Emanuele Scimia

Opinion | Why an EU-Taiwan chip foundry deal may not be such a bad thing for Beijing

Any such deal is still a long way off as Taiwan seeks to rally EU support against threats of military action by Beijing while also avoiding EU autonomy in chipmaking

But for Beijing, which frowns on foreign engagement with Taiwan’s government, it might actually be easier to deal with a Europe less dependent on Taiwanese chips

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European Commission Vice-President Margrethe Vestager is seen at a news conference on the European Chips Act, a plan to boost the chip industry in which Taiwan features prominently, in Brussels, Belgium, on February 8. Photo: Reuters

Emanuele Scimia

Published: 8:15am, 27 Dec 2022

The European Union wants strategic autonomy on microchips, from design to production. But despite its expressed interest in developing economic and technological ties with Taiwan – as seen in the December 18-21 visit by a delegation from the European Parliament’s international trade committee – a deal to build Taiwanese semiconductor plants in Europe is still a long way off.

At the recent Asia-Pacific Economic Cooperation (Apec) summit in Thailand, Taiwan Semiconductor Manufacturing Company (TSMC) founder Morris Chang said the world’s largest contract chip maker was considering building foundries in countries other than the United States and Japan. He did not elaborate, but Europe is seen to be in line to host Taiwanese semiconductor production.

TSMC is spending US$12 billion on chip factories in the US, plus a further commitment for US$28 billion, while the investment in Japan with the Sony group is worth US$2.1 billion.

In February, the EU Commission launched its European Chips Act, a plan to raise US$45.3 billion in public and private investments to face any future supply chain disruptions. Europe is a powerhouse in microchip design, but is dependent on the import of finished products. In case of a crisis across the Taiwan Strait, it would be vulnerable to a halt in supplies, so it is aiming to diversify its supply chain and secure production at home.

The European bloc has said it is in constant dialogue with like-minded partners, including Taiwan, with which it exchanges views on technological research, industrial policy and the supply chain.

At TSMC’s quarterly earnings conference call on October 13, CEO C.C. Wei said the company was in the preliminary stage of an evaluation on whether to invest in Europe and did not rule out any possibility. TSMC president Mark Liu stressed in June that the company did not yet have enough customers in Europe to justify investments in microchip factories there.