EU-Japan chips move 'desrisks' China supply chain domination

News that the European Union (EU) is to support Japanese semiconductor companies looking to operate within the EU has been welcomed by business and political leaders across Europe and the US.

Ongoing supply chain problems continue to beset the semiconductor industry, and chip supply is becoming increasingly politicised, with the US looking to limit China’s power as a major chip manufacturer. As part of that drive, President Joe Biden has sought support from the EU.

The US wants to limit China’s ability to acquire advanced semiconductors, as well as the equipment used to manufacture them.

It is in this context that both Japan and the EU have sought to strengthen their domestic semiconductor industries. 

In April, the European Commission agreed to invest US$3.6bn in building Europe’s semiconductor manufacturing capabilities. The goal is to help avoid a Taiwanese bottleneck in the world’s semiconductor supply chains.

EU-Japan strategy eases Taiwan chips bottleneck

Taiwan is the biggest chip manufacturer, with TSMC is the world’s largest semiconductor foundry. The company provides services to 481 customers. It’s a strategy that ensures TSMC never directly competes with its customers, but also means that manufacturing and supply problems in Taiwan have a significant ripple effect across the globe.

"We believe it's extremely important to secure the supply chain of semiconductors," EU Commissioner Thierry Breton told Reuters recently.

He added that the EU’s policy of reducing dependency on China-made chips is part of a Europe-wide strategy to “de-risk”.

During top-level EU-Japan Digital Partnership talks, co-operation was sought and agreed upon across issues relating to:

• Supply chain resilience for chips
• Undersea cable connectivity
• Research
• Investment in quantum and high performance computing 
• AI regulation

Breton also recently met government ministers from the Republic of Korea and to collaborate on a similar range of topics. 

The Euro chips move comes in the wake of US multinational tech company IBM seeking to safeguard its future with Japanese chipmaking startup, Rapidus, in a plan also designed to strengthen the global supply chain of semiconductors.

Japanese chip-making startup Rapidus is taking over manufacturing of IBM’s 2-nanometer chip over coming years to help diversify the chip supply chain.