US-China tech war: Japan, Netherlands poised to join Biden’s chip crackdown on Beijing
Japan and the Netherlands, home to key suppliers of semiconductor manufacturing equipment, are close to joining a Biden administration-led effort to restrict exports of the technology to China and hobble its push into the chips industry.
The Japanese and Dutch export controls may be agreed to and finalized as soon as the end of January, according to people familiar with the matter. Prime Minister Fumio Kishida, and Netherlands leader Mark Rutte, discussed their plans with U.S. President Joe Biden at the White House earlier this month.
“I’m fairly confident that we will get there,” Rutte said Thursday in an interview with Bloomberg News on the sidelines of the World Economic Forum in Davos, Switzerland.
The Hague and Tokyo likely won’t go as far as Washington’s restrictions, which not only limit exports of American-made machinery but also impede U.S. citizens from working with Chinese chipmakers. Even so, Beijing may find itself even more cut off from either the technology or know-how it needs to build the most advanced kinds of semiconductors once all three countries act.
While the U.S. is home to the biggest group of chip-gear makers, the Netherlands boasts ASML Holding, which controls the market for lithography technology that’s one of the most important steps in producing the electronic components.
Japan’s Tokyo Electron, meanwhile, is a major rival to U.S. companies in other types of machinery. Without access to their state-of-the-art products and those supplied by U.S. firms Applied Materials, Lam Research and KLA, Chinese companies would find it almost impossible to build production lines capable of the most advanced chip manufacturing, analysts say.
On Friday, Liberal Democratic Party heavyweight Akira Amari, the main architect of Tokyo’s effort to elevate Japan’s semiconductor industry, said his country must join the U.S. in containing China’s chip ambitions, warning that Beijing is part of a group of nations seeking global hegemony and must be curbed.
But any sanctions need to be carefully calibrated to avoid a complete decoupling that risks global economic stability, Amari told Bloomberg News.
“Countries like China, Russia and North Korea are vying for global hegemony, and we should never help them achieve that,” Amari said. “We must join the U.S. in stopping exports of cutting-edge chips that can be diverted for military use and pose serious security concerns.” A spokeswoman for the White House’s National Security Council declined to comment.
China Foreign Ministry spokesman Wang Wenbin said Friday at a regular press briefing in Beijing that the U.S. effort showed its “selfish hegemonic interest” and that Washington was “seeking to benefit itself at the expense of its allies.” Beijing “would follow what is developing and defend our own interests,” Wang added.
The Biden administration issued sweeping new rules in October that include restrictions on the supply of U.S. manufacturers’ most advanced chipmaking equipment to Chinese customers and limits on Americans working for Chinese semiconductor firms, a move aimed at choking off access to certain expertise.
A comment period on the Commerce Department’s rules — opposed by some U.S. semiconductor companies but supported by lawmakers in both parties — closes Jan. 31. Republicans in Congress have pressured Commerce Secretary Gina Raimondo to crack down even tighter on Chinese chipmakers, questioning in a letter on Wednesday whether the export controls are being sufficiently enforced.
Semiconductors have become a key battleground for the growing rivalry between the world’s two largest economies. The U.S. is the inventor and largest provider of the technology, while China is the biggest single market. Beijing’s dependence, combined with growing efforts by Washington to limit access to advanced chips and their military use, have prompted China to seek to reduce its reliance on imports.
For Biden, broadening his move against China to include the Netherlands and Japan will add to its effectiveness. For the Dutch and Japanese, as for some U.S. companies, the geopolitical concerns must be weighed against losing access to a huge market.
“I commend the Biden administration for working with our partners to apply export controls on equipment used to make advanced semiconductors and am eager to scrutinize the specifics of what comes out of these talks,” Texas Rep. Michael McCaul, who chairs the House Foreign Affairs Committee, said in a statement to Bloomberg News. “A Republican Congress is ready to use its authorities to protect U.S. national security and defend human rights, should the outcomes not substantially match the controls currently in place.”
McCaul is set to meet with Raimondo to discuss the matter on Thursday. It’s uncertain how long it will take the other countries to implement their measures. “It could even be something which just happens without big announcements,” Rutte said in the interview. “It’s still not clear. It depends a bit on how the discussions with various countries will evolve.”
After the U.S. announcement in October, some American companies were forced to warn investors that they may lose out on billions of dollars in future China revenue. Since then, they’ve argued it also exposes them to losing market share, if overseas competitors are allowed to continue to operate in China relatively unrestricted. Tokyo Electron has said the general clampdown on its Chinese customers is already hurting business.
ASML has said that demand elsewhere in the world for its most advanced products can make up for any revenue shortfall from China, though Chief Executive Officer Peter Wennink also said last month his company has “given up enough” with the pre-existing restrictions on the sales of its extreme ultraviolet lithography machines to the Asian country.
-From South China Morning Post, Jan 22, 2023
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