Chip Lobby Group SEMI To EU: Export Restrictions Should Only Be Used In Self-defense

SEMI, an industry association representing 3,000 chip vendors, would really appreciate it if the European Union would back off plans to impose export controls on China, arguing that they should only be used as a "last resort" to protect national security.

In a paper [PDF] published on Monday, the industry association laid out its criticisms of the European Commission's five-point strategy [PDF] to improve the bloc's economic security and stem the flow of sensitive technologies to China.

Restrictions on the export of chip tech have become a potent instrument in US efforts to stifle China's domestic semiconductor industry. European nations, under pressure from US interests, have taken actions such as the Netherlands’ government barring the export of ASML's deep ultraviolet (DUV) lithography machines used in the production of latest-gen semiconductors to China.

While SEMI acknowledges the need for export controls to prevent sensitive technologies reaching potentially hostile powers, it urges sparing use of the instruments.

"SEMI Europe would like to recall that the success of the European and global semiconductor industry is built upon a complex supply chain and that export controls should indeed on be a last resort for cases with genuine concerns for national security," the group argues.

Among the measures proposed by the European Commission is tougher screening of foreign investments in the EU's chipmakers. SEMI contends that, due to the complex supply chains on which semiconductor vendors rely, efforts to screen foreign investments could end up backfiring.

"Over the last decades, European semiconductor companies have greatly benefitted from substantial investment from outside the EU," the industry association notes, adding that the EU should avoid "the introduction of excessive screening mechanisms that may discourage non-EU investors and undermine the potential success of the European Chips Act."

In other words, please don't scare away foreign investors – we kinda need them.

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Unsurprisingly, SEMI isn't a huge fan of the European Commission scrutinizing outbound investments either, arguing that it would put an unnecessary burden on local semiconductor businesses.

"In order to guarantee the long term success and prosperity of the European semiconductor industry, our companies must be as free as possible in their investment decisions or otherwise risk losing their agility and relevance in global markets," the paper reads.

Instead, SEMI makes the case that if ensuring Europe's economic security is the goal, export controls should be the "primary instrument for preventing technology leakage" – and only when absolutely necessary.

However, a recent investigation by the US – where investment in Chinese firms is already heavily restricted – would seem to undermine that argument. That report found that investments by US firms in Chinese chip vendors, including SMIC, played a pivotal role in the advancement of the Middle Kingdom's domestic semiconductor manufacturing capability.

Instead of heavy-handed protective measures, SEMI makes the case that European chip firms would be better served by placing an equal emphasis on promotion of economic opportunities and the creation of partnerships with non-European countries.

"The EU should work to guarantee its companies the highest possible level of access to the global markets," the group contends. ®