Europe plots rules to protect tech supply chains from foreign influence

The European Commission is considering measures to restrict member nations and companies from outsourcing sensitive technologies to countries of concern – namely China and Russia.

Among the technologies targeted by the Commission's Economic Security Strategy [PDF] are AI, quantum computing, and advanced semiconductor tech.

In a speech Tuesday, commissioner Margrethe Vestager emphasized that this wasn't about decoupling Europe's economy, but rather about de-risking the region's supply chains. "We are focusing on the risks of our economic interdependencies being weaponized by third countries," she explained.

The trick is deciding what technologies, infrastructure, and services could pose a risk to national security if supply chains are disrupted, or if certain technologies are exploited. The measures also include provisions intended to stem the flow of intellectual property – particularly that with the potential to be turned against the European Union or its allies.

If any of this sounds familiar, that's because European countries have been grappling with these issues on an individual basis for years. One of the highest profile examples has been an ongoing effort to eliminate Huawei equipment from European telco networks over concerns about the vendor's ties to the Chinese government.

Just last week, commissioner Thierry Breton warned that European nations' failure to remove this equipment from their networks was putting the entire Union at risk.

Meanwhile, US sanctions against the Chinese semiconductor industry have called attention to Chinese investment in European tech companies, and raised concerns over the potential for intellectual property theft.

It's suspected that a former ASML employee accused of stealing trade secrets about advanced chipmaking equipment was actually a Chinese spy. ASML is the sole provider of extreme ultraviolet (EUV) lithography technologies – used by the likes of Samsung and TSMC to produce the most advanced chips in the world. Under pressure from the US, the Netherlands has blocked the sale of EUV and older deep ultraviolet lithography equipment to China.

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The security measures under consideration by the European Commission don't explicitly target China. Beyond the commissioner's statements, the documents released Tuesday make no reference to China – though Russia is directly named.

Vestager emphasized that the proposed security measures are intended to be country agnostic – but acknowledged the concerns previously raised by EU president Ursula von der Leyen regarding Russia's threat to energy security and concerns over corporate espionage by Chinese firms.

Despite the Commission's hesitance to name China, the nation is clearly a focus. Many of the proposed rules are likely to have sweeping implications for Chinese businesses operating in the EU.

The exact terms of the EU strategy are not yet set in stone. The Commission is slated to explore the plan in greater detail later this month, with the intention of adopting the rules by September, and completing risk assessments by the end of the year. ®