It became official on Tuesday: The Taiwanese world market leader TSMC is building a chip plant in Germany. Its partners are Bosch, Infineon and the Dutch company NXP. This at least slows down the migration of key technologies to Asia. Modern microchips are being produced on European soil. But how modern?
The factory will produce chips with process sizes between 12 and 28 nanometers. That is a solid mid-range – and a compromise between the current demand of the car industry for simpler chips and the expectations of the governments in Berlin and Brussels. They would have preferred to bring absolute cutting-edge technology to Germany. But TSMC will take it to the USA first for the time being.
China is Niger’s main trading partner. And the two countries have also built a lot of other things together over the past few years. Beijing is currently building Africa’s longest pipeline there. The mining of large uranium deposits is also planned. The recent military coup only has a limited effect on these developments, as Frank Sieren writes. In fact, the alarming events could take the partnership between Niger and China to a new level.
Because: Unlike the West and the African Union, China does not directly condemn the coup. If the military junta prevails, it will expand its influence in the region without competition after the withdrawal of the Western powers. At the moment, however, even the government in Beijing is watching developments with concern. Ambitious economic activities ultimately require political stability on the ground, after all.
Your Fabian Peltsch
Feature
TSMC builds in Germany with Infineon, Bosch and NXP
The key points of the project are very much in line with Table.Media reports from May and last year, which were based on informed sources:
The European partners are the automotive supplier Bosch, the semiconductor specialist Infineon and Dutch chip manufacturer NXP. Together they form a supply network that mutually supports each other.
They jointly found a new company in Dresden, the European Semiconductor Manufacturing Company GmbH, or ESMC for short. TSMC owns 70 percent of the company; the other partners will each hold 10 percent.
Construction will begin next year and is expected to take three years.
Key technology comes back to Europe
The exact investment sum has not yet been officially determined as it depends on government funding, which itself has not yet been formally approved. But it will undoubtedly be in the range of ten billion euros. Around half of it will come from the German government. This is the only way TSMC’s statement of committing a maximum of three and a half billion euros of its own capital makes sense.
In the overall industrial policy picture, constructing a plant by the world’s most technically advanced semiconductor company is a success. As a result, German government politicians shower themselves with praise for the new site. Europe has lost key technologies to Asia decade after decade. This was not considered a problem as long as the supply was not in question in global trade. However, the geopolitical situation has changed. The tolerance for dependencies has declined sharply.
Implementation of new strategies
TSMC would certainly not have come without the large subsidy. However, the expenditure is in line with the German government’s security and China strategies as well as the European course of action. TSMC’s announcement explicitly mentions the EU Chips Act. So the companies want to draw funds from European pots.
The plant will mainly produce two classes of microchips:
CMOS chips with process sizes between 22 and 28 nanometers. PC enthusiasts may know the abbreviation CMOS as a memory for hardware settings. However, what is meant here is a common class of power-saving elements.
FinFET chips with process sizes between 12 and 16 nanometers. This technology is more modern and future-proof. It allows particularly fast data processing (the smaller the nanometer number, the better the chip).
More modern than expected – and yet old
This type of chip was considered new and modern around 2015. At least this is better than initially expected – the first reports about the plant had only anticipated 22-nanometer technology, which again was up-to-date around 2010.
But even 12 nanometers are not the vanguard of technology development. This feels particularly painful compared to TSMC’s investments in the United States: The Taiwanese company manufactures cutting-edge products there. What TSMC brings to Germany, on the other hand, is called “mature technology” in jargon.
Car industry only moderately thrilled
However, these chips are currently still too modern for the German car industry. They require considerably simpler products with process sizes of around 90 nanometers, according to a German Association of the Automotive Industry (VDA) spokesperson in Berlin on Tuesday. The car industry certainly also needs the technologies that will be manufactured at ESMC. Nevertheless, the direct effect of the Dresden plant on its independence will be limited.
But the plant is not expected to be ready until 2027 anyway – and cars will soon mutate into high-performance computers on wheels. AI functions, such as autonomous driving at higher levels, will require fast and power-saving chips on par with modern graphics cards in the foreseeable future. These are already produced today in 7-nanometer technology and lower.
Breton had promised more
TSMC is ultimately giving Germany outdated technology after all. This is not in line with the spirit of the EU Chips Act: Internal Market Commissioner Thierry Breton had envisaged the creation of state-of-the-art plants to produce chips with the smallest process sizes. The reality falls short of these grand ambitions, writes the scientist Mathieu Duchâtel of Institut Montaigne.
But Duchâtel points out that this does not mean the Chips Act is unsuccessful. On the contrary, the TSMC plant is widely regarded as a strategic success. Because even if the site seems expensive from a business perspective, it was nevertheless the right thing to do: Building back a modern chip industry in Europe is necessary and overdue.
Global subsidy race
The necessary subsidies are also so expensive because the United States and China are spoiling the industry with billions of dollars:
China plans subsidies of one trillion yuan (125 billion euros) in the coming years to become independent of the United States. China has paid around 12 billion yuan (1.5 billion euros) in subsidies to its semiconductor companies in 2022 alone, according to local media.
