Italy Eyes Taiwan Chip Deals Ahead of Decision on China Pact

Chiara Albanese and Alessandro Speciale
·3 min read
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(Bloomberg) -- Italian officials hinted in private talks with Taiwan that they may be willing to pull out of a controversial pact with China as they sought to secure help with semiconductors, according to people familiar with the issue.

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Officials from Rome’s industry ministry discussed plans to increase cooperation on the production and export of semiconductors during recent meetings in Taipei, said the people who asked not to be named as the talks are not public. The officials told their Taiwanese counterparts that Italy may scrap its participation in China’s Belt and Road Initiative (BRI), a massive global infrastructure program.

A decision on the matter will have to be taken by Prime Minister Giorgia Meloni, who has not taken a final position, the people said.

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Italy is the only Group of Seven country that has signed up to China’s BRI. Even though the memorandum of understanding has had little practical impact since it was signed by Prime Minister Giuseppe Conte in early 2019, it has a highly symbolic value for Beijing at a time of mounting tensions with the US and allies. The agreement will be automatically renewed in 2024 unless Italy ditches it.

A spokesperson for the Italian industry ministry declined to comment.

The visit by senior officials shows Italy is willing to deepen diplomatic relations with Taiwan, a critical supplier of semiconductors and other high-tech goods. The island aims to open a second representative office in Italy, in Milan, according to local media reports.

Italy’s decision on the memorandum of understanding will be closely watched in Washington and other capitals, as a sign of Meloni’s capacity to turn her staunch pro-US rhetoric into facts.

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Meloni and officials from her far-right Brothers of Italy party have in the past criticized China’s stance on Taiwan. But since taking office at the end of 2022 at the head of a right-wing coalition, Meloni has avoided public references to the matter, as the European Union struggles to balance security concerns with deep economic ties to China. Earlier this month, a group of lawmakers from Rome’s parliament scrapped a trip to Taipei at the last minute.

French President Emmanuel Macron sparked outrage among partners earlier this month by suggesting that the bloc should avoid being dragged into a dispute with Beijing by the US. Macron said after a visit to Beijing that the bloc shouldn’t become a “vassal” in a US-China clash.

The case of tire maker Pirelli SpA offers the Rome government another opportunity to scale down economic ties with Beijing. Italian officials are studying ways to curtail the influence of China’s Sinochem, Pirelli’s largest shareholder, Bloomberg reported earlier this month.

The supply of semiconductors is key for the EU and the US in order to reduce exposure to supply chain disruptions amid growing tensions with China. Italy is particularly dependent on the supply of semiconductors which are crucial for its automotive luxury industry.

--With assistance from Jenny Leonard.

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