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  HOME | Business & Economy (Click here for more)

EU Tackles Chinese Competition with Multi-Billion Microelectronics Investment

BRUSSELS – The European Union’s antitrust watchdog approved on Tuesday plans by France, Germany, Italy and the UK to fund a multi-billion research project in microelectronics, as the bloc seeks to keep up with Chinese competitors.

The decision, the first under rules that came into force in 2014, allows the four countries to allocate up to 8 billion euros ($9.11 billion) in public and private funding by 2024 for research centers and companies to jointly work on microchips and sensors becoming smarter and more energy-efficient.

“This can help Europe leap in innovation to benefit its economy and citizens,” said competition commissioner Margrethe Vestager.

The bloc that seeks to promote the capability of European corporate giants to take on Chinese competitors, gain more transparency on how China uses subsidies to promote its companies abroad and screen Chinese and other foreign investments in Europe.

The European Commission earlier this year had drawn the ire of French and German officials after it raised antitrust objections to the planned merger of two railway giants, Germany’s Siemens and France’s Alstom, a project actively promoted by French President Emmanuel Macron to compete against China’s rail behemoths.

German Chancellor Angela Merkel in June said publicly that EU competition law “does not help us sufficiently” to create global champions.

Vestager refuted that claim and said EU competition law in recent years allowed the creation of global giants in industries such as cement, beer, and dairy.

“This is all to show that you can have both amazing companies that have a European home and a European market that benefits from competition,” she said.

On the Siemens-Alstom merger, she said companies have submitted concessions, but that it was still up to the marketplace to decide whether those concessions are sufficient for the merger to go ahead.

German companies Infineon, Carl Zeiss, and Robert Bosch are included in the project approved Tuesday, according to the commission. Germany in recent years has become wary of Chinese purchases of European high-tech companies, after its robotics company Kuka was taken over by a Chinese company in 2016.

Largely in response to that acquisition, which took German authorities by surprise, Berlin has pushed for an investment screening system at European level whereby countries need to notify each other whenever companies from outside the block purchase strategic infrastructure or technologies. A political agreement on that investment screening notification system was reached last month and should enter into force next year.

The recent scandal surrounding Chinese smartphone maker Huawei, which the US has urged allies, including Germany and Italy, to avoid using, is also contributing to Europe’s attempts to grow more independent from Chinese chip makers.

European Commission Vice President Andrus Ansip, who covers digital issues, said earlier this month that “I think we have to be worried about” Huawei and other Chinese companies who, he said, have been ordered to cooperate with Chinese intelligence services. He said this is partly about “chips they can put somewhere to get some... of our secrets.”

In a statement, Huawei Europe said it was “surprised and disappointed” by Ansip’s remarks.

 

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