European tech accuses US of using sanctions to shut it out of China

By StockHastix On Dec 25, 2020

</ifQrame></div><p></p> <div> <p>European tech executives and diplomats are accusing the US of using its sanctions regime to shut them out of the Chinese market while offering exemptions for American companies. </p> <p>Over the past two years, the US has imposed aggressive sanctions on Chinese companies such as Huawei and, as of Friday, the chipmaker SMIC, which have prevented them from buying most US-made technologies. </p> <p>But one senior European executive said the sanctions had created an “America First” trade policy, involving exemptions for US companies while groups from other countries are cut out of the Chinese market. “So far, US companies have been given licences to supply Huawei, while European suppliers cannot,” said the executive, who asked not to be named.</p> <p>Many European businesses that produce chips and chipmaking equipment are affected by American sanctions because they rely on US intellectual property. </p> <p>A second European tech executive said their company had once been stopped from supplying components to Chinese buyers because of suspicions that they could be used for military purposes. But the market for the components was quickly filled by US vendors selling through middlemen, the executive claimed.</p> <p>The impact on EU companies has been significant. Earlier this month, one of Europe’s biggest semiconductor companies, Swiss-based STMicroelectronics, postponed its annual revenue target for a year, citing US sanctions on an “important customer” — Huawei. ST’s shares dropped almost 12 per cent the same day.</p> <div class="n-content-layout"> <figure class="n-content-picture n-content-layout__container"><picture><source media="screen and (max-width: 490px)" srcset="https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F25bd5b00-3ec8-11eb-bbbb-9fc34eea463d-mobile.png?dpr=1&fit=scale-down&quality=highest&source=next&width=490" data-id="https://api.ft.com/content/300e84f9-6d04-46e5-94be-68a150711c54" data-original-image-width="600" data-original-image-height="800"><img src="https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F25bd5b00-3ec8-11eb-bbbb-9fc34eea463d-standard.png?dpr=1&fit=scale-down&quality=highest&source=next&width=700" data-id="https://api.ft.com/content/ee87f41a-0b16-46c3-9e20-995363d93ad9" data-image-type="graphic" data-original-image-width="1400" data-original-image-height="1000" alt="Column chart of Imports of semiconductors and manufacturing equipment ($bn) showing Where China buys its chips" data-srcset="https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F25bd5b00-3ec8-11eb-bbbb-9fc34eea463d-standard.png?dpr=1&fit=scale-down&quality=highest&source=next&width=700 1x, https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F25bd5b00-3ec8-11eb-bbbb-9fc34eea463d-standard.png?dpr=2&fit=scale-down&quality=medium&source=next&width=700 2x"/></source></picture></figure> </div> <p>Chief executive Jean-Marc Chery told investors that its market “did not grow substantially during the past two years,” citing the US-China trade war as one reason.</p> <p>In September, the head of the German chipmaker Infineon told CNBC that US-China tensions were “a big concern”. Infineon told the FT: “Europe must be careful not to be crushed in the competition for technological leadership between the USA and China.”</p> <p>Dutch company ASML, the world’s biggest chipmaking equipment group, has been blocked from selling its newest-generation machines to SMIC, China’s biggest chipmaker. The company expects China to make up one-quarter of its sales this year.</p> <p>The list of companies granted licences to sell to blacklisted Chinese corporations is not public. The Financial Times has reported that several US companies, as well as South Korea’s Samsung and Japan’s Sony, have won approval to supply some parts to Huawei.</p> <p>European executives and diplomats say that while they have sympathy with some of the US government’s aims to prevent chips contributing to Chinese military build-up, tech companies and governments are growing increasingly frustrated with the unilateral sanctions, and hope to reduce their use of US intellectual property. </p> <p>At the start of December, 17 EU member states announced a “European initiative on processors and semiconductor technologies” via the European Commission. The group noted that one-fifth, or €145bn, of the European Recovery and Resilience Facility funds will go to “digital transition” projects over the next two to three years, and advocated for investment on semiconductor research.</p> <div class="n-content-layout"> <figure class="n-content-picture n-content-layout__container"><picture><source media="screen and (max-width: 490px)" srcset="https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F94e1d680-3ec5-11eb-baf9-fdb67551ff9c-mobile.png?dpr=1&fit=scale-down&quality=highest&source=next&width=490" data-id="https://api.ft.com/content/f088df9f-f70a-41f0-a3ab-9ca54daf7100" data-original-image-width="600" data-original-image-height="800"><img data-src="https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F94e1d680-3ec5-11eb-baf9-fdb67551ff9c-standard.png?dpr=1&fit=scale-down&quality=highest&source=next&width=700" data-id="https://api.ft.com/content/b38db426-ab54-454c-bb77-e6ad4f20aeb4" data-image-type="graphic" data-original-image-width="1400" data-original-image-height="1000" alt="Column chart of exports of semiconductors and manufacturing equipment (€bn) showing where Europe sells its chips" data-srcset="https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F94e1d680-3ec5-11eb-baf9-fdb67551ff9c-standard.png?dpr=1&fit=scale-down&quality=highest&source=next&width=700 1x, https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F94e1d680-3ec5-11eb-baf9-fdb67551ff9c-standard.png?dpr=2&fit=scale-down&quality=medium&source=next&width=700 2x"/></source></picture></figure> </div> <p>“This declaration shows that European governments want to be less dependent on US technology, although that will take a long time,” said a European diplomat based in China.</p> <p>“This process was accelerated by the US sanctions. For European companies, China is such a big market that they need to find ways of serving it,” the diplomat added.</p> <p>Joerg Wuttke, chair of the EU Chamber of Commerce in China, said: “Europe doesn’t want to get sucked into a bilateral confrontation and have to choose between [the] Chinese and the US.” </p> <p>EU foreign minister Josep Borrell earlier this year also referred to the pressure to align with either the US or China and instead advocated the “Sinatra doctrine”, writing in a blog post: “We as Europeans have to do it ‘My Way’”.</p> <p>“When it comes to China, the US’s priorities at present are security, security, security. European governments care about other things: market access, standard-setting.”</p> <p>Mr Wuttke said one of the biggest challenges was for Europe’s car industry, which relies on US technology for its smart and autonomous cars. The world’s biggest market for both car manufacturing and sales is in China.</p> <p>“They are now wondering how to manufacture in China without semiconductors from the US, anticipating that the US will stop them exporting certain types of chips to China,” added Mr Wuttke.</p> <p><em>Additional reporting by Qianer Liu</em></p> <div class="n-content-video n-content-video--internal p402_hide"> <div class="n-content-video__placeholder" data-o-component="o-video" data-o-video-id="a5b99a11-e150-4d0c-8bdd-1a656fb3091c"><span>Video: What a Biden presidency means for the US-China tech war</span></div></div></div> <p><a href="https://www.ft.com/content/7baa8caf-ca3f-4d95-967c-e315a3ee348f">Source </a></p><div class="stock-160" style="text-align: center; " id="stock-252089150"><iframe src="https://cdn.plus500.com/Media/Buttons/Responsive/57113/index.html?set=Buy_Sell_Buttons&language=EN&country=GB&url=https%3A%2F%2Fwww.plus500.co.uk%2F%3Fid%3D128619%26pl%3D2&isRW=1" width="160" height="70" scrolling="no" frameborder="0" style="border:none">