EU threatens US over electric car subsidies
The European Union threatened Monday to take retaliatory measures against the United States for electric car subsidies that favour domestic manufacturers.
The 27-nation bloc is upset about Washington’s “Inflation Reduction Act”, which will see vast spending on green energy initiatives and includes tax breaks for US-made electric cars and batteries.
Brussels says those benefits for American electric vehicle makers would put e-cars made in the EU at an unfair disadvantage on the lucrative US domestic market.
EU finance ministers meeting in Brussels said they believed Washington was not hearing Europe’s worries.
“I’m not sure whether they are aware of our concerns,” German Finance Minister Christian Lindner said.
He added: “We should do everything to avoid a tit-for-tat scenario or even a trade war.”
His French counterpart, Bruno Le Maire, said he expected the European Commission to come up with “a strong response to this US policy”.
The US legislation “could harm this level playing field between the European companies and American companies,” he said,
He underlined that it was “a matter of deep concern for the French government,” which estimates that 10 billion euros in investments are at stake.
The US Inflation Reduction Act opens up a $7,500 tax credit for the purchase of an electric car, but the vehicle has to roll out of a US factory with locally manufactured batteries.
Internal Market Commissioner Thierry Breton early Monday threatened to take “retaliatory measures” against the United States, calling the subsidies “contrary to World Trade Organization rules”.
If Washington doesn’t take into account the views of its EU partners the bloc could “go to the WTO” and make its arguments there, he said on French radio and TV station BFM Business.
Last week the EU urged the United States that it grant it the same exemptions it grants cars built in Canada and Mexico.
Brussels and Washington have set up a task force to try to hammer out a solution.
The EU’s trade commissioner, Valdis Dombrovskis, said as he arrived for the Brussels meeting that the issue was being discussed “extensively” with US counterparts, as well as through the joint task force.
The US credits have raised particular hackles in Europe’s manufacturing powerhouse Germany, which is concerned for its key car industry.
Chancellor Olaf Scholz warned last month that the US measures could trigger “a huge tariff war”.
EU, Google want ‘voluntary’ AI rules: commissioner
The EU and Google want voluntary rules on AI before a new law comes into force in the bloc to regulate the rapidly advancing technology, the bloc’s industry commissioner Thierry Breton said Wednesday.
“We agreed that we cannot afford to wait for the AI law to come into force and to work together with all AI developers to introduce a voluntary pact,” Breton told AFP after holding talks with Google CEO Sundar Pichai in Brussels.
Although the European Union’s executive arm first proposed a law to regulate AI in 2021, the issue has taken on greater urgency since ChatGPT, a chatbot created by OpenAI in the United States, burst onto the scene with all its dizzying developments.
The European Parliament is due to back the draft law next month before negotiations formally begin with the EU’s 27 member states to agree on a final version.
The EU is racing to be the first to regulate the risks that come with AI’s deployment.
Breton said that even if the EU adopted the law by the end of the year, it would start to apply “at the earliest by the end of 2025”.
The concerns over AI are an ever-growing list, from disinformation to copyright over images, sound and text.
Breton added that he wanted to engage a “large number of players, whether European or non-European” to discuss the voluntary rules.
“We already see some general rules. Many things could be implemented without going through the law,” he said, giving examples including ensuring that AI-generated images contain labels saying they were produced by AI.
The EU parliament’s text included bans on biometric surveillance, emotion recognition and AI predictive policing systems.
It also seeks to put generative AI systems such as ChatGPT and Midjourney in a category requiring special transparency measures, such as notifications to users that the output was made by a machine, not a human.
Some tech firms have welcomed regulation.
Last week, OpenAI’s CEO Sam Altman testified before a US Senate panel and called on Congress to impose new rules on big tech to mitigate the dangers that can arise from AI.
The G7 group of nations last week also announced they would launch discussions this year on “responsible” use of the technology with a working group to tackle issues from copyright to disinformation.
European Commission Vice President Margrethe Vestager said on Tuesday that officials from the United States and the EU would discuss the issue at an EU-US Trade and Technology Council (TTC) meeting in Sweden next week.
“We can talk about this within the TTC in a way that will help the G7 process to be as concrete as possible,” she told reporters.
German chip charge could short-circuit on myriad challenges
Germany is seeking to lead a European charge to boost chip production with a series of mega-investments but the drive faces challenges ranging from high energy prices to subsidy rows and worker shortages.
When the pandemic sent semiconductor demand surging and snarled global supply chains, Western nations long reliant on Asia to produce their chips cheaply got a nasty shock as they faced sudden shortages.