The US far exceeds this. President Joe Biden is mobilizing 1.5 trillion dollars over the next few years under the Science and Chips Act. That is a strong incentive for industry to invest in America.
If the EU wanted to get a share, it had to put in a little extra. In fact, the 43 billion euro budget of the European Chips Act looks modest compared to the American and Chinese competition.
In light of this comparison, the subsidy for TSMC in Dresden no longer seems so expensive, especially since Intel receives twice as much in Magdeburg.
TSMC: thriving partnership
TSMC technology also fits perfectly into the existing supply chains. Bosch and Infineon already run their own semiconductor plants nearby, which will be welcome customers for TSMC’s products. Infineon, for instance, is formally also a semiconductor manufacturer, although its business model differs from that of TSMC.
In fact, Infineon has some of its products manufactured in the Taiwanese’s highly efficient factories. This makes them more partners than competitors.
The military coup in Niger shifts the balance of power between the BRICS countries China, Russia and India on the one side, and France and the USA on the other. The West does not accept the military coup; the coup leaders, in turn, oppose the West. China’s presence, on the other hand, “will not be affected by the coup,”Rahmane Idrissa, a researcher at the African Studies Centre at Leiden University in the Netherlands, soberly observes.
With a share of 18.7 percent, China is already Niger’s largest trading partner, ahead of the former colonial power France (14.1 percent) and India (8.5 percent). Should coup leader General Abdourahmane Tchiani continue his anti-Western stance and stay in power, China could even overtake France as the largest foreign investor in the country.
Niger probably lost to the West due to overthrow
Until the coup, Niger was the last democratic government in the Sahel, and thus extremely important for Europe. The upheavals in neighboring Mali and Burkina Faso had made Niger the West’s geostrategic bastion in the region. What cheap Russian gas was for Germany, is Niger’s affordable uranium for France, which continues to rely heavily on nuclear power. Niger is also of military importance to the West. So far, not only German and French troops are stationed in the country; since 2016, the United States has been operating “Niger Air Base 201” there, one of its few permanent US military bases in Africa.
This is all now hanging in the balance since General Tchiani seized power at the end of July and ousted the incumbent, democratically elected president Mohamed Bazoum. Tchiani immediately stopped military cooperation with the French. This is bitter because France already had to withdraw its troops from Mali and Burkina Faso after the military coups there.
China with many projects in Niger
In any case, China and Niger have already built a lot together and still have a lot planned. Beijing is currently building a 2,000-kilometer-long oil export pipeline. And they plan to jointly mine uranium deposits. A joint industrial park is also planned.
The oil pipeline is already more than 60 percent complete. It is capable of transporting 60,000 barrels of oil per day and will be the longest pipeline in Africa when it goes into operation. It runs through Benin in the south and ends at the Gulf of Guinea, near the Nigerian city of Lagos, with a population of 16 million. It will connect the 650 million barrel Agadem oil field to the international market for the first time, which Petro China and Niger have been jointly developing since 2008.
Niger only became an oil producer in the first place with China’s help. The output of the oil field is now to be expanded. Together with the pipeline, this includes investments of around four billion US dollars alone, according to the Chinese Ministry of Commerce. So far, according to calculations by the local US Embassy, China has invested 2.61 billion in Niger, making it the second-largest investor after the French.
The investments also include an oil refinery with a capacity of 20,000 barrels per day to meet demand in Niger. China holds a 60 percent share in the plant. Niger’s imports from China increased by an average of just over 14 percent a year over the past 26 years to 441 million US dollars in 2021, and exports by as much as 33 percent to 344 million.
China and Niger: joint uranium mining
The joint production of uranium is also making progress. Just over a month ago, then-President Bazoum received a delegation from the China National Uranium Corporation (CNUC) to negotiate terms for a Chinese takeover of the Nigerien Société des Mines d’Azelik (Somina). Nine years ago, the project had initially been abandoned due to low international uranium prices at the time. “Prices are now favorable internationally,” said Ousseini Hadizatou Yacouba, Niger’s mining minister under Bazoum. “It is for us to better develop this sector with all the partners, including the CNUC, who already have operating permits.”
Niger is one of the five largest uranium suppliers in the world. About a quarter of European uranium imports and a third of France’s uranium imports come from Niger. With 56 nuclear power plants, France ranks among the countries with the most nuclear power plants after the United States. Germany also imports nuclear power from France from time to time. So Germany cannot have any interest in French uranium going to China in the future.
Stronger Chinese presence in Niger
Beijing, in turn, is under great pressure to diversify its uranium suppliers: 70 percent of China’s uranium imports come from just three countries: Kazakhstan, Canada and Australia. So even without the coup, China would have pushed for a stronger presence in Niger. The coup, however, could accelerate this development. At least that is what Gyude Moore, former Minister of Public Procurement in Liberia, now Senior Policy Fellow at the Center for Global Development in Washington, fears: “China has no preference regarding regime type, so if Western governments withdrew, China’s influence would grow, by default.”
But it is not yet clear that this will happen. What is clear, however, is that Tchiani does not have the support of the African Union. On 29 July, it gave the coup leaders an ultimatum of two weeks, backed by the UN Security Council, to restore the old balance of power. So far, there are no signs that they will bow to the pressure.
