The U.S. 50% semiconductor tariff hike accelerates supply chain realignments, with TSMC’s European expansion and EU Chips Act investments testing Europe’s capacity to balance tech sovereignty with ASEAN partnerships.
As TSMC finalizes plans for a €10 billion Dresden fab following Murata’s profit warnings, Brussels faces mounting pressure to reconcile its Chips Act priorities with ASEAN’s booming legacy chip production.
Tariff Shockwaves Reshape Global Semiconductor Landscape
The U.S. Commerce Department’s 50% tariff on Chinese semiconductors, effective 22 May 2024, has triggered immediate supply chain adjustments. TSMC CEO C.C. Wei confirmed on 30 May that the company is accelerating its Dresden fab partnership with Bosch and Infineon, targeting 2027 production for European automotive clients. This follows Murata Manufacturing’s 28 May profit warning, citing 20% quarterly declines in smartphone and automotive component sales.
EU Chips Act Tested by Asian Production Shifts
While the EU approved €3.2B in state aid for 2nm chip research on 27 May, analysts question its competitiveness against Asian incentives. ‘Taiwan offers 25% R&D tax credits, South Korea pledged $19B in subsidies just last week,’ notes TechInsights’ Dan Hutcheson. The European Commission faces pressure to relax state aid rules as Infineon warns of ‘two-year lag’ in mature-node chip production.
BIS Report Urges ASEAN-EU Collaboration on Legacy Chips
A 29 May Bureau of Industry and Security (BIS) report highlights ASEAN’s 18% annual growth in legacy semiconductor output, urging Brussels to ‘avoid overdependence on geopolitical flashpoints.’ Malaysia’s Minister of Trade Tengku Zafrul announced a $5.6B investment in analog chip facilities this week, signaling the region’s push to become the non-Chinese alternative for mature nodes.
Startups Navigate Bifurcated Standards
French AI chip designer SiPearl recently demonstrated RISC-V processors compatible with both U.S. export controls and Chinese domestic standards. CTO Philippe Notton stated: ‘Our June-updated architecture allows clients to toggle between instruction sets without redesigning hardware.’
Historical Context: From Shortages to Sovereignty
The current crisis echoes 2021’s chip shortage, when automotive giants slashed production by 11% globally. However, today’s scramble differs fundamentally through its geopolitical drivers rather than pure supply-demand mismatch. The EU’s 2017 Electronic Components and Systems Initiative, which allocated €1.2B for IoT chips, provides a cautionary tale – despite funding, Europe’s global semiconductor market share stagnated at 8%.
ASEAN’s Rising Strategic Value
ASEAN nations now account for 22% of global PCB production and 15% of assembly services, per WTO data. This mirrors China’s 2005-2015 ascent in low-margin electronics manufacturing before moving up the value chain. With Thai authorities approving $1.3B in semiconductor FDI incentives last month, the region appears poised to capture mid-tier chip manufacturing as U.S.-China tensions persist.
