"“Our dependence on core technology is the biggest hidden trouble for us”, said Xi Jinping in 2016. Semiconductors are crucial to China's global leadership ambitions - but China's trouble is no longer hidden, despite massive policy support to a booming sector. For a long time, interdependence was a major asset for China, irrigating the rapid growth of its microelectronic industry. But this period may be coming to an end, due to an American offensive that takes advantage of China's dependence on foreign technology. This policy paper describes the state of China's semiconductor industry, provides an analysis of the strengthening of technology transfers controls in the United States, reviews China's current industrial policies to overcome its weaknesses and draws implications and recommendations for the European semiconductor industry. It highlights the chokepoint technologies that slow down China's ambitions for an “innovation-driven development strategy”. The paper concludes that Europe should act fast and play on its strengths in a strategic sector at the heart of the US-China tech rivalry. Interdependence is no longer a given, and the US-China technology rivalry will not disappear overnight. As the strategic awareness regarding Europe's potential future vulnerabilities progresses in European policy circles, the main questions are about policy choices, planning for effi ciency and the optimal use of available resources. The author provides fi ve recommendations to reduce Europe's exposure to future geopolitical shockwaves."

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