Market evolution: Other integrated circuits (CN 85423990) — 2015–2025

Introduction

This report examines the evolution of EU trade in electronic integrated circuits classified under customs code 85423990 — a residual category that captures integrated circuits other than processors, controllers, memories, amplifiers, and multichip/multi-component devices. While narrower in scope than the broader 8542 heading, this product class is significant because it covers a wide array of application-specific and other specialised integrated circuits that underpin European industry, from automotive to industrial automation. Over the period 2015–2025, EU trade in this product underwent dramatic structural shifts: trade values surged while physical volumes contracted, unit prices more than doubled, and import dependency deepened. The Scope & Definitions section of the underlying dashboard provides further details on the product classification.

1. A Value Boom Masking Declining Physical Volumes

1.1 EU trade values surged despite falling tonnage

The most striking feature of EU trade in CN 85423990 over the 2015–2025 decade is the divergence between value and volume trends. As shown in the General Overview, EU imports rose from €6.7 billion in 2015 to €11.4 billion in 2025 (+70.1%), while import volumes actually fell from 12,749 tonnes to 7,727 tonnes (−39.4%). On the export side, values climbed from €4.5 billion to €8.0 billion (+78.3%) while volumes edged down from 3,936 to 3,281 tonnes (−16.6%).

Sources: General Overview

1.2 Unit prices more than doubled, driven by product-mix shifts and global supply tensions

The reconciliation of these trends lies in a dramatic increase in unit values. Import prices rose from approximately €526,000 per tonne to €1,476,000 per tonne (+180.6%), while export prices climbed from €1,133,000 to €2,423,000 per tonne (+113.9%). Several factors likely explain this. First, the global semiconductor shortage of 2020–2022 pushed prices sharply upward across the industry. Second, the product mix within this residual category may have shifted towards higher-value, more specialised circuits (e.g., power management ICs, analog/mixed-signal chips), which command premium pricing. Third, structural supply-side inflation in the semiconductor industry — including rising fabrication costs at advanced nodes — contributed to persistent price escalation.

1.3 The trade deficit widened but with a divergent trajectory

The EU's trade deficit in this product category deepened from −€2.2 billion in 2015 to −€3.5 billion in 2025. However, the trajectory was far from linear. The deficit peaked dramatically at approximately −€8.2 billion during the semiconductor shortage period (likely 2021–2022), before partially recovering. This reflects the fact that the EU's import bill spiked more sharply and earlier than its export revenues during the supply crunch, a pattern consistent with the EU's position as a net importer with limited bargaining power during periods of global scarcity.

2. The Asian Supply Chain Consolidation and Shifting Partner Dynamics

2.1 Taiwan became the EU's dominant import source

Among the EU's top seven extra-EU import partners, Taiwan recorded the most dramatic growth, rising from €1.1 billion in 2015 to €3.5 billion in 2025 (+220.7%). By 2025, Taiwan alone accounted for roughly 30% of extra-EU import value — a remarkable concentration given that Taiwan was already a significant supplier at the start of the period. This reflects Taiwan's central role in global semiconductor manufacturing, particularly through foundry services, and the growing value content of chips produced there.

Sources: Top Partners

2.2 China and Southeast Asia expanded rapidly as suppliers

China's exports of these circuits to the EU grew by 161.9% (from €491 million to €1.3 billion), while Thailand (+165.4%) and the Philippines (+60.4%) also saw substantial increases. The growth of Malaysia and Thailand as supply sources is consistent with the broader trend of semiconductor assembly, test, and packaging (ATP) capacity being concentrated in Southeast Asia. China's growth, meanwhile, reflects both its expanding domestic chip production capacity and its role as a re-export hub. Notably, Japan's share contracted slightly (−8.7%), consistent with Japan's declining role in mid-range semiconductor manufacturing.

2.3 The United Kingdom's collapse as an import partner stands out

The UK experienced the most dramatic decline among the top partners, with imports falling 92.6% from €319 million to just €24 million. The Volatility & Shocks analysis also detected a massive price shock in UK imports in 2021 (abnormality score of 130.9, with a price shift of +1,584.3%). This likely reflects post-Brexit trade reclassification effects combined with the disruption of UK-EU semiconductor supply chains. The UK's coefficient of variation for imports (1.11) was by far the highest among all partners, confirming an exceptionally erratic trade pattern.

