Italy, the second largest manufacturing hub in Europe after Spain, is strengthening its economic ties with Taiwan and seeking to attract the island’s Taiwan Semiconductor Manufacturing Company Ltd (TSMC) to set up a foundry in its northeastern Veneto region.
Economy Minister Giancarlo Giorgetti said on April 14 that Prime Minister Giorgia Meloni is assessing Italy’s partnership with China in the Belt and Road Initiative. He said Italy would be taking a more cautious approach than in the past.
Apparently going beyond that hint, Italian officials have in recent meetings in Taipei told their Taiwanese counterparts that Italy may quit Belt and Road, Bloomberg reports, citing people familiar with the situation as saying that the final decision on the matter will be made by Meloni.
That report follows a Taiwan foreign ministry announcement Monday that Taiwan will establish a representative office in Milan (it already has one in Rome) to boost bilateral trade and investment. (The self-governing island opened a representative office in Provence in southern France in December 2020 and in Lithuania in November 2021.)
“The Milan office will serve the needs of business travelers, tourists and the overseas Taiwanese community and provide emergency assistance to Taiwanese citizens in the eight administrative regions of northern Italy,” said the foreign ministry.
A direct flight route between Taipei and Milan commenced operations last October.
Since mid-2022, TSMC has been considering building a chip factory in Germany or Italy but it has not made a decision yet. Last September, Intel Corp said it planned to build a chip packaging and assembly plant in Veneto.
Sino-Italian relations
In March 2019, Italy became the first G7 member to sign a memorandum of understanding supporting Belt and Road. That put Italy out of tune with the European Union, which was calling China “an economic competitor and a systemic rival.”
Then-Prime Minister Giuseppe Conte, reviled by opponents as a pro-Beijing politician, resigned in January 2021, having been criticized for the government’s slow response when the pandemic broke out in China’s Wuhan in early 2020. About 189,000 people in Italy have been killed by the coronavirus so far, according to the World Health Organization.
Mario Draghi, Conte’s successor, adopted the EU’s stance of calling China a systemic rival. Meloni, who became the first female prime minister in Italy last September, said it was a big mistake that Italy had moved toward joining Belt and Road.
In May last year, TSMC reportedly approached the Italian government and proposed to invest up to 10 billion euros ($10.98 billion) to build a chip factory that would create 3,000 new jobs in Italy. It would be TSMC’s third overseas project after the ones in the US’s Arizona and Japan’s Kyushu.
Earlier media reports have said that TSMC might build a foundry in Germany.
Wei Che-Chia, chief executive of TSMC, said in January of this year that the company will decide where to build a chip factory in Europe based on customer demand and government support.
EU’s China policy
The official Taipei view is that the matter should involve political considerations.
Taiwan’s Deputy Foreign Minister Roy Chun said in the European Parliament’s Renew Europe seminar via video on March 8 that it would be a top agenda item for Taiwan to sign a bilateral investment agreement with the EU.
However, Gunnar Wiegand, managing director for Asia and the Pacific of the European External Action Service, the EU’s diplomatic service, said the EU does not necessarily need such an agreement with Taiwan.
“I know that others are asking for a BIA perhaps for more political reasons, as a sign of our engagement,” Wiegand said, “but for the pure reason of supporting our companies, we don’t necessarily need this.”
Adeline Hinderer, head of the Far East unit of the Directorate General for Trade of the European Commission, also said there is no need to have an EU-Taiwan bilateral investment agreement.
The Central News Agency, Taiwan’s national news agency, struck back on March 13 by publishing a hard-line commentary titled “Fearing China, the EU demands chips from Taiwan but avoids diplomatic talks.”
“EU officials should understand that the world’s most cost-effective chip foundry is located in Taiwan,” said Tien Hsi-Ju, the article’s writer. “While TSMC is building factories in the US and Japan due to changes in geopolitics, the EU also wants its investments. But from Taiwan’s point of view, we don’t necessarily need to do this.”
Tien criticized Wiegand’s call that the EU should view Taiwan’s issues from a broader perspective – a euphemistic reference to EU-China relations.
“If the EU only cares about its relations with China, its strategic perspective is not broad enough,” Tien said. “In its Chips Act, the European Parliament urged the European Commission to establish a chip diplomacy initiative and work with partners such as the US, Japan, South Korea and Taiwan. Now the EU only wants chips from Taiwan but avoids diplomatic talks. Is Taiwan an idiot?”
Italy’s response was swift. On March 16, the Italian Chamber of Deputies passed a motion urging the Italian government to be more involved in the Indo-Pacific region and to place importance on the situation across the Taiwan Strait.
Taiwan’s Foreign Ministry thanked the Italian lower house and said that Italy and Taiwan have a strong partnership based on a shared belief in universal values of freedom, democracy and respect for human rights.
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Follow Jeff Pao on Twitter at @jeffpao3