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🇰🇷 South Korea /Economy & Trade

EU's 'Technology Sovereignty' Dilemma: Cannot Leave China

From Hankyoreh · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

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  • The EU aims to strengthen its technological sovereignty with a new package focusing on semiconductors, AI, cloud computing, and open-source software.
  • European companies, while welcoming the initiative, emphasize the need for industry-led approaches and pragmatism, particularly regarding their significant reliance on China's supply chains and market.
  • Despite geopolitical tensions and EU efforts to diversify, European firms continue to operate and expand in China due to cost advantages and the necessity of integrated supply chains, especially for emerging technologies.

The European Union is navigating a complex path to technological sovereignty, seeking to bolster its domestic industries in critical sectors like semiconductors, AI, and cloud computing. The EU's "European Technology Sovereignty Package," announced on June 3, aims to enhance European capabilities and reduce reliance on external powers. However, the initiative faces a significant challenge: the deep integration of European businesses into global supply chains, particularly those involving China.

European Union's 'strategic projects' must align with industry needs and be company-led.

— Christoph PuechASML CEO's statement on LinkedIn regarding the EU's technology sovereignty proposals.

ASML, a leading European semiconductor equipment manufacturer, has voiced a need for the EU's strategic projects to align with industry demands and be company-driven. This sentiment reflects a broader concern among European businesses that a purely protectionist approach could hinder competitiveness. While the EU's "Critical Raw Materials Act" aims to limit dependence on any single country for essential materials, many European firms find it impossible to decouple from China's vast and cost-effective supply networks.

We prioritize European partnerships but maintain a pragmatic approach that does not exclude the best solutions from outside Europe.

— Joint statement from European companiesStatement from major European tech firms like Airbus, ASML, Ericsson, and SAP on EU digital and innovation policies.

Major European companies, including Airbus, ASML, Ericsson, and SAP, have jointly stated their commitment to European partnerships but also advocate for a "pragmatic approach" that does not exclude superior solutions from outside the EU. This pragmatic stance is underscored by a survey of nearly 300 European companies operating in China, revealing that about 70% intend to maintain or increase their business there. The primary drivers are not just lower costs but the essential role of China's supply chains in sectors like electric vehicles and consumer electronics. Leaving these chains, as one European logistics executive noted, would allow Chinese companies to dominate them.

If they don't, Chinese companies will take over those supply chains.

— European logistics executiveExplanation to CNBC on why European companies remain integrated into Chinese supply chains.
DistantNews Editorial

Originally published by Hankyoreh in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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