Japan and the Netherlands have decided to join the US in strengthening limits on chipmaking gear exports to China, which is a setback to Beijing's technological aspirations.
Three-country Alliance
According to the insiders that Bloomberg interviewed, Japan and the Netherlands are expected to declare in the coming weeks that they will implement new regulations similar to the ones the US enacted in October.
The said rules limit the export of machinery used to produce sophisticated semiconductors. According to the Biden administration, the restrictions are meant to stop the Chinese military from buying high-tech semiconductors.
The equipment and knowledge required to produce cutting-edge semiconductors are mostly located in these three nations - Japan, the Netherlands, and the US.
Therefore, this three-nation alliance would effectively cut off China's access to the tools it needs to produce advanced semiconductors.
American manufacturers Applied Materials Inc., Lam Research Corp., and KLA Corp. could not meet demand due to export restrictions imposed by the US government.
It is a major step forward that the governments of Japan's Tokyo Electron Ltd. and the Netherlands' lithography expert ASML Holding NV have adopted the export limitations that the US required for the sanctions to have any impact.
China's Stance
China cannot develop a world-class economy on its own. Stacy Rasgon, an analyst at Sanford C. Bernstein, said, "No chance."
China's Ministry of Commerce stated on Monday, Dec. 12, saying that the nation has filed a dispute with the World Trade Organization about US export curbs.
Chinese officials have argued that the US' grounds for national security concerns are weak and that the limitations jeopardize the integrity of the global supply chain.
Nonetheless, there is growing international criticism of China's plans to become a chip manufacturing powerhouse.
Talks About the Restrictions
Dutch authorities are reportedly considering additional export limits on China, according to a story from Bloomberg News from last week.
Meanwhile, sources said that the Japanese government consented to such constraints in recent weeks so that the two nations could work together.
One of the sources claimed that Japan had to overcome resistance from local firms concerned about losing sales in China. Other than Tokyo Electron, the market is dominated by Nikon Corp. and Canon Inc.
Bloomberg reported that in late November, senior US National Security Council official Tarun Chhabra and Under Secretary of Commerce for Industry and Security Alan Estevez met with Dutch officials to discuss export limits. And only last week, Commerce Secretary Gina Raimondo spoke with Minister of Economy, Trade, and Industry (METI) head Yasutoshi Nishimura by teleconference to discuss the same topics.
Specifics
Officials in the Netherlands and Japan are taking this step to further limit China's access to advanced semiconductor technology by formalizing and expanding their current export control restrictions.
According to the sources, the two countries want to prohibit exporting equipment designed to produce chips with a minimum feature size of 14 nanometers to China.
The measures are consistent with guidelines established by the US government in October.
China's chipmaking champion Semiconductor Manufacturing International Corp. (SMIC) controls the 14nm technology, which is at least three generations behind the newest developments on the market but is already the company's second-best technology.