2.4 EU export destinations diversified

On the export side, the EU's top partners in 2025 included China (€835 million, +150.4%), the United States (€356 million, +63.1%), Hong Kong (€384 million, +154.9%), and Mexico (€231 million, +205.8%). The strong growth in exports to China and Hong Kong is consistent with European chipmakers supplying specialised or analogue circuits to Chinese electronics manufacturers. The UK remained the single largest export destination at €304 million, though it declined slightly (−8.4%). Morocco and Tunisia also grew notably, likely reflecting the expansion of electronics assembly in the Euro-Mediterranean region. The export concentration HHI fell from 880 to 759 (−13.7%), confirming that EU export destinations became more diversified over the period.

2.5 Import concentration increased, raising supply-chain risk

In contrast to export diversification, import concentration rose. The import HHI climbed from 1,193 to 1,608 (+34.8%), indicating that EU import sources became more concentrated. This is primarily explained by the rapid rise of Taiwan as a dominant supplier and the relative decline of more distributed sources such as the UK and Japan. Greater concentration increases the EU's vulnerability to supply disruptions from any single major source.

3. Deepening Import Dependency amid Expanding Domestic Production

3.1 Net import reliance grew, particularly during the shortage years

The EU's net import reliance in this product category increased from 16.8% in 2015 to 23.3% in 2025 (+38.6%). The peak reached 45.8% during the semiconductor shortage, underscoring the extreme external dependency when global supply tightens. While the ratio has since moderated, the end-of-period level remains well above the 2015 baseline, suggesting a structural rather than cyclical shift.

3.2 Trade intensity and export propensity both declined

Despite growing trade values in absolute terms, the EU's trade intensity (trade as a share of apparent consumption) fell from 86.6% to 79.1% (−8.7%), and export propensity (exports as a share of production) declined from 74.0% to 60.1% (−18.7%). This paradox — rising absolute trade values but declining trade ratios — is explained by the strong growth in domestic production. EU production of this category grew from approximately 7.1 billion items (€5.7 billion) in 2015 to 20 billion items (€12.4 billion) in 2025, according to the production data. The volume increase of +182.5% (and +119.9% in value terms) indicates significant capacity expansion within the EU, likely boosted by investments linked to the European Chips Act and broader semiconductor policy initiatives.

3.3 Germany, France, and the Netherlands dominate EU production and exports

Among EU Member States, Germany led both imports (€4.9 billion) and exports (€3.3 billion) in 2025, reflecting its central role as Europe's largest semiconductor consumer and the home of major chipmakers such as Infineon and Bosch. The Netherlands followed with €3.2 billion in imports and €1.2 billion in exports, boosted by ASML's ecosystem and NXP's operations. France showed the highest revealed comparative advantage in 2025 (RSCA of 0.60), consistent with STMicroelectronics' and other French firms' strong position in specialised analogue and mixed-signal integrated circuits. Italy's export growth was exceptionally strong (+1,099.5%, from €88 million to €1.06 billion), likely driven by STMicroelectronics' expanding operations in its Italian fabs.

3.4 The EU's structural deficit persists despite the production ramp-up

Despite the substantial growth in domestic production — both in volume and value — the EU continues to run a persistent trade deficit in this product category. The deficit of €3.5 billion in 2025, though smaller than the peak of €8.2 billion, confirms that the EU remains a net importer. The growing import concentration and the elevated net import reliance suggest that the expansion of EU production capacity has so far been insufficient to offset the structural growth in demand, particularly given the increasing chip content of European manufactured goods (automotive, industrial IoT, energy systems).

Conclusion

Over the 2015–2025 period, EU trade in CN 85423990 (other electronic integrated circuits) was shaped by three reinforcing dynamics: a dramatic price-driven escalation in trade values that masked declining physical volumes; a reorientation of import supply chains towards East Asia — and Taiwan in particular — that increased concentration risk; and a deepening of import dependency that coexisted with significant expansion of EU domestic production. The semiconductor shortage of 2020–2022 served as a stress test that exposed the EU's vulnerability, with net import reliance peaking at 45.8% and the trade deficit ballooning to €8.2 billion. While the post-shortage period has seen some normalisation, the structural picture at end-2025 remains one of net dependency, with a trade deficit of €3.5 billion, import HHI at elevated levels, and more than three-quarters of extra-EU imports sourced from a handful of Asian partners. The substantial growth in EU production volumes (to 20 billion items) and value (€12.4 billion) offers a positive signal, but achieving greater strategic autonomy in this product category will require sustained investment and continued policy support.