China-Swiss chip deal poke in the eye for US

Published: 6:30am, 12 Jun, 2023

https://www.scmp.com/comment/opinion/article/3223720/china-swiss-chip-deal-poke-eye-us

Europe’s second-largest chip maker has entered a Chinese multibillion-dollar joint venture. STMicroelectronics will jointly invest with China’s Sanan Optoelectronics to build a US$3.2 billion chip plant in the southwestern mega-city of Chongqing. The new venture will even dwarf the US$2 billion Shanghai plant committed by American electric vehicle mogul Elon Musk back in 2019. It aims to support the country’s rising domestic demand for silicon carbide (SiC) devices in electric vehicles as well as other industrial power and energy sectors. But it is also highly symbolic at a time of the US-China chip war, with America pressuring European governments and companies to take a side.

The Geneva-based company has demonstrated foresight as well as courage in sealing this against-the-herd deal. But it also shows that China is too big a market to ignore simply on Washington’s say-so. China’s world-beating electric car sector and other industries are growing at a fast pace. Sales of new e-vehicles in China almost doubled to 6.9 million units last year, according to the China Association of Automobile Manufacturers. Under the latest deal, still subject to regulatory approval, Sanan Optoelectronics will also build and operate a separate new SiC manufacturing facility. SiC is a key ceramic component in the semiconductor industry that caters to electric cars, rail transport, as well as wind and solar power devices.