The European Union was jolted into action, and is rolling out a plan to double the bloc’s share of global chip production to 20 percent by 2030, and mobilise billions of euros in investment.
Industrial powerhouse Germany — whose carmakers were among firms hit hard by the shortages — is hoping to lead the European renaissance, with major investments announced in recent times, including from Intel, Infineon, Bosch and Wolfspeed.
Taiwanese tech giant TSMC, one of the world’s leading chip companies, is also considering to build its first European plant in the eastern city of Dresden.
At the groundbreaking this month for a new Infineon chip factory in Dresden, Chancellor Olaf Scholz said semiconductors were “often referred to as the petroleum of the 21st century”.
Chips, used to power everything from smartphones to fighter jets, were the one component “on which almost everything else depends,” he added.
Infineon plans to invest about five billion euros ($5.4 billion) in the plant. It is due to open in 2026, and create up to 1,000 jobs in Dresden, the state capital of Saxony, already home to a dense network of chip companies.
– Soaring costs –
Not every project has been running so smoothly, however.
Intel announced with great fanfare in March last year plans to build a massive chip plant in the city of Magdeburg, with initial investment of 17 billion euros, the centrepiece of the US firm’s European investment drive.
But after inflation surged following Russia’s invasion of Ukraine, the project has been delayed, with construction — originally supposed to start in the first half of 2023 — not yet under way.
The company is reportedly pushing for higher government subsidies to cover the impact of higher costs.
Asked about the reports, Intel said that “much has changed” since the project was announced.
“Geopolitical challenges have become greater, semiconductor demand has declined, and disruptions in the global economy have resulted in increased costs, from construction materials to energy,” the company said in a statement.
Germany’s economy ministry said the government was currently discussing measures to “close the cost gap of the planned project, which has increased significantly in recent months”.
For Germany’s chip ecosystem, another major challenge is finding enough workers.
In occupations that are particularly key for the chip industry, there is currently a shortage of 62,000 skilled workers, according to a study from the German Economic Institute in December.
Europe’s “Chips Act”, agreed on by the European Parliament and EU member states last month, aims to mobilise more than 43 billion euros in public and private investments.
As well as Germany, investments have been announced elsewhere in the bloc, including a new plant in France built by French-Italian chipmaker STMicroelectronics and US-based GlobalFoundries.
– ‘No self-sufficiency’ –
The continent has much lost ground to make up — its share of global chip manufacturing capacity fell from 44 percent in 1990 to nine percent in 2020, according to a study from the US-based Semiconductor Industry Association and Boston Consulting Group.
Europe also faces competition from the United States, which is shelling out large sums to promote domestic production, while Japan and South Korea have vowed to spend billions on developing production.
However, some fear that spending billions of euros in public money on chip production is misguided, given Europe is likely to remain heavily dependent on semiconductors produced elsewhere.
“If we enter into a subsidy race, then we end up paying a lot of money and are not necessarily any safer,” Clemens Fuest, president of Germany’s Ifo institute, recently said on broadcaster ARD.
And industry players believe the semiconductor supply chain — which involves many different companies, providing different services — is destined to remain globalised.
“All big economies are trying to strengthen the semiconductor industry in their territories,” Infineon CEO Jochen Hanebeck told reporters on an earnings call this month.
While dependencies can be dialled back, there will be “no self-sufficiency for any countries or regions,” he added.
Apple to spend billions of dollars on US-made 5G tech
Apple on Tuesday announced a multi-billion-dollar collaboration with US tech firm Broadcom to make “cutting edge” components for wirelessly connecting to high-speed 5G telecom networks.
The iPhone maker did not specify exactly how many billions of dollars it would put into the Broadcom alliance, but said it is part of a commitment to invest in the US economy.
“We’re thrilled to make commitments that harness the ingenuity, creativity, and innovative spirit of American manufacturing,” Apple chief executive Tim Cook said in a statement.
“All of Apple’s products depend on technology engineered and built here in the United States, and we’ll continue to deepen our investments in the US economy because we have an unshakable belief in America’s future.”
The alliance will include designing and manufacturing sophisticated radio frequency components and other “cutting-edge wireless connectivity” parts in the United States, according to Apple.
“5G technology is shaping the future of next-generation consumer electronics — and Apple is spending tens of billions of dollars to develop this field in the United States,” the company said.
Apple is on pace to meet a commitment it made in 2021 to invest $430 billion in the US economy over the course of five years, according to the Silicon Valley technology titan.
It said those investments include money put into data centers, capital projects and suppliers.
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