by curbing the export of designs and equipment to manufacture them. It pressured the Netherlands, Japan and other allies to block exports, most notably those of cutting-edge printing equipment made by Dutch tech champion ASML.
Legacy chips have larger “nodes,” making them easier to manufacture but unsuited for leading technology like smartphones.
For the less advanced models, European chips companies have a strong foothold — especially in manufacturing models that serve the automotive industry and the burgeoning electric vehicle market.
Companies like Germany’s Infineon, the Netherlands’ NXP and French-Italian STMicro are leaders in these field, a recent report showed. These firms sit on piles of intellectual property and patents on automotive chips, largely because they grew around Germany’s, France’s and Italy’s car manufacturing industries.
