European tech industry executives and diplomats have accused the U.S. government of using its sanctions regime to exclude European companies from the Chinese market, but offering exemptions to U.S. companies.
A report in the Financial Times on Wednesday (Dec. 23) said that “the United States is using sanctions to keep European companies out of the Chinese market.”
Some tech executives and diplomatic officials from European countries have slammed Washington for using its sanctions regime to exclude European companies from the Chinese market while offering exemptions to U.S. firms and companies, the report said, citing a number of European high-tech executives and diplomatic officials.
Since taking office, the Trump administration has imposed tough sanctions in recent years on a number of other Chinese companies, including Chinese tech giant huawei, barring them from buying most advanced U.S. technology.
Just last week, the U.S. Department of Commerce added Chinese semiconductor company SMIC to its list of sanctioned entities. However, two Republican members of Congress, Senator Rubio and Representative McCaul, then sent a joint letter to Commerce Secretary Ross criticizing the sanctions against SMIC for not being tough enough and leaving a “dangerous loophole” for Chinese high-tech companies.
A European executive, who asked not to be named, told the Financial Times that the U.S. sanctions have created an “America First” trade policy that provides exemptions for U.S. companies, while similar companies from other countries are kept out of the Chinese market.
The executive said, “U.S. companies are now licensed to supply Huawei, while European suppliers are not.”
Many European companies that produce chips and chip manufacturing equipment are said to be affected by the U.S. sanctions because these European companies rely on U.S. intellectual property.
Another European technology executive said their companies were once stopped from supplying parts to Chinese buyers because of suspicions that the purchasers might use them for military purposes. But the market for those parts was quickly captured by U.S. suppliers selling through intermediaries, the executive said.
These European technology executives believe that the U.S. sanctions against China and the “America First” strategy have dealt a serious blow to EU high-tech companies.
One of Europe’s largest semiconductor companies, Switzerland-based “STMicroelectronics” (STMicroelectronics), reportedly postponed its annual revenue target by a year earlier this month because of U.S. sanctions against one of its key customers, “Huawei.
“STMicroelectronics’ CEO Jean-Marc Chery told investors that its stock market “has not seen any significant growth in the last two years” and cited the U.S.-China trade war as one of the reasons.
Earlier this year, the director of German chipmaker “Infineon” (Infineon) had also said on CNBC TV that tensions between the U.S. and China were “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 technological leadership.
Dutch chip manufacturing equipment company “Asmac” (ASML), was banned from selling its latest generation of production equipment to China’s largest chip maker “SMIC”. The company expects that the Chinese market may only complete a quarter of its sales this year.
Some European diplomats have also said that while they are sympathetic to Washington’s goal of preventing chip technology from contributing to 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 announced a “European Initiative on Processor and Semiconductor Technologies” through the European Commission. The initiative proposes that one-fifth (145 billion euros) of a European recovery plan over the next two to three years will be spent on “digital transformation” projects and advocates investment in semiconductor research.
An unnamed European diplomat in China said the statement shows that although it will take a long time; European governments want to reduce their dependence on U.S. technology.
Washington has not 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 been approved to supply some of China’s Huawei Parts.
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