China: neutrality, but pro Bazoum
In this situation, China is more neutral than the West and the African Union. According to a statement by the Foreign Ministry, China hopes that the politicians in Niger “settle differences peacefully through dialogue, restore normal order at an early date, and uphold the stability and development of the nation.” That China is taking the situation seriously is shown by the fact that the embassy in Niger urged Chinese nationals to avoid traveling to Niger unless absolutely necessary.
Nevertheless, Beijing clearly took a position in support of the deposed President Mohamed Bazoum in the statement. He was “a friend of China,” and Beijing hoped “his personal safety is ensured,” explained Wu Peng, head of the foreign ministry’s Africa department. By Chinese standards, this is a pretty clear commitment to Bazoum – and shows: China requires political stability for its economic activities. Whether General Tchiani can provide that is uncertain.
Geopolitik
Sinolytics.Radar
Foreign automakers expand partnerships in China
Dieser Inhalt ist Lizenznehmern unserer Vollversion vorbehalten.
In late July, Volkswagen announced a 700 million US dollar investment in Xpeng, one of China’s successful EV players. Xpeng will be a knowledge and technology provider in this new strategic partnership. The goal is to jointly develop intelligent connected vehicles for the Chinese market.
While originally forced into Joint Ventures to gain access to the Chinese market, foreign automotive OEMs and suppliers increasingly seek Chinese partnerships to conduct joint research and gain access to advanced technologies.
In March, Toyota announced to join forces with Chinese OEM Haima to bring fuel-cell driven passenger vehicles to the market in Hainan. Simultaneously to the Volkswagen announcement, Audi said it is planning to extend its partnership with state-owned SAIC to use its EV platform.
French automotive supplier Forvia, formerly Faurecia, has successively expanded its partnership with Chinese EV manufacturer BYD. They jointly operate seven manufacturing plants in China and are now expanding their supply chains in the Asia-Pacific region with a new assembly plant in Thailand.
Despite continuing political discussions on de-risking, we will see intensified localization by foreign OEMs in China in order to remain successful in the fiercely competitive Chinese market.
Besides extending local partnerships, foreign OEMs will also continue doubling down on their own capacities, especially in R&D. BMW just opened a new R&D center in Shanghai in July, where BMW quotes itself to have ” built-up fully-fledged R&D competency and software development capabilities” for ICVs. Similarly, Volkswagen pooled its R&D activities across its JVs and brands in Hefei with an additional 1bn EUR investment, hoping to significantly shorten innovation cycles.
Sinolytics is a European research-based consultancy entirely focused on China. It advises European companies on their strategic orientation and concrete business activities in the People’s Republic.
Autoindustrie
Technologie
News
Weak trade figures point to dip in growth
The economic slump of important trading partners hit China, the world’s leading exporter, in July. Exports from the People’s Republic declined more than expected by 14.5 percent year-on-year. The customs authority reported this on Tuesday. China thus recorded its worst export result since February 2020, when the Covid pandemic began. In July, China’s imports also contracted 12.4 percent, much more than forecast. On average, experts had expected exports to decline by 12.5 percent and imports by 5.0 percent.
China’s trade surplus grew by 80.6 billion US dollars in July. EU Trade Commissioner Valdis Dombrovskis, recently described the EU’s deficit with the People’s Republic as “staggering” in an interview with the Financial Times. Beijing’s foreign ministry responded quickly. “China has never deliberately sought surplus in trade with the EU,” it announced on Tuesday. “If the EU truly wants to address this issue, it needs to lift export control against China, rather than putting the blame on China,” it added.
The weak figures could be a harbinger that China’s growth may slow again in the third quarter. Activity in construction, industrial production and services are all slowing, as are foreign direct investment and industry profits. After 5.5 percent growth in the first quarter, the economy still grew by 6.3 percent in the second quarter, both year-on-year.
Dispute over presence in South China Sea continues
The dispute between the Philippines and China over disputed sea territories continues. Beijing did not initially respond on Tuesday to a complaint from Manila about the use of water cannons against Philippine vessels on Saturday. Instead, China again called on the Philippines to remove a warship named “BRP Sierra Madre,” which was used as a military base and deliberately ran aground 24 years ago, from the disputed waters.
According to AFP, the Philippines had “repeatedly made clear promises to tow away the warship illegally ‘stranded’ on the reef,” a Chinese foreign ministry spokesperson said. Instead of towing it away, Manila “also attempted to repair and reinforce it on a large scale.”
Manila, in turn, accuses the Chinese coast guard of blockading Philippine ships near the “BRP Sierra Madre” and firing water cannons at them. The Philippines had deliberately grounded the warship at Second Thomas Shoal in the Spratly Islands area in 1999 in order to install a permanent presence there. A handful of Philippine navy soldiers have been stationed on the rusting ship ever since.
