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US Gets New Levers From Japan to Curb China’s Chip Ambitions

 1 year ago
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US Gets New Levers From Japan to Curb China’s Chip Ambitions

Takashi Mochizuki and Yuki Furukawa
Wed, April 5, 2023, 8:00 AM GMT+9·5 min read
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US Gets New Levers From Japan to Curb China’s Chip Ambitions

(Bloomberg) -- Japan’s decision to join the US and Netherlands in restricting exports of chipmaking gear to China is giving the allies powerful new weapons to deploy in the escalating technology war.

Most Read from Bloomberg

Japan’s trade ministry said last week that suppliers of 23 types of chip technology will need government approval to export to countries including China as early as July. That affects a broad range of companies that have been central to China’s efforts to build a domestic chip industry, including Tokyo Electron Ltd., Nikon Corp. and Screen Holdings Co.

While not as high-profile as their counterparts in the US or Netherlands, Japanese companies control key steps in the semiconductor supply chain, which could be used as potential chokepoints against China. Screen, for instance, is the leading producer of wafer cleaning equipment. Lasertec Corp. is the sole supplier of machines needed to inspect designs for the world’s most advanced chips, using extreme ultraviolet lithography chipmaking.

“The goal of these new controls is to cut off Chinese firms from a broad array of advanced chipmaking tools with the aim of making it more difficult for Chinese firms to manufacture advanced chips for artificial-intelligence purposes,” said Chris Miller, an economic historian and author of Chip War: the Fight for the World’s Most Critical Technology. The idea is to slow down China’s tech development to help widen the gap between China’s military capabilities and that of the US and its allies, he said.

When the Biden administration unveiled its sweeping restrictions on chip-related exports to China in October, American companies such as Applied Materials Inc. were directly affected by the rules. With the addition of the Netherlands and now Japan, all the major countries that produce chipmaking equipment are participating in the China blockade. The restrictions cover the most advanced machines, including those that make logic chips at 16 nanometers or more advanced geometries.

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