Tokyo announces export restrictions on chip equipment

The Japanese government, a key node in the global semiconductor supply chain, announced on Friday that it will restrict exports of high-end computer chip-making equipment to prevent the technologies from being used for military purposes.

Though China was not mentioned in the order, the restrictions imposed by Japan, a close US ally, are likely to please the Biden administration, which has ramped up its own campaign to block shipments of high-tech companies’ cutting-edge semiconductors to Beijing in the US and with important allies.

The new Japanese curbs will reportedly come into effect in July. Chinese semiconductor companies have been stockpiling needed supplies from Japan ahead of expected export controls. The Financial Times reported.

The measure was taken “to prevent our technology from being diverted for military use,” Economy, Trade and Industry Minister Yasutoshi Nishimura said told the news service Kyodo News. “We are living up to our responsibilities in the international community.”

Under the plan, which becomes official after a period of public comment, Japan will impose export restrictions on 23 items.

The Asahi Daily Newspaper written down that 42 nations, including democratic chipmakers South Korea and Taiwan, will be exempt from the restrictions, but not China.

The Beijing-based Global Times, which has close ties to the ruling Chinese Communist Party, fired back on Japan’s move within hours.

“Japan’s willingness to blindly follow the US as a pawn in technological containment against China could cost dearly,” the news website said warned in an article accusing Tokyo of “shooting itself in the foot by giving in to US pressure to contain China.”

Mr Nishimuri told a news conference in Tokyo that the government “has no particular country in mind with these measures”, but US Ambassador to Japan Rahm Emanuel hailed the move as a victory, writing: “It is another win for.” economic security and supply chain security.”

Chips are at the heart of the rapidly digitizing global economy, and China is struggling to domestically produce the super-fast new models that power modern technology.

The US government has used key American intellectual property in this sector as leverage to persuade allies to ship chips and related equipment to China, warning that it could be used to bolster Beijing’s rapidly expanding military and intelligence capabilities .

The “chip war” is perhaps the Trump administration’s most well-known policy to be maintained — and expanded — by the Biden administration.

Concerned about Beijing using various chips to train artificial intelligence systems and power advanced military and surveillance applications, Washington has itself announced a series of related technology export restrictions.

This policy has put the spotlight on the biggest global chipmakers in Taiwan and South Korea: TSMC and Samsung Electronics. South Korea-based Samsung is the world’s largest maker of memory chips, while Taiwanese company TSMC is the leading maker of advanced non-memory or logic chips.

Although Japan is no longer a major player in semiconductor manufacturing, it still plays a pivotal role in the industry through the production and export of chemicals, components and manufacturing equipment needed by chip companies.

“No Japan – no semiconductors!” said Scott Foster, an analyst at Lightstream Research in Tokyo. “Japan has extremely high market shares in vital equipment and materials, things you never read about [but] this is very important.”

These include mission-critical chemicals and wafer dicing technologies. Products from 10 companies will be subject to the stricter export measures, including Tokyo Electron Ltd., Nikon Corp. and Screen Holdings Co, the Asahi newspaper reported. These companies make advanced lithography and etching solutions and cleaning equipment, Mr. Foster said.

Japan is following the example of the Netherlands, which has also held talks with Washington to deny China high-power chips.

The Netherlands is home to ASML, a major manufacturer of premium semiconductor manufacturing machinery. In March, after months of negotiations with the US, the Dutch government announced that it would restrict the export of key chip technologies.

The US effort is complicated by the reluctance of companies in such close US allies as Japan, the Netherlands and South Korea to lose lucrative Chinese markets for their products. The world’s second largest economy is a voracious consumer of chips, chip components and chip making equipment.

Mr Foster said Friday’s announcement reflected ongoing ambivalence in Tokyo over restrictions on China.

“This is just the latest announcement from the Japanese government, but it’s getting a little less vague each time,” Mr Foster said. “In my opinion, they’re procrastinating things as much as they can.”

He continued, “If they haven’t finalized discussion with the public, that means the industry is probably not too enthusiastic about the idea – similar to Holland, where it could take months and years to work out the details.”

However, it’s clear that the US government believes the chip sector offers real leverage against a key competitor.

China’s government is investing heavily in the chip sector. But in an industry where the smaller the size, the better, Chinese companies are struggling to make 14-nanometer chips even after South Korean and Taiwanese industry leaders started making 3-nanometer chips in 2022.

And Huawei, the Chinese tech flagship, has found its smartphone division crippled by US sanctions.

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