Challenges of a rising Chinese chip design ecosystem

The growing competitiveness of Chinese chip design companies has so far been neglected by policymakers in Europe. Despite the recent US export controls targeting China’s semiconductor industry, it is highly likely that Chinese chip design companies will gain global market share in a range of industry sectors in this decade. This presents challenges across the dimensions of national security, supply chain resilience and technological competitiveness for Europe, its end-customer industries and semiconductor companies. Importantly, most of these challenges are not currently addressed by the proposed European Chips Act and will require different and tailored policy responses. Europe must: (a) invest in its own chip design capabilities; (b) strengthen the “strategic indispensability” of its semiconductor companies and technology providers through policy interventions; (c) engage with national and industry actors in discussions on the international structure of the semiconductor value chain and managing conflicting interests, including among the US-allied community; and (d) map the risk profile of increasing reliance on Chinese chip design across different sectors and industry verticals.

This chapter is part of the report "Europe’s Strategic Technology Autonomy From China" from the Digital Power China Research Consortium:

The Digital Power China (DPC) research consortium is a gathering of China experts and engineers based in eight European research institutions, universities, think tanks and consultancies. Not all DPC researchers contribute to every report. For this report, DPC has been joined by invited guest researchers.