From London sources, some European tech industry executives and diplomats have recently charged to the media that the U.S. government is using its sanctions regime to sideline European companies from the Chinese market but offering exemptions to U.S. companies.
A Dec. 23 report in the Financial Times said Washington has imposed aggressive sanctions on Chinese companies such as huawei over the past two years, and as of Friday, sanctions on chipmaker SMIC prevented it from buying most U.S.-made technology. But one European tech executive said the sanctions create an “America First” trade policy that involves exemptions for U.S. companies while companies from other countries are cut off from the Chinese market. The executive, who asked not to be named, said, “So far, U.S. companies have been granted permission to supply Huawei, while European suppliers have not.”
Many European companies that produce chips and chip manufacturing equipment are said to be affected by the U.S. sanctions because they rely on U.S. technology and intellectual property. Another European tech executive said their companies had been prevented from supplying components to Chinese buyers because of suspicions they could be used for military purposes. But the executive said the market for those components was quickly filled by U.S. suppliers selling through middlemen. In addition to the impact of the U.S. sanctions ban on sanctioned Chinese companies, it has also had a significant impact on European Union companies. Earlier this month, one of Europe’s largest semiconductor companies, Switzerland-based STMicroelectronics, postponed its annual revenue target by a year, citing U.S. sanctions against Huawei. STMicroelectronics’ shares fell nearly 12 percent that day.
STMicroelectronics CEO Jean-Marc Chery told investors that its stock market “has not seen any significant growth in the last two years” and said the U.S.-China trade war was one of the reasons. In addition, earlier this year, the director of German chipmaker Infineon (Infineon) had also said on the U.S. Consumer News and Business Channel (CNBC) that tensions between the United States and China are “a big concern. The German company cautioned that European countries must be careful not to be crushed in the U.S. and China’s competition for technology leadership.
Dutch chip manufacturing equipment company Asmac (ASML), was banned from selling its latest generation of production equipment to China’s largest chipmaker, SMIC. The company expects that the Chinese market may only complete a quarter of its sales this year. Meanwhile, some European diplomats have said that while they are sympathetic to Washington’s goal of preventing chip technology from fueling China’s military buildup, technology companies and EU governments are increasingly frustrated by unilateral sanctions and want to reduce their use of U.S. intellectual property technology.
Earlier this month, 17 EU member states, through the European Commission, announced the Joint Statement on the European Processor and Semiconductor Technology Initiative. The initiative proposes that one-fifth of a European recovery plan funding (€145 billion) over the next two to three years will be spent on digital transformation projects and advocates investment in semiconductor research. A European diplomat in China, who spoke on condition of anonymity, said the statement shows that although it will take a long time; European governments want to reduce their dependence on U.S. technology.
The U.S. side is not known to have disclosed which companies have been licensed to sell products or equipment to the sanctioned Chinese companies. The Financial Times had earlier reported that some U.S. companies, as well as South Korea’s Samsung and Japan’s Sony, had received approval to supply some parts to Huawei.
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