According to the Philippine Department of Foreign Affairs, the deployment of soldiers on the Second Thomas Shoal was a response to China’s “illegal occupation” of nearby Mischief Reef in 1995. The soldiers depend on regular supply missions to survive in their remote location. One such mission was en route to the ship on Saturday carrying food, water, fuel and other supplies, according to Manila, when the Chinese coast guard appeared. In response, the Philippine government summoned the Chinese ambassador to Manila on Monday and handed him videos and a complaint. ck
Philippines
South China Sea
Facial recognition: Stricter rules for companies
China aims to restrict the use of facial recognition technology by companies. The Cyberspace Regulatory Authority (CAC) published draft rules to this effect on Tuesday. The proposed guidelines require, among other things, a well-justified reason for the use of facial recognition as well as the consent of the individual.
Companies in China have been experimenting with facial recognition technology for some time, for example, for paying in shops or accessing train stations. According to the now presented draft, airports, hotels, train stations, banks, stadiums, exhibition halls and other facilities are no longer allowed to use facial recognition to verify personal identity – unless required by law. If other, non-biometric alternatives exist that fulfill the same purpose or equivalent business requirements, they are to be given priority.
According to the South China Morning Post, many Chinese courts have already ruled against companies for excessive use of facial recognition in the past and imposed fines. However, for certain administrative situations, which the draft does not specify, individual consent will still not be required in the future. Public comments on the draft can be submitted until 7 September. rtr/fpe
Society
Technology
Parents of fled activist questioned
Hong Kong security police have again questioned the parents of an activist who fled overseas. The parents of activist Anna Kwok were temporarily detained on Tuesday and questioned for several hours, the South China Morning Post reported, citing family friends. They were questioned about whether they had contacted their daughter or offered her financial support.
Kwok is a key member of the US-based organization Hong Kong Democracy Council, advocating for more freedom in China. Police accuse her of attending meetings and campaigning abroad between September 2012 and February 2022, as well as meeting with foreign politicians and officials to lobby for sanctions against mainland China and Hong Kong. ck
Hongkong
Human Rights
Nationales Sicherheitsgesetz
Heads
Garima Mohan – India expert at the Marshall Fund
Garima Mohan is an India expert at the German Marshall Fund.
“Both India and the EU are currently seeking contact with each other – a reaction to an increasingly tense relationship with the People’s Republic of China,” explains Garima Mohan, Senior Fellow in the Indo-Pacific Programme of the German Marshall Fund in Berlin. This represents a significant change in India’s foreign policy, as India has long been interested in shaping the Western-dominated world order in a more pluralistic way with other BRICS countries. According to Delhi, however, China is now more interested in expanding its own power aspirations in the region, which is why India feels that it must oppose it.
Born in New Delhi, Mohan first studied history at its St. Stephen’s College and later history and politics at the London School of Economics. She applied for a doctoral program at the Free University of Berlin and the Hertie School of Governance in Berlin in 2012, where she joined the junior research group “Asian Perceptions of the EU.”
Much of the project focuses on the role of the EU as an international role model and the question to what extent European institutions can be applied to other regions. As one of two non-European Ph.D. students in the program, it regularly falls to her to challenge the sometimes Eurocentric views of her fellow students.
Much of the project revolved around the role of the EU as an international role model and the question of how far European institutions can be transferred to other regions. As one of two non-European doctoral students in the program, it fell to her to regularly break down the sometimes Eurocentric views of her fellow students. “It was hardly questioned whether the EU institutions could even be considered an example of success and whether other countries would want to adopt them,” Mohan criticizes today. This is one of the reasons why she switched to political consulting after earning her Ph.D., in order to work “closer to the real world.”
Breaking down Eurocentric perspectives
She initially spent four years conducting research in the Global Orders Program at the Global Public Policy Institute (GPPi) before taking up a position at the US think tank German Marshall Fund in 2019. In her current role, Mohan focuses more on cooperation between the United States, Europe, and India and heads the India Trilateral Forum, which promotes exchanges between experts from the three regions. She also devotes her research to the changing relationship between Europe and India.
“The EU urgently needs more investment in research on contemporary India to understand this complex country better,” Mohan urges. For example, she says, the intellectual and cultural ties between Russia and India are historically very strong, and India’s military heavily depends on Moscow. This is one aspect that should not be neglected when trying to understand India’s position in the Ukrainian war, for example. India is currently benefiting from cheap Russian oil imports, says Mohan. Behind closed doors, however, Delhi is not happy about Russia’s attack. That is why India, unlike China, consistently seeks contact with both warring parties and sent humanitarian aid to Kyiv.
Mohan’s wish: Just as there is a think tank dedicated to China with the Merics Institute, she would like to see something similar just for India. An India think tank could help Europe develop in-depth knowledge about the subcontinent. Clemens Ruben
EU
Geopolitics
India
Executive Moves
Johann Buss has been Vice President Research And Development at Mercedes-Benz in China since July. Previously, he was in charge of seat development as Development Manager at the car manufacturer in Sindelfingen. His current place of employment is Beijing.
Saskia Mayer is the new specialist for strategy development, internationalization and de-risking at Bosch. Mayer studied sinology and law in Tuebingen and Nanjing and spent three years developing training units on intercultural relations for Bosch.
Is something changing in your organization? Let us know at heads@table.media!
Dessert
8.8. is not only a lucky day for many Chinese women – but also national fitness day. Naturally, people like to pose, exercise and run in public. Here, young athletes in Zaozhuang, Shandong Province, show off their skills in the Korean martial art of taekwondo.
