Illustration: Liu Xiangya/GT

Taiwan Semiconductor Manufacturing Co (TSMC) is expected to break ground on its first European factory in Dresden, Germany next week, the VOA reported. While the EU has stepped up efforts to revive the semiconductor sector, history teaches us that achieving success will require more than just manufacturing investment.

Anna Rita Ferrara, an Italian political and international law adviser for research organizations, was quoted by the VOA as saying that relocating production to the US and Europe would help protect the Western information technology sector from "a dangerous supply reduction and a possible technological debacle."

As global reliance on semiconductors continues to grow, US political elites have begun to hype so-called supply-chain vulnerabilities in semiconductors, which they consider to be a serious threat to national security. Their excessive security anxiety has even affected Europe. 

Europe reportedly accounts for about 10 percent of global semiconductor production and is trying to catch up. Some observers believe that encouraging localized semiconductor production may help protect the security of the semiconductor supply chain in the EU.

According to the VOA, the ground-breaking ceremony of TSMC's first European factory will take place on August 20. The Dresden plant is scheduled to go into operation in 2027, with a monthly output of 40,000 chips, including 12-nanometer vehicle chips, the report said.

There is no doubt that TSMC's plant will increase semiconductor production capacity in Europe, but uncertainties and challenges remain. Analysts say that more skilled workers and end customers are needed. The EU has fallen behind in semiconductor manufacturing. That cannot be changed overnight. 

More worrisome is whether efforts to increase local production will lead Europe toward trade protectionism. The European Commission has begun canvassing the region's semiconductor industry for its views on China's expanded production of older generation computer chips, Reuters reported in July, citing two sources familiar with the matter.

It is unclear what action will result from the study, the report said. Now, the US is cracking down on China's attempts to develop its own semiconductor industry, and trying to reduce semiconductor imports from China. Some believe the US may consult with its allies to combat China's chip exports. 

However, while encouraging local production, efforts to curb protectionism are equally important. China has mastered technologies for mature or lower-end chips, so local chipmakers can utilize China's manufacturing advantages and transform them into price advantages. It is unwise for any economy to block cheap semiconductors. Fair competition between locally made semiconductors and foreign made chips will boost the semiconductor industry in the EU.

The EU should maintain strategic autonomy as the US ramps up tech "decoupling," which has disrupted the global high-tech supply chain.

Against the backdrop of repeated US crackdowns on China's semiconductor industry, a global tech race is heating up. In the foreseeable future, the real competition will focus on the high-end chip field. The key for Europe is to maintain and expand its technological edge, not its low-end manufacturing capabilities.

Europe should focus on developing core technologies. In this process, cooperation is important. For instance, some analysts said that Dutch semiconductor equipment maker ASML is the EU's most important bargaining chip. The EU and other economies, including China, should further explore the potential for cooperation. China remains ASML's biggest market, representing 49 percent of system sales in the first quarter, according to media reports. 

In considering their own interests, European politicians should maintain strategic sobriety and further tap into cooperation potential, rather than talking about so-called security issues and trade restrictions that disrupt global supply chains.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn