The European Commission held consultations with the region’s semiconductor industry to garner views on China’s ramp-up in the production of older-generation computer chips, according to sources quoted by Reuters.

The move was in a bid to expand its forthcoming two voluntary surveys covering major chip-consuming industrial firms and the chip industry, respectively, slated for release in September.

The Commission does not yet have any comments regarding the initiative.

The tensions with Beijing come as Brussels is increasingly protecting its industries from Chinese competition. Most recently, the Commission imposed provisional duties of up to 37.6 per cent on Chinese electric vehicles.

According to trade analysts, the tariffs could signal a more hard-line Europe when it comes to China. State subsidies mean China’s semiconductor industry is heavily investing in a major expansion of output of older, or so-called legacy, chips.

That, in part, is a workaround to a set of US-led restrictions that have limited China’s access to more advanced computer chips.

Although this will reduce the country’s short-term reliance on foreign chips, Western governments are concerned that it could result in oversupplying the chip market—the type used for appliances and vehicles.

Margrethe Vestager, the Commission’s antitrust chief, signalled that the EU may examine legacy chips following a meeting with US officials, including Commerce Secretary Gina Raimondo, in Belgium in April.

This occurred after the Commission published a 712-page report outlining the far-reaching support that Beijing was providing to domestic firms in several sectors, from semiconductors and telecommunications to renewable energy, in April.

To trade analysts, the report was an indication that Brussels might open more cases against China.

It has been said that future chip-focused questionnaires will be wider in scope than similar security-focused surveys conducted by the US Department of Commerce.

The questionnaires by the EU will gather information on where industrial companies source chips and details about chip firms’ products, pricing, and guesses about their competitors, including those in China.

To ASML—the EU’s largest technology group—a ramp-up in legacy chip output from China is certainly a shot in the arm to revenues that were curtailed by the United States lead in cutting-edge technology exports.

However, the issue is highly nuanced for chipmakers such as Germany’s Infineon, France’s STMicroelectronics, and NXP of the Netherlands.

Few other companies are as significantly exposed to chip production for automotive and electrical infrastructure as these three firms, hence the rising competitive threat of China, against which they cannot afford to offend the leadership as business partners.

It’s therefore unlikely that European firms—industrial, aerospace, automotive, health-tech, and energy sector firms—will be very open to revealing the use of Chinese legacy chips.

In addition, the complexity introduced into chipmaking and packaging across borders renders it hard for companies to know the origin of their used chipsets.

In particular, German carmakers oppose the tariffs on Chinese EVs, as their sales are quite huge in China, and they have diversified chip suppliers following chip shortages during the COVID-19 pandemic.