Japan Gives US New Tools to Limit China’s Semiconductor Aspirations


The US and Netherlands have gained a powerful new lever to help curb China’s aggressive chip ambitions following Japan’s decision to restrict its exports of chipmaking gear to China. In joining the US and Netherlands, Japan is the final major provider of chipmaking gear to join in the China blockade. Tokyo’s trade ministry announced last week that suppliers of 23 types of chip technology will need government approval to export to countries including China, effective as early as July. This affects a broad range of companies known for fueling China’s efforts of a domestic chip industry, such as Tokyo Electron Ltd., Nikon Corp., and Screen Holdings Co.

Screen is a leading producer of wafer cleaning equipment, while Lasertec Corp. is the sole supplier of machines used to inspect designs for some of the world’s most advanced chips. These restrictions cover machinery used for 16 nanometers and below, making it difficult for Chinese firms to create advanced chips, such as those used for artificial intelligence. In addition, the US, Netherlands, and now Japan are major countries that produce chip-related technology, so this alliance can create some challenges for Chinese firms.

In response to this situation, China’s Foreign Minister Qin Gang urged the Japanese Foreign Minister to refrain from such support in order to sustain the Chinese semiconductor industry. However, Japan declined that commitment. This could mean lost sales for Nikon, who gets 28% of their revenue from China and has been relying on demand for its lithography machines in the country.

Not only is this creating challenges for Chinese firms, it is also pressuring them to become more self-sufficient in chip technology. In fact, over the weekend, Chinese chip-related stocks rose amid optimism that they will benefit from Beijing’s semiconductor efforts.

Japan is known for its dominant makers of photoresist coaters and developers, mask inspection equipment, single biggest source of silicon wafers, and many fine chemicals necessary for chipmaking. With this new policy, it remains to be seen how the US, Netherlands, and Japan’s effort to curb China’s chip ambitions will affect the chipmakers and the Chinese economy overall.