It became official on Tuesday: The Taiwanese world market leader TSMC is building a chip plant in Germany. Its partners are Bosch, Infineon and the Dutch company NXP. This at least slows down the migration of key technologies to Asia. Modern microchips are being produced on European soil. But how modern?
The factory will produce chips with process sizes between 12 and 28 nanometers. That is a solid mid-range – and a compromise between the current demand of the car industry for simpler chips and the expectations of the governments in Berlin and Brussels. They would have preferred to bring absolute cutting-edge technology to Germany. But TSMC will take it to the USA first for the time being.
China is Niger’s main trading partner. And the two countries have also built a lot of other things together over the past few years. Beijing is currently building Africa’s longest pipeline there. The mining of large uranium deposits is also planned. The recent military coup only has a limited effect on these developments, as Frank Sieren writes. In fact, the alarming events could take the partnership between Niger and China to a new level.
Because: Unlike the West and the African Union, China does not directly condemn the coup. If the military junta prevails, it will expand its influence in the region without competition after the withdrawal of the Western powers. At the moment, however, even the government in Beijing is watching developments with concern. Ambitious economic activities ultimately require political stability on the ground, after all.
Your Fabian Peltsch
Feature
TSMC builds in Germany with Infineon, Bosch and NXP
The key points of the project are very much in line with Table.Media reports from May and last year, which were based on informed sources:
The European partners are the automotive supplier Bosch, the semiconductor specialist Infineon and Dutch chip manufacturer NXP. Together they form a supply network that mutually supports each other.
They jointly found a new company in Dresden, the European Semiconductor Manufacturing Company GmbH, or ESMC for short. TSMC owns 70 percent of the company; the other partners will each hold 10 percent.
Construction will begin next year and is expected to take three years.
Key technology comes back to Europe
The exact investment sum has not yet been officially determined as it depends on government funding, which itself has not yet been formally approved. But it will undoubtedly be in the range of ten billion euros. Around half of it will come from the German government. This is the only way TSMC’s statement of committing a maximum of three and a half billion euros of its own capital makes sense.
In the overall industrial policy picture, constructing a plant by the world’s most technically advanced semiconductor company is a success. As a result, German government politicians shower themselves with praise for the new site. Europe has lost key technologies to Asia decade after decade. This was not considered a problem as long as the supply was not in question in global trade. However, the geopolitical situation has changed. The tolerance for dependencies has declined sharply.
Implementation of new strategies
TSMC would certainly not have come without the large subsidy. However, the expenditure is in line with the German government’s security and China strategies as well as the European course of action. TSMC’s announcement explicitly mentions the EU Chips Act. So the companies want to draw funds from European pots.
The plant will mainly produce two classes of microchips:
CMOS chips with process sizes between 22 and 28 nanometers. PC enthusiasts may know the abbreviation CMOS as a memory for hardware settings. However, what is meant here is a common class of power-saving elements.
FinFET chips with process sizes between 12 and 16 nanometers. This technology is more modern and future-proof. It allows particularly fast data processing (the smaller the nanometer number, the better the chip).
More modern than expected – and yet old
This type of chip was considered new and modern around 2015. At least this is better than initially expected – the first reports about the plant had only anticipated 22-nanometer technology, which again was up-to-date around 2010.
But even 12 nanometers are not the vanguard of technology development. This feels particularly painful compared to TSMC’s investments in the United States: The Taiwanese company manufactures cutting-edge products there. What TSMC brings to Germany, on the other hand, is called “mature technology” in jargon.
Car industry only moderately thrilled
However, these chips are currently still too modern for the German car industry. They require considerably simpler products with process sizes of around 90 nanometers, according to a German Association of the Automotive Industry (VDA) spokesperson in Berlin on Tuesday. The car industry certainly also needs the technologies that will be manufactured at ESMC. Nevertheless, the direct effect of the Dresden plant on its independence will be limited.
But the plant is not expected to be ready until 2027 anyway – and cars will soon mutate into high-performance computers on wheels. AI functions, such as autonomous driving at higher levels, will require fast and power-saving chips on par with modern graphics cards in the foreseeable future. These are already produced today in 7-nanometer technology and lower.
Breton had promised more
TSMC is ultimately giving Germany outdated technology after all. This is not in line with the spirit of the EU Chips Act: Internal Market Commissioner Thierry Breton had envisaged the creation of state-of-the-art plants to produce chips with the smallest process sizes. The reality falls short of these grand ambitions, writes the scientist Mathieu Duchâtel of Institut Montaigne.
But Duchâtel points out that this does not mean the Chips Act is unsuccessful. On the contrary, the TSMC plant is widely regarded as a strategic success. Because even if the site seems expensive from a business perspective, it was nevertheless the right thing to do: Building back a modern chip industry in Europe is necessary and overdue.
Global subsidy race
The necessary subsidies are also so expensive because the United States and China are spoiling the industry with billions of dollars:
China plans subsidies of one trillion yuan (125 billion euros) in the coming years to become independent of the United States. China has paid around 12 billion yuan (1.5 billion euros) in subsidies to its semiconductor companies in 2022 alone, according to local media.
