Japan, Netherlands to join US in China chip controls: Bloomberg

Japan and the Netherlands will soon agree to join the United States in restricting exports of semiconductor manufacturing equipment to China, Bloomberg News has reported.

Talks between the countries will conclude as early as Friday, with the Netherlands restricting ASML Holding from selling machines to China used to make certain types of advanced chips, Bloomberg reported, citing people familiar with the matter.

Japan would impose similar restrictions on Nikon Corp, the report said.

Sources have told the Reuters news agency that a deal between Dutch and US officials could be clinched by the end of the month as representatives from the two countries meet in Washington, DC on Friday.

Getting the Netherlands and Japan to impose tighter export controls on China would be a big diplomatic win for US President Joe Biden’s administration, which in October announced sweeping restrictions on Beijing’s access to US chipmaking technology to slow its technological and military advances.

Without Japanese or Dutch cooperation, US companies would face a competitive disadvantage.

“We have been in discussion with the United States and other countries regarding the export-control regime,” Yasutoshi Nishimura, Japan’s minister of economy, trade and industry, told reporters on Friday.

“We will implement any measures in accordance with our foreign exchange law and through international cooperation,” he added, declining to provide further details.

The Japanese company most likely to be impacted by new restrictions would be chip manufacturing machinery maker Tokyo Electron, which relies on China for about a quarter of its sales, said Masahiko Hosokawa, a Meisei University professor and former director general of trade control at the ministry.

“A balance needs to be struck so no one among Japan, the United States and Europe will be disproportionately disadvantaged. It’s about fairness,” he said.

Dutch officials have insisted that new controls address national security concerns rather than favour US chip-related companies, a source familiar with the discussions told Reuters.

Japan expects sales at affected chip-related companies to rebound quickly because the market for their equipment is expanding, a trade and industry official involved in overseeing semiconductor firms told Reuters. He asked not to be identified because he is not authorised to speak to the media.