Semiconductors: European Views on Four 2029 Tech Transfer Regime Scenarios
📄 Read the full report ↗Institut Montaigne · Sep 2025 · 66 pp
Summary
The Wassenaar Arrangement, which has governed multilateral technology transfer controls for nearly three decades, is no longer fit for the current era of US-China rivalry and the Fourth Industrial Revolution. Institut Montaigne presents four scenarios for what technology transfer regimes might look like by January 2029, and reports assessments from thirteen senior representatives of ten leading European semiconductor companies via a Delphi workshop. The industry’s outlook is deeply pessimistic: they expect the US will unilaterally drive future tech transfer regimes through extraterritorial controls, and that the scenarios most opposed to EU interests are also the ones most likely to materialise.
Key Insights
Most likely scenario (7.89/10): “Expanding Extraterritorial Patchwork.” The US expands entity listings, the Foreign Direct Product Rule, and extraterritorial controls unilaterally. By 2027, European companies face a stark choice: sever connections to Chinese actors or lose US market access. European executives deem this most achievable — and least desirable (2.78/10). (Table 4)
Most desirable scenario (6.44/10): “Fortress Europe.” The EU creates a unified Agency for Foreign Technology Transfer (EUAFTT), coordinates restrictions internally before negotiating externally. Executives want this but deem it unlikely (3.22/10) — the EU lacks institutional capacity to match the US Bureau of Industry and Security. (Table 4)
CoCom2.0 — the coalition scenario — includes India. A multilateral export-control coalition of the US, EU, Japan, Korea, India, and Philippines bans almost all tech transfers to China. Rated unlikely (3.44/10) but moderately desirable (5.55/10). It requires a triggering security event — China integrating AI into its armed forces and intensifying aggression toward neighbours. (p. 37)
US-China Grand Bargain is the second most likely (4.89/10) and second least desirable (3.00/10). Trump trades technology controls for a Phase Two trade deal; China prioritises US semiconductor purchases over European ones. European firms lose market access to China without gaining security. (Table 4)
European executives expect China to produce EUV systems within ten years. Participants question the effectiveness of all four regimes in preventing Chinese semiconductor independence. China’s indigenisation drive, espionage, and mass state support undermine control effectiveness regardless of which regime prevails. (p. 42)
The EU has almost no bureaucratic capacity for export controls. The US Bureau of Industry and Security employs hundreds of specialists; European capitals have “a handful” of policymakers working on tech transfer. The European Commission’s yearly forum on export controls has been discontinued. (p. 42)
What This Means for India
India is being written into the Western technology-denial coalition. The CoCom2.0 scenario explicitly includes India as a coalition member alongside the US, EU, Japan, and South Korea. This is not an Indian policy position — it is a European assumption about where India will align. Indian policymakers need to be aware that they are being cast in this role in European scenario planning, with all the obligations it implies: restricting technology trade with China, harmonising export controls, and screening Chinese FDI.
The “Expanding Extraterritorial Patchwork” scenario has direct implications for India. If the US continues expanding FDPR-based controls unilaterally, India’s semiconductor companies will face the same choice European firms face: comply with US extraterritorial controls or lose access to US technology. This affects everything from EDA tool licensing to equipment procurement for Indian fabs. India’s policy autonomy on semiconductor trade with China is constrained by US extraterritorial reach, regardless of what India’s stated policy is.
The “Grand Bargain” scenario is worst for India. If the US and China cut a bilateral deal that rolls back technology controls in exchange for Chinese purchases of US semiconductors, India gets nothing: no preferred technology access, no coalition benefits, and a China that continues to expand its mature-node capacity in direct competition with India’s ISM investments. India’s semiconductor strategy is more resilient under multilateral regimes (CoCom2.0 or Fortress Europe) than under bilateral US-China arrangements.
Critical minerals leverage cuts both ways. European executives flag that China’s gallium, germanium, and rare earth export restrictions make the EU “somewhat vulnerable” to retaliation regardless of which scenario prevails. India faces the same vulnerability — and unlike the EU, India lacks a EUAFTT-equivalent body even in concept to coordinate its response.
Data Extracted
Scenario scores from Delphi workshop (0–10 scale) (Table 4)
| Metric | Extraterritorial Patchwork | Fortress Europe | CoCom2.0 | Grand Bargain |
|---|---|---|---|---|
| Achievability (likelihood) | 7.89 | 3.22 | 3.44 | 4.89 |
| Desirability (EU interest) | 2.78 | 6.44 | 5.55 | 3.00 |
| NATO ally support | 4.00 | 3.67 | 5.11 | 3.22 |
| Prevents China military use | 4.44 | 4.00 | 5.00 | 2.55 |
| Prevents China dominance | 5.11 | 5.00 | 5.11 | 2.78 |
| Protects EU competitiveness | 2.89 | 5.22 | 4.00 | 3.44 |
| EU leverage vs US | 2.11 | 4.89 | 3.67 | 2.56 |
Source
Teer, J. (2025), Semiconductors: European Views on Four 2029 Tech Transfer Regime Scenarios, Institut Montaigne, Paris, September 2025, ISSN 1771-6756.