The US far exceeds this. President Joe Biden is mobilizing 1.5 trillion dollars over the next few years under the Science and Chips Act. That is a strong incentive for industry to invest in America.
If the EU wanted to get a share, it had to put in a little extra. In fact, the 43 billion euro budget of the European Chips Act looks modest compared to the American and Chinese competition.
In light of this comparison, the subsidy for TSMC in Dresden no longer seems so expensive, especially since Intel receives twice as much in Magdeburg.
TSMC: thriving partnership
TSMC technology also fits perfectly into the existing supply chains. Bosch and Infineon already run their own semiconductor plants nearby, which will be welcome customers for TSMC’s products. Infineon, for instance, is formally also a semiconductor manufacturer, although its business model differs from that of TSMC.
In fact, Infineon has some of its products manufactured in the Taiwanese’s highly efficient factories. This makes them more partners than competitors.
The military coup in Niger shifts the balance of power between the BRICS countries China, Russia and India on the one side, and France and the USA on the other. The West does not accept the military coup; the coup leaders, in turn, oppose the West. China’s presence, on the other hand, “will not be affected by the coup,”Rahmane Idrissa, a researcher at the African Studies Centre at Leiden University in the Netherlands, soberly observes.
With a share of 18.7 percent, China is already Niger’s largest trading partner, ahead of the former colonial power France (14.1 percent) and India (8.5 percent). Should coup leader General Abdourahmane Tchiani continue his anti-Western stance and stay in power, China could even overtake France as the largest foreign investor in the country.
Niger probably lost to the West due to overthrow
Until the coup, Niger was the last democratic government in the Sahel, and thus extremely important for Europe. The upheavals in neighboring Mali and Burkina Faso had made Niger the West’s geostrategic bastion in the region. What cheap Russian gas was for Germany, is Niger’s affordable uranium for France, which continues to rely heavily on nuclear power. Niger is also of military importance to the West. So far, not only German and French troops are stationed in the country; since 2016, the United States has been operating “Niger Air Base 201” there, one of its few permanent US military bases in Africa.
This is all now hanging in the balance since General Tchiani seized power at the end of July and ousted the incumbent, democratically elected president Mohamed Bazoum. Tchiani immediately stopped military cooperation with the French. This is bitter because France already had to withdraw its troops from Mali and Burkina Faso after the military coups there.
China with many projects in Niger
In any case, China and Niger have already built a lot together and still have a lot planned. Beijing is currently building a 2,000-kilometer-long oil export pipeline. And they plan to jointly mine uranium deposits. A joint industrial park is also planned.
The oil pipeline is already more than 60 percent complete. It is capable of transporting 60,000 barrels of oil per day and will be the longest pipeline in Africa when it goes into operation. It runs through Benin in the south and ends at the Gulf of Guinea, near the Nigerian city of Lagos, with a population of 16 million. It will connect the 650 million barrel Agadem oil field to the international market for the first time, which Petro China and Niger have been jointly developing since 2008.
Niger only became an oil producer in the first place with China’s help. The output of the oil field is now to be expanded. Together with the pipeline, this includes investments of around four billion US dollars alone, according to the Chinese Ministry of Commerce. So far, according to calculations by the local US Embassy, China has invested 2.61 billion in Niger, making it the second-largest investor after the French.
The investments also include an oil refinery with a capacity of 20,000 barrels per day to meet demand in Niger. China holds a 60 percent share in the plant. Niger’s imports from China increased by an average of just over 14 percent a year over the past 26 years to 441 million US dollars in 2021, and exports by as much as 33 percent to 344 million.
China and Niger: joint uranium mining
The joint production of uranium is also making progress. Just over a month ago, then-President Bazoum received a delegation from the China National Uranium Corporation (CNUC) to negotiate terms for a Chinese takeover of the Nigerien Société des Mines d’Azelik (Somina). Nine years ago, the project had initially been abandoned due to low international uranium prices at the time. “Prices are now favorable internationally,” said Ousseini Hadizatou Yacouba, Niger’s mining minister under Bazoum. “It is for us to better develop this sector with all the partners, including the CNUC, who already have operating permits.”
Niger is one of the five largest uranium suppliers in the world. About a quarter of European uranium imports and a third of France’s uranium imports come from Niger. With 56 nuclear power plants, France ranks among the countries with the most nuclear power plants after the United States. Germany also imports nuclear power from France from time to time. So Germany cannot have any interest in French uranium going to China in the future.
Stronger Chinese presence in Niger
Beijing, in turn, is under great pressure to diversify its uranium suppliers: 70 percent of China’s uranium imports come from just three countries: Kazakhstan, Canada and Australia. So even without the coup, China would have pushed for a stronger presence in Niger. The coup, however, could accelerate this development. At least that is what Gyude Moore, former Minister of Public Procurement in Liberia, now Senior Policy Fellow at the Center for Global Development in Washington, fears: “China has no preference regarding regime type, so if Western governments withdrew, China’s influence would grow, by default.”
But it is not yet clear that this will happen. What is clear, however, is that Tchiani does not have the support of the African Union. On 29 July, it gave the coup leaders an ultimatum of two weeks, backed by the UN Security Council, to restore the old balance of power. So far, there are no signs that they will bow to the pressure.
