New research out this week reveals why German firms are refusing to join the United States’ tech trade war with China over semiconductor chips, a key component in modern electrical devices.
University of Sussex and Kings College London researchers found heavy links between German car makers like Mercedes-Benz, BMW and Volkswagen, and the country’s semiconductor firms.
With automotive companies now dependent on Chinese markets and suppliers, the researchers say this explains why Germany is defying U.S. calls to cut China out of semiconductor supply chains in an ongoing global trade dispute known as the chip war.
Dr Steven Rolf, Research Fellow at the Digital Futures at Work Research Centre, University of Sussex Business School, said, “China spends more on importing semiconductors than oil and the U.S. is using all its leverage to get European firms to turn off the tap.
“The pressure is huge. Which is why it’s been so interesting to see German players ignoring calls to separate, or decouple, from China.
“Once you see how deeply German automotive and semiconductor interests are wedded together it makes sense. They’re stuck in the middle, vulnerable to US powers on tech, and China on cars. For now, it looks like they’re sticking with the latter.”
Dubbed “the world’s most critical technology” in a 2022 book on the subject, semiconductors are used in modern electronics like smartphones, medical devices and routers. The industry is worth more than $500bn and expected to double by 2030.