chip security: china and eu seek common ground amid trade tensions
shanghai, Monday, 2 June 2025.
semiconductor firms from china and the eu convened to bolster supply-chain security, a move intensified by fears of disruptions. this meeting highlights the vital role of semiconductors, essential for everything from smartphones to spacecraft. with growing us-china trade disputes, european firms seek ways to safeguard access to the chinese market. the eu relies heavily on china for rare earth elements, crucial for semiconductor manufacturing, and this dependence shapes their approach to tech alliances. will this meeting lead to a shift in the global chip landscape?
seeking supply chain resilience
The meeting between chinese and eu semiconductor firms, which took place on may 28, 2025, centered on supply chain resilience and security [5]. Over 40 company representatives from both regions, along with officials from the chinese ministry of commerce, the china semiconductor industry association, and the european union chamber of commerce, attended the discussions [2][5]. The goal was to identify solutions to supply chain vulnerabilities amid rising geopolitical tensions and trade restrictions [5].
eu’s balancing act
The eu faces a difficult position, needing chinese supply chains for mature processes while also attempting to limit china due to us pressure [2]. The eu relies on china for 98% of its rare earth elements, which are essential for manufacturing semiconductors [2]. Specifically, elements like gadolinium and terbium are vital for components such as photoresists and magnets [2]. Concerns about supply disruptions have grown since china implemented export controls on certain rare earth elements in april [2].
china’s strategic approach
China aims to counter us tech restrictions through cooperation with the eu [2]. By collaborating, china hopes to gain access to advanced eu equipment and technologies, reducing pressure on its domestic advanced manufacturing [2]. This strategy also aims to create a rift between the us and eu tech alliance [2]. China may selectively ease rare earth export restrictions for eu companies that support chinese technological development, potentially in exchange for key technologies [2].
potential impact on tech companies
The evolving dynamics could significantly affect companies like tsmc, asml, and nvidia [GPT]. Tsmc’s new chip design center in munich signals a move to strengthen european ties [1]. Nvidia is reportedly considering developing a new ai chip specifically for the chinese market, despite us restrictions [1]. Synopsys, a us chip design software firm, recently halted sales and services in china, highlighting the ongoing tech tensions [1]. These developments suggest a fragmented market where companies must navigate complex geopolitical considerations, potentially impacting stock valuations.
investment considerations
Investors should monitor policy changes and trade dynamics impacting semiconductor supply chains [GPT]. Companies demonstrating adaptability amid trade tensions may represent attractive investment opportunities [GPT]. The eu’s reliance on chinese rare earth elements and its need to balance relations with both the us and china create uncertainty [2]. Companies successfully navigating these challenges, such as those diversifying supply chains or securing access to critical materials, may offer long-term value [GPT].