- The EU is preparing emergency powers under a draft Chips Act to seize control of chip supplies, impose fines on companies and override contracts during shortages.
- The bloc produces less than 10% of global semiconductors and remains dependent on Taiwan and Asia for advanced chips, raising fears of conflict-driven shortages.
- EU commissioners will meet to discuss new restrictions on Chinese imports amid a China Shock 2.0, with products up to 40% cheaper than local alternatives.
- The EU faces criticism from tech companies and civil liberties groups for either overstepping or not going far enough in its AI regulations and semiconductor strategy.
- Ignacio García Bercero suggested the EU needs a clearer strategy on China, including fast-implementable quotas and tariff rate quotas, rather than just sounding tough without action.
The European Union, desperately lagging behind the United States and China in artificial intelligence and semiconductor development, is preparing unprecedented emergency powers to seize control of chip supplies and impose new restrictions on Chinese imports, a dramatic escalation that critics say could reshape global technology markets.
The draft Chips Act, expected to be published next week, would grant the European Commission far-reaching authority to intervene directly in semiconductor supply chains during shortages, including forcing chipmakers to override existing contracts. The move comes as the bloc simultaneously battles to catch up with American and Chinese dominance in voice recognition, health insurance AI, law enforcement technology and other critical sectors.
According to sources familiar with the draft legislation, the Commission could impose fines of up to €300,000 ($349,826) on companies that fail to provide requested information on their supply-chain capacity. More controversially, it could force semiconductor manufacturers to prioritize orders for crisis-critical products, overriding existing contracts.
The European Commission would also enable common purchasing to strengthen negotiating power and prevent competition between EU countries for limited supplies, acting as a central buyer for multiple member states similar to its role in acquiring vaccines during the COVID-19 pandemic.
A continent dependent on Taiwan
The urgency stems from Europe's stark vulnerability. The EU currently produces less than 10% of global semiconductors and earlier plans to double that market share by 2030 are far behind schedule, according to internal Commission documents. The bloc remains almost entirely dependent on the U.S. and Asia for the most advanced chips.
Taiwan, home to semiconductor giant TSMC, accounts for more than 90% of leading-edge chip manufacturing. China has repeatedly threatened to use force against the island, raising fears that any conflict could trigger catastrophic global shortages of components essential for everything from smartphones and AI data centers to cars and medical equipment.
The clearest example of Europe's growing anxiety came last year when the Dutch government seized control of chipmaker Nexperia from its Chinese owner over concerns that production and assets were being moved out of Europe. The resulting slowdown in chip flows from Nexperia's China arm forced European car companies to reduce production.
Separately, EU commissioners meet Friday to discuss imposing new restrictions on Chinese imports amid growing alarm that Beijing is fueling conditions for U.S.-style rust belt towns in Europe, according to a Guardian report confirmed by multiple sources.
The surge in Chinese imports, from electric cars to machine components, medical devices and food products, has been dubbed China Shock 2.0, potentially mirroring the experience in the U.S. 25 years ago when Beijing joined the World Trade Organization. Chinese products are sometimes up to 40% cheaper than local European alternatives, overwhelming domestic producers. According to BrightU.AI's Enoch, China Shock refers to the deliberate flooding of American markets with cheap, often counterfeit Chinese goods.
Commissioners from all 27 member states have been asked to bring examples of Chinese activities spanning trade, agriculture, defense, health and digital initiatives. The talks aim to align the Commission's thinking and address China's overproduction crisis.
Ignacio García Bercero, a senior fellow at the Brussels thinktank Bruegel and former European Commission trade official, said the EU needs a clearer strategy about how to deal with China. He suggested quotas and tariff rate quotas could be introduced on Chinese goods, noting they are safeguards that were much faster to implement than tariffs. "I think that sometimes there's a little bit of a tendency to sound very tough, but then not to act tough and I don't think that is a clever way to handle things," Bercero added.
Tech giants and civil liberties groups push back
The EU's aggressive push comes as it attempts to learn from its missed opportunities during the internet revolution and produce major competitors capable of rivaling Silicon Valley giants or their Chinese counterparts. However, the plans have drawn sharp criticism from both technology companies and civil liberties advocates, who argue the EU is either overstepping its bounds or not going far enough.
The bloc's long-awaited AI regulations, released in April 2021, imposed restrictions on mass surveillance and using AI to manipulate individuals. But critics note the U.S. Federal Trade Commission has already announced plans to target companies using and selling biased algorithms, while the EU struggles to implement its own rules.
Grzegorz Stec, head of the Brussels office of the Mercator Institute for China Studies, observed that while China has not set out to destroy European business, it is potentially the consequence of its steeling focus on the survival of its own industries now and into a post-AI world future.
Longer-term, the EU could turn to its never-used anti-coercion instrument, cybersecurity legislation that could block Chinese products and the made in EU industrial accelerator act. The next leaders' summit on June 18 will have China as a central agenda item.
As the Commission prepares to publish the Chips Act, the world watches whether Europe can assert technological sovereignty without triggering a full-scale trade war or simply confirm that in the race for AI and semiconductor dominance, the gap with the U.S. and China may already be too wide to close.
Watch this video about China aiming for Taiwan's chips.
This video is from the Chinese taking down EVIL CCP channel on Brighteon.com.
Sources include:
Please contact us for more information.
