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Computer chip group SEMI to EU: new export controls should be 'last resort'

FILE PHOTO: Illustration picture of semiconductor chips

AMSTERDAM (Reuters) -The European Union should think twice before imposing additional export controls or rules on foreign investment, semiconductor industry group SEMI Europe said in a position paper published this week.

The warning comes after the European Commission in January presented a package of plans aimed at improving "economic security" and preventing unwanted technology transfers to rivals such as China.

While the EU is right to weigh risks that its rivals may obtain European technology, SEMI Europe argued free trade partnerships were the best way to ensure security "in geopolitical crisis scenarios".

"In order to guarantee the long term success and prosperity

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of the European semiconductor industry, our companies must be as free as possible in their investment decisions or otherwise risk losing their agility and relevance," the group said.

European Commission plans include harmonization of export restrictions, stronger vetting of inbound investment, and a probe into whether investments by European companies abroad may also pose a threat.

"We felt that it was the right time to respond" SEMI Europe spokesman Stefano Orlando said on Tuesday.

The group represents companies from across the European chip industry including ASML, NXP, Infineon and STMicroelectronics, as well as leading research laboratories Imec of Belgium, Fraunhofer of Germany and CEA Leti of France.

SEMI warned that heavy-handed vetting of inbound investments could discourage companies and "undermine the potential success of the European Chips Act" - the bloc's attempt to match state support for the chip industry in response to similar programmes in China and the United States.

Intel and Taiwan's TSMC have announced plans to build new semiconductor plants in Europe, but neither have yet been awarded subsidies.

Following a campaign by the U.S. government aimed at hobbling China's ability to manufacture its own advanced computer chips, the Dutch government has restricted ASML, Europe's largest tech firm, from exporting many of its products to China.

"In light of the recent geopolitical tensions, and the prominent role that export controls in the semiconductor industry have played in this, it has become increasingly necessary for the EU to speak with a common voice," SEMI said.

"Export controls should indeed be a last resort for cases with genuine concerns for national security."

(Reporting by Toby Sterling; Editing by Lisa Shumaker and Emelia Sithole-Matarise)