In a two-day "Trade and Technology Council Meeting" (TTC) held on April 5th, local time, the United States and the European Union concluded with a 12-page joint declaration outlining the outcomes of the meeting, with a particular emphasis on cooperation in the semiconductor sector.
Both parties have affirmed their intention to investigate the supply chain of traditional semiconductors, primarily focusing on mature process chips, and are planning to take "next steps" in terms of measures.
△ Material Image from the US-EU Trade and Technology Council (TTC) Meeting
In a joint statement, the United States and the European Union stated: "Our coordinated efforts to establish resilient semiconductor supply chains remain crucial for the security of semiconductor supply, which is an indispensable input to the rapidly growing and strategically important sector, ensuring leadership in cutting-edge technologies."
Both parties have collaborated under the following two administrative arrangements:
A joint early warning mechanism aimed at identifying (potential) supply chain disruptions and taking prompt action to address their impacts, which has proven highly effective in monitoring the developments in the gallium and germanium markets.
Establishment of a transparent mechanism for mutual sharing of information concerning public support provided to the semiconductor industry.
The United States and the European Union plan to extend the above two administrative arrangements for three years to achieve further coordination and establish synergies between support for semiconductor industry investments under the EU Chip Act and the U.S. CHIPS Act.
In the joint statement, the EU and the U.S. also express concerns about non-market economic policies and practices, indicating that these policies and practices could lead to distortion effects or excessive reliance on mature process nodes ("legacy") semiconductors.
Of the globally shipped chips, 70% are mature process chips, widely used in automobiles, household appliances, and medical devices. According to data from market research firm TrendForce, the proportion of global wafer foundry mature process (28nm and above) and advanced process (below 16nm) capacity is approximately maintained at 7:3 from 2023 to 2027. In terms of the proportion of mature process in various regions, Taiwan, China accounts for 49%, mainland China accounts for approximately 29%, the United States accounts for only 6%, and the European Union accounts for even less.
In January 2024, the United States initiated an industry investigation to assess the usage of mature process chips in the supply chain that directly or indirectly support U.S. national security and critical infrastructure.
It is reported that the purpose of this investigation is to determine how U.S. companies procure current-generation and mature-node semiconductors, also known as legacy chips (mainly based on mature processes).
This analysis will inform policies aimed at supporting the semiconductor supply chain in the United States, fostering fair competition in traditional chip production, and reducing external security risks.
During the 5th Ministerial Meeting of the TTC on January 30, 2024, the European Union and the United States also held a joint roundtable with senior industry representatives dedicated to the traditional semiconductor supply chain. Both sides expressed commitment to continue close collaboration with the industry on this issue and planned further intergovernmental discussions with like-minded countries in the near future.
In their latest joint statement, the EU also indicated that they are gathering information on the issue. "We intend to continue collecting and sharing non-confidential information and market intelligence on non-market policies and practices, commit to consulting each other on planned actions, and may develop joint or cooperative measures to address the impact of traditional semiconductor supply chains on the global economy."
Margrethe Vestager, Vice President of the European Commission responsible for EU technology policy, stated that the EU and the US are taking "next steps" regarding traditional semiconductors to reduce dependence on external sources.
It is worth noting that both the US and EU have pledged to collaborate on research to find alternatives to per- and polyfluoroalkyl substances (PFAS) in chips (these chemicals are persistent and have been shown to be harmful to human health). For instance, they plan to explore the use of artificial intelligence capabilities and digital twins to expedite the discovery of suitable materials to replace PFAS in semiconductor manufacturing.