China: neutrality, but pro Bazoum
In this situation, China is more neutral than the West and the African Union. According to a statement by the Foreign Ministry, China hopes that the politicians in Niger “settle differences peacefully through dialogue, restore normal order at an early date, and uphold the stability and development of the nation.” That China is taking the situation seriously is shown by the fact that the embassy in Niger urged Chinese nationals to avoid traveling to Niger unless absolutely necessary.
Nevertheless, Beijing clearly took a position in support of the deposed President Mohamed Bazoum in the statement. He was “a friend of China,” and Beijing hoped “his personal safety is ensured,” explained Wu Peng, head of the foreign ministry’s Africa department. By Chinese standards, this is a pretty clear commitment to Bazoum – and shows: China requires political stability for its economic activities. Whether General Tchiani can provide that is uncertain.
Geopolitik
Sinolytics.Radar
Foreign automakers expand partnerships in China
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In late July, Volkswagen announced a 700 million US dollar investment in Xpeng, one of China’s successful EV players. Xpeng will be a knowledge and technology provider in this new strategic partnership. The goal is to jointly develop intelligent connected vehicles for the Chinese market.
While originally forced into Joint Ventures to gain access to the Chinese market, foreign automotive OEMs and suppliers increasingly seek Chinese partnerships to conduct joint research and gain access to advanced technologies.
In March, Toyota announced to join forces with Chinese OEM Haima to bring fuel-cell driven passenger vehicles to the market in Hainan. Simultaneously to the Volkswagen announcement, Audi said it is planning to extend its partnership with state-owned SAIC to use its EV platform.
French automotive supplier Forvia, formerly Faurecia, has successively expanded its partnership with Chinese EV manufacturer BYD. They jointly operate seven manufacturing plants in China and are now expanding their supply chains in the Asia-Pacific region with a new assembly plant in Thailand.
Despite continuing political discussions on de-risking, we will see intensified localization by foreign OEMs in China in order to remain successful in the fiercely competitive Chinese market.
Besides extending local partnerships, foreign OEMs will also continue doubling down on their own capacities, especially in R&D. BMW just opened a new R&D center in Shanghai in July, where BMW quotes itself to have ” built-up fully-fledged R&D competency and software development capabilities” for ICVs. Similarly, Volkswagen pooled its R&D activities across its JVs and brands in Hefei with an additional 1bn EUR investment, hoping to significantly shorten innovation cycles.
Sinolytics is a European research-based consultancy entirely focused on China. It advises European companies on their strategic orientation and concrete business activities in the People’s Republic.
Autoindustrie
Technologie
News
Weak trade figures point to dip in growth
The economic slump of important trading partners hit China, the world’s leading exporter, in July. Exports from the People’s Republic declined more than expected by 14.5 percent year-on-year. The customs authority reported this on Tuesday. China thus recorded its worst export result since February 2020, when the Covid pandemic began. In July, China’s imports also contracted 12.4 percent, much more than forecast. On average, experts had expected exports to decline by 12.5 percent and imports by 5.0 percent.
China’s trade surplus grew by 80.6 billion US dollars in July. EU Trade Commissioner Valdis Dombrovskis, recently described the EU’s deficit with the People’s Republic as “staggering” in an interview with the Financial Times. Beijing’s foreign ministry responded quickly. “China has never deliberately sought surplus in trade with the EU,” it announced on Tuesday. “If the EU truly wants to address this issue, it needs to lift export control against China, rather than putting the blame on China,” it added.
The weak figures could be a harbinger that China’s growth may slow again in the third quarter. Activity in construction, industrial production and services are all slowing, as are foreign direct investment and industry profits. After 5.5 percent growth in the first quarter, the economy still grew by 6.3 percent in the second quarter, both year-on-year.
Dispute over presence in South China Sea continues
The dispute between the Philippines and China over disputed sea territories continues. Beijing did not initially respond on Tuesday to a complaint from Manila about the use of water cannons against Philippine vessels on Saturday. Instead, China again called on the Philippines to remove a warship named “BRP Sierra Madre,” which was used as a military base and deliberately ran aground 24 years ago, from the disputed waters.
According to AFP, the Philippines had “repeatedly made clear promises to tow away the warship illegally ‘stranded’ on the reef,” a Chinese foreign ministry spokesperson said. Instead of towing it away, Manila “also attempted to repair and reinforce it on a large scale.”
Manila, in turn, accuses the Chinese coast guard of blockading Philippine ships near the “BRP Sierra Madre” and firing water cannons at them. The Philippines had deliberately grounded the warship at Second Thomas Shoal in the Spratly Islands area in 1999 in order to install a permanent presence there. A handful of Philippine navy soldiers have been stationed on the rusting ship ever since.
