According to people familiar with the negotiations, Japan and the Netherlands are poised to join the United States in limiting China’s access to advanced semiconductor manufacturing equipment, forging a powerful alliance that will undercut Beijing’s ambitions to build its own domestic chip capabilities.
Chip Export Banned To China
The Netherlands will tighten limitations on ASML Holding, preventing the business from selling at least some of its deep ultraviolet lithography machines, which are required to manufacture some types of advanced chips and without which it may be impossible to set up production lines. Nikon Corp. will face similar restrictions in Japan.
Tokyo Electron, which relies on China for approximately a quarter of its sales, is the Japanese business most likely to be hit by new limitations, according to Masahiko Hosokawa, a Meisei University professor, and former director general of trade control at the ministry.
The National Security Council’s representative declined to comment. With senior national security advisers and cabinet officials, the council serves as the US President’s primary venue for national security and foreign policy decision-making.
The collaborative effort adds to constraints announced by the Biden administration in October to limit China’s capacity to manufacture advanced semiconductors or buy cutting-edge chips from abroad to help military and artificial intelligence capabilities.
US equipment manufacturers have protested that the Biden administration’s unilateral action permitted international competitors to continue operating in one of the most important markets for their products, undermining the goal of limiting China’s military gains.
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Global Tech War
After Bloomberg’s story, Tokyo Electron, which has sold chip-making equipment to China, reversed gains and dipped around 1%.
Furthermore, China’s offshore yuan reversed earlier advances against the US dollar, falling 0.1% to 6.7448 on the story. The yuan had risen to its highest level in two weeks, fueled by signs of increased tourism and consumption during the Lunar New Year break.
With mainland markets closed, thinner trade has also magnified movements in the foreign exchange market. China has retaliated against the US initiative.
In December, Beijing launched a lawsuit with the World Trade Organization in an attempt to reverse the US-imposed export limits. Even ASML’s CEO has expressed concern that the US effort may have unexpected repercussions.
On January 25, ASML president and CEO Peter Wennink stated that US-led export control measures against China could eventually force Beijing to successfully develop its own sophisticated chip-making technology.
According to a person familiar with the conversations, Dutch officials have pushed that new rules address national security issues rather than favoring US chip-related companies.
A trade and industry official involved in regulating semiconductor manufacturers told Reuters that Japan expects sales at affected chip-related companies to revive rapidly because the market for their equipment is rising. He requested anonymity because he is not authorized to speak to the media.
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