Europe eyes new ‘non-China’ supply chains as Taiwan tensions stoke semiconductor worries

Analysts expect Europe to rework its semiconductor import routes so that chips flow through a Western-friendly network of countries and contract manufacturers

European firms buy 80 to 95 per cent of manufactured chips from outside the European Union, especially Taiwan, making them vulnerable to disruptions

Reading Time:4 minutes

Europe is looking to establish Western-friendly semiconductor supply chains to prevent disruptions from Chinese military tensions with Taiwan. Photo: TSMC

Published: 10:15pm, 21 Sep 2022Updated: 12:23am, 22 Sep 2022

Europe is expected to push for the establishment of friendly semiconductor supply chains with the help of Taiwanese chip making giants as tensions between the self-ruled island and mainland China risk “choking” Asian supplies.

Europe lacks an indigenous chip making industry on the scale of Asia’s and relies on Taiwan’s integrated circuits and microchips to support key industries.

Companies like Netherlands-based Stellantis, for example, use the tiny hi-tech components for electric vehicles, while French aerospace firm Airbus needs them for aerospace technology.

“Wary of becoming victims of a political dispute, European companies are monitoring this increasingly sensitive issue and are assessing the potential risks very carefully,” the European Union Chamber of Commerce of China said on Wednesday in its annual position paper.

A choking of the Asian chip supply chain could be catastrophic for Europe

Neil Mawston

Much of the world grappled with a chip shortage due to surging demand for electronic devices during the coronavirus pandemic. For Europe, the issue is resurfacing now due to new geopolitical tensions between the West and China.

Taiwan supplies about 60 per cent of the world’s semiconductors, which have emerged as key commodities in a burgeoning tech war between Beijing and the West. Taiwanese chip makers are finding themselves caught in the middle.