According to the Philippine Department of Foreign Affairs, the deployment of soldiers on the Second Thomas Shoal was a response to China’s “illegal occupation” of nearby Mischief Reef in 1995. The soldiers depend on regular supply missions to survive in their remote location. One such mission was en route to the ship on Saturday carrying food, water, fuel and other supplies, according to Manila, when the Chinese coast guard appeared. In response, the Philippine government summoned the Chinese ambassador to Manila on Monday and handed him videos and a complaint. ck
Philippines
South China Sea
Facial recognition: Stricter rules for companies
China aims to restrict the use of facial recognition technology by companies. The Cyberspace Regulatory Authority (CAC) published draft rules to this effect on Tuesday. The proposed guidelines require, among other things, a well-justified reason for the use of facial recognition as well as the consent of the individual.
Companies in China have been experimenting with facial recognition technology for some time, for example, for paying in shops or accessing train stations. According to the now presented draft, airports, hotels, train stations, banks, stadiums, exhibition halls and other facilities are no longer allowed to use facial recognition to verify personal identity – unless required by law. If other, non-biometric alternatives exist that fulfill the same purpose or equivalent business requirements, they are to be given priority.
According to the South China Morning Post, many Chinese courts have already ruled against companies for excessive use of facial recognition in the past and imposed fines. However, for certain administrative situations, which the draft does not specify, individual consent will still not be required in the future. Public comments on the draft can be submitted until 7 September. rtr/fpe
Society
Technology
Parents of fled activist questioned
Hong Kong security police have again questioned the parents of an activist who fled overseas. The parents of activist Anna Kwok were temporarily detained on Tuesday and questioned for several hours, the South China Morning Post reported, citing family friends. They were questioned about whether they had contacted their daughter or offered her financial support.
Kwok is a key member of the US-based organization Hong Kong Democracy Council, advocating for more freedom in China. Police accuse her of attending meetings and campaigning abroad between September 2012 and February 2022, as well as meeting with foreign politicians and officials to lobby for sanctions against mainland China and Hong Kong. ck
Hongkong
Human Rights
Nationales Sicherheitsgesetz
Heads
Garima Mohan – India expert at the Marshall Fund
Garima Mohan is an India expert at the German Marshall Fund.
“Both India and the EU are currently seeking contact with each other – a reaction to an increasingly tense relationship with the People’s Republic of China,” explains Garima Mohan, Senior Fellow in the Indo-Pacific Programme of the German Marshall Fund in Berlin. This represents a significant change in India’s foreign policy, as India has long been interested in shaping the Western-dominated world order in a more pluralistic way with other BRICS countries. According to Delhi, however, China is now more interested in expanding its own power aspirations in the region, which is why India feels that it must oppose it.
Born in New Delhi, Mohan first studied history at its St. Stephen’s College and later history and politics at the London School of Economics. She applied for a doctoral program at the Free University of Berlin and the Hertie School of Governance in Berlin in 2012, where she joined the junior research group “Asian Perceptions of the EU.”
Much of the project focuses on the role of the EU as an international role model and the question to what extent European institutions can be applied to other regions. As one of two non-European Ph.D. students in the program, it regularly falls to her to challenge the sometimes Eurocentric views of her fellow students.
Much of the project revolved around the role of the EU as an international role model and the question of how far European institutions can be transferred to other regions. As one of two non-European doctoral students in the program, it fell to her to regularly break down the sometimes Eurocentric views of her fellow students. “It was hardly questioned whether the EU institutions could even be considered an example of success and whether other countries would want to adopt them,” Mohan criticizes today. This is one of the reasons why she switched to political consulting after earning her Ph.D., in order to work “closer to the real world.”
Breaking down Eurocentric perspectives
She initially spent four years conducting research in the Global Orders Program at the Global Public Policy Institute (GPPi) before taking up a position at the US think tank German Marshall Fund in 2019. In her current role, Mohan focuses more on cooperation between the United States, Europe, and India and heads the India Trilateral Forum, which promotes exchanges between experts from the three regions. She also devotes her research to the changing relationship between Europe and India.
“The EU urgently needs more investment in research on contemporary India to understand this complex country better,” Mohan urges. For example, she says, the intellectual and cultural ties between Russia and India are historically very strong, and India’s military heavily depends on Moscow. This is one aspect that should not be neglected when trying to understand India’s position in the Ukrainian war, for example. India is currently benefiting from cheap Russian oil imports, says Mohan. Behind closed doors, however, Delhi is not happy about Russia’s attack. That is why India, unlike China, consistently seeks contact with both warring parties and sent humanitarian aid to Kyiv.
Mohan’s wish: Just as there is a think tank dedicated to China with the Merics Institute, she would like to see something similar just for India. An India think tank could help Europe develop in-depth knowledge about the subcontinent. Clemens Ruben
EU
Geopolitics
India
Executive Moves
Johann Buss has been Vice President Research And Development at Mercedes-Benz in China since July. Previously, he was in charge of seat development as Development Manager at the car manufacturer in Sindelfingen. His current place of employment is Beijing.
Saskia Mayer is the new specialist for strategy development, internationalization and de-risking at Bosch. Mayer studied sinology and law in Tuebingen and Nanjing and spent three years developing training units on intercultural relations for Bosch.
Is something changing in your organization? Let us know at heads@table.media!
Dessert
8.8. is not only a lucky day for many Chinese women – but also national fitness day. Naturally, people like to pose, exercise and run in public. Here, young athletes in Zaozhuang, Shandong Province, show off their skills in the Korean martial art of taekwondo.
