Ensuring 'win-win cooperation' philosophy wins

WANG XIAOYING/CHINA DAILY

As the EU recalibrates its semiconductor strategy, China should pursue chances to collaborate with it to avoid isolation due to technological decoupling

As global technological competition heats up, the semiconductor industry has emerged as a critical battleground for great power rivalry. To avoid being sidelined in this competition, the European Union is recalibrating its semiconductor strategy in response to the fierce confrontation between China and the United States. With China's rapid progress in semiconductor technology and the US' ongoing push for technological decoupling from China, the EU faces unprecedented pressure and challenges.

To address these issues, the EU is not only focusing on enhancing its technological sovereignty, but also adjusting its semiconductor strategy through multiple perspectives, including geopolitics, economic security, and technological competition. These adjustments will not only profoundly affect China-EU relations but also reshape the global technology landscape, potentially transforming the global semiconductor supply chain.

In formulating its semiconductor strategy, the EU places significant emphasis on geopolitical security. Given the highly interconnected nature of the semiconductor supply chain in today's globalized world, technological sovereignty is intrinsically linked to geopolitical security. China's rapid ascent in the semiconductor sector has heightened the EU's fears of becoming overly reliant on external suppliers, potentially compromising its role in the global supply chain. Such dependence, particularly amid potential international tensions or trade conflicts, could prove to be a strategic liability.

French President Emmanuel Macron has warned that Europe "in the long run will disappear geopolitically" amid the current competitive global environment. In response, the EU has introduced the European Chips Act, which aims to increase its share of the global semiconductor market to 20 percent by 2030, thereby reducing reliance on external suppliers. This act is designed to enhance semiconductor production capabilities through substantial R&D investments.

Furthermore, the European Chips Act also establishes an emergency response mechanism, incorporating monitoring and early warning systems to mitigate supply chain disruptions. For example, the 2021 chip shortage — which severely impacted automakers such as Volkswagen and BMW — revealed the dangers of excessive supply chain dependence, prompting the EU to accelerate its efforts to localize chip manufacturing. By making these strategic adjustments, the EU aims to maintain independence and resilience within the global semiconductor supply chain.

The EU's semiconductor strategy is not solely driven by geopolitical security, it is also influenced by ideological concerns, particularly regarding the independence of its technology policy. As China's influence in the global tech market grows, the EU is increasingly wary of losing its technological autonomy.

To counter this, the EU has tightened its regulatory oversight of external technologies through the European Chips Act and supplementary legislation. For instance, the EU's Digital Markets Act and Digital Services Act have set stringent market entry rules and technical standards to ensure that foreign technology cannot gain undue control over its markets. These legislative actions go beyond restricting external technological penetration — they are crucial to preserving the EU's technological sovereignty and the independence of its industrial policies in the digital era.

Additionally, in responding to the US' push for technological decoupling from China, the EU faces the challenge of balancing cooperation while maintaining independence. While the EU aims to enhance its technological competitiveness through cooperation with the US, it also recognizes that overreliance on the US may undermine its independence in the technology sector. Thus, in its interactions with both China and the US, the EU seeks technological cooperation while maintaining a degree of autonomy, avoiding being drawn passively into their rivalry.

The EU's response to China's advancement in the semiconductor technology is multi-faceted, combining collaboration with measures to strengthen domestic innovation and maintain technological leadership. China's advancements in areas such as high-end chip manufacturing, material supply chains, and technical standards have amplified the EU's concerns about its long-term competitiveness. The EU views China's progress as a potential threat to its technological edge.

To address this challenge, the European Chips Act explicitly calls for the improvement of domestic chip manufacturing capabilities through large-scale investments and policy support, along with partnerships with leading global chip manufacturers. These efforts are intended to bolster Europe's semiconductor production capacity, reduce dependency on external markets such as China, and secure Europe's technology ecosystem while enhancing technological sovereignty. For example, Germany's Infineon and France's STMicroelectronics are both expanding their high-end chip production capabilities with government support, aimed at reducing dependency on Asian suppliers.

The EU's semiconductor strategy is not solely about competing with China, it also includes maintaining close technological collaboration and alignment with the US. By leveraging transatlantic partnerships, the EU aims to enhance its technological autonomy while securing a stable and diversified supply chain. Through partnerships with the US and other like-minded nations, the EU aspires to establish a stronger strategic position in the global semiconductor supply chain — promoting technological innovation while ensuring supply chain stability.

As global technological competition continues to intensify, the relationship between the EU and China in the semiconductor sector will grow increasingly complex. And the EU must also respond to political and economic pressures from the US by maintaining an appropriate distance from China in the semiconductor field.

Looking ahead, the EU's semiconductor policy toward China will likely continue to balance cooperation and competition. The EU will seek to promote domestic technological development through targeted policy and investment, ensuring technological sovereignty while reducing reliance on Chinese technology. At the same time, it is crucial for the EU to maintain necessary channels of cooperation with China, particularly in areas such as semiconductor standards, supply chain stability, and industrial policies. A deeper dialogue with China could help the EU mitigate risks related to technological decoupling.

In light of the EU's strategic adjustments in semiconductors, China can adapt proactively to shifts in the global technology landscape. Besides, China can continue to strengthen its capabilities for independent innovation, optimize its semiconductor supply chain, reduce dependency on foreign technologies, and boost its competitiveness in the global market. Concurrently, China should pursue opportunities to collaborate with the EU, particularly in technical standards and research partnerships, to avoid isolation due to technological decoupling. By adhering to a "win-win cooperation" philosophy, China can flexibly respond to global technological competition, leveraging multilateral cooperation and technological exchanges to create more development opportunities.

Cai Cuihong is a professor at the Center for American Studies at Fudan University. Liu Beining is a graduate at the School of International Relations and Public Affairs at Fudan University. The authors contributed this article to China Watch, a think tank powered by China Daily.

The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.