U.S., Europe Team Up to Address Chip Shortage, Tech Issues

PITTSBURGH—U.S. and European Union officials agreed to join forces in an effort to boost the semiconductor supply chain and maintain leadership in emerging technologies.

In a joint statement Wednesday, the new U.S.-EU Trade and Technology Council said the two governments will “seek to strengthen their competitiveness and technological leadership by developing common strategies to mitigate the impact of non-market practices at home and in third countries.”

While the statement didn’t mention China by name, Beijing’s economic practices—including subsidies for favored industries—were one of the factors behind the commission’s formation.

“We know a big part of this is due to the behavior of China,” a senior European trade official said.

In their meetings Wednesday, officials discussed ways to reinforce semiconductor supply chains and to strengthen export controls and investment screening to protect sensitive technologies and data. The two sides will also develop and implement artificial-intelligence systems that will protect privacy and human rights.

The number of semiconductors in a modern car, from the ignition to the braking system, can exceed a thousand. As the global chip shortage drags on, car makers from General Motors to Tesla find themselves forced to adjust production and rethink the entire supply chain. Illustration/Video: Sharon Shi

The U.S. was represented by Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo and U.S. Trade Representative Katherine Tai. The EU was represented by Valdis Dombrovskis, executive vice president and trade commissioner, and Margrethe Vestager, also an EU executive vice president, as well as competition commissioner.

Semiconductors occupied much of the day’s discussions, Ms. Raimondo said. “We see this as an area for very fruitful collaboration, given that our interests are aligned and struggles are similar to one another’s,” she said. “Over time, we really look to collaborate as we increase supply on each of our shores and also collaborate as related to research and development.”

Ms. Vestager of the EU, when asked why China wasn’t specifically mentioned in the joint statement, said the group was “trying to set a constructive and positive agenda.”

“I think you can see some of the things we would disagree with the other upon what we consider non-market economies,” she said. “But I think this is a constructive approach.”

The meeting was held at a former steel mill on the outskirts of Pittsburgh that has been turned into a research facility for manufacturing and robotics by researchers at Carnegie Mellon University.

The council will continue to work on a range of issues over the coming years through working groups on 10 areas including technology standards, climate and clean technology, data governance and technology platforms, and misuse of technology. The group’s next meeting is scheduled for the spring.

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One of the key outcomes of the meeting was to enhance cooperation on semiconductors to advance transparency and communication in their supply chains, the statement said. The two sides will together “identify gaps, shared vulnerabilities, and opportunities” to strengthen their respective domestic research, developing and manufacturing of semiconductors, it said.

The agreement came as U.S. officials grow increasingly concerned about supply shortages of semiconductors that have severely affected a swath of the U.S. manufacturing industry.

Biden administration officials last week invited representatives of auto makers, technology companies and semiconductor producers, and pitched a program for companies to reveal more information about their supply chains to better understand the bottlenecks. Both the U.S. and EU plan to shore up domestic semiconductor production with government assistance.

The U.S. and the EU together represented 21% of the world’s semiconductor manufacturing capacity in 2020, according to the Semiconductor Industry Association, a trade group.

The group calls on the U.S. and EU officials to work together to strengthen rules for state-owned enterprises and distortive industrial subsidies, and coordinate and target export-control policy.

Write to Yuka Hayashi at [email protected]