(Yicai) Aug. 13 -- The European Union’s proposed reform of its foreign direct investment screening regulation is mainly directed at China and the United States and driven by concern about how the two nations will impact domestic EU industries such as semiconductors and new energy, according to a Chinese specialist.

The key reason why the EU is setting up investment and trade barriers under the guise of regulation is because the region is not in the first tier when it comes to the new economic areas of chips, new energy, artificial intelligence, and biotechnology, said Zhao Yongsheng, a professor at the University of International Business and Economics and a doctoral supervisor at the Sorbonne University in Paris.

The EU is considering reviewing investments made by European capital in foreign chip, AI, and biotech firms, with a decision on the proposed reform expected to come as early as next year.

SEMI Europe, an industry group representing around 300 European chip companies and institutions, including ASML and NXP Semiconductors, called on the EU to place as few restrictions as possible on outbound investment in foreign computer chip technology by companies based in the bloc, Reuters reported on Aug. 5. 

“European semiconductor companies must be as free as possible in their investment decisions or otherwise risk losing their agility and relevance,” SEMI Europe said in March. adding that the EU should think twice before imposing additional export controls or rules on foreign investment.

The EU has been hesitant in recent years, Zhao told Yicai. It has not put regulation in such an important position before, and there is no consensus within the union on the extent of regulation, Zhao said, adding that some member states, such as Hungary, are open to foreign investment, while others insist on protecting the development of new industries.

While tightening regulation, the EU also hopes to attract investment into developing the region’s semiconductor sector. The EU Chips Act is expected to help the bloc’s chip industry secure more than EUR100 billion (USD109.4 billion) of private investment by 2030, Thomas Skordas, the European Commission's deputy director-general for communications networks, content, and technology, has said.

The chip sector is a capital-intensive industry, according to Zhao. Between fund-raising and regulation, the EU finds it hard to deal with Chinese and US companies with large amounts of capital, he said.

Previously, the US also issued a similar draft on foreign investment restrictions. Although the EU and the US seem to have the same value system, this does not mean the EU's regulatory plan does not target the US, Zhao said. The EU said the regulations are aimed at other countries, but the US is one of them, according to Zhao.

“The EU's recent large platform fines have all been issued to US companies,” Zhao noted.

Editor: Martin Kadiev