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Japan chips in, announces restrictions on semiconductor exports to China

Tokyo Japan

Japan has agreed to join forces with the Netherlands and the United States to restrict the export of advanced semiconductor manufacturing equipment to China, reported Kyodo News. The new regulation, which is set to take effect in the spring, will aim to prevent China from developing advanced chips that could enhance its military capabilities.

The Japanese government's decision to restrict chip manufacturing equipment will be done through an amendment in the country's foreign exchange law. The new regulation will, however, not mention China specifically in order to reduce the risk of retaliation by the country.

In early 2022, the United States imposed restrictions on the export of advanced chip-making equipment to China. The Biden administration then expanded the restrictions in September 2022 to include the export of semiconductors used for artificial intelligence.

Following in the footsteps of the United States, the Netherlands also decided to implement similar restrictions. Of all the companies affected by the restrictions imposed by the Netherlands, ASML is the most critical one. It is the sole manufacturer of ultraviolet lithography machines, which are vital to the production of advanced semiconductors, globally.

Now, Japan is also poised to implement the restrictions due to pressure from the U.S. and other global trading partners. Nikon and Tokyo Electron are two of the leading companies in the semiconductor manufacturing industry in the country, and their businesses could be impacted by the proposed restrictions.

White House National Security Spokesperson John Kirby confirmed that talks have been held between Japanese and Dutch officials and the US government regarding "a range of issues important to the three countries." Kirby stated that the discussions included the "safety and security of emerging technologies," and once the talks are concluded, the US government will make an official announcement, as per Kyodo News.

The implementation of restrictions on exports by Japan and the Netherlands may take some time to come to fruition. According to Bloomberg, both nations need to prepare domestic legislation, and it may take months to finalize the legal arrangements.

In addition to restricting exports to China, the White House has also leveraged its influence to boost domestic chip production. President Joe Biden signed the CHIPS and Science Act in 2022, worth $280 billion and included $52 billion in subsidies for semiconductor manufacturing. This has led to companies such as Intel, TSMC, and Samsung either announcing plans or actively building new semiconductor manufacturing facilities in the United States.

Source: Kyodo News via Reuters

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