- Move could have significant impact on Tokyo Electron and others
According to Nikkei Asia article published on January 29, 2023, Tokyo will consider restricting exports of advanced semiconductor technology including chipmaking machinery to China at the request of the U.S.
Japanese Economy and Trade Minister Yasutoshi Nishimura told reporters on Saturday that, "We are strictly implementing export control based on international cooperation."
Japan will "take into account restrictions adopted by other nations and respond appropriately," he said.
The matter was discussed by top officials from the U.S., Japan and the Netherlands on Friday in Washington, with news outlets reporting the U.S. secured a deal with the two nations. Japan and the Netherlands will incorporate some of the restrictions adopted by the U.S., the reports said, noting that no announcement is forthcoming and implementation will take several months.
On the three-way talks in Washington, Nishimura said he "would like to refrain from commenting on diplomatic negotiations."
Under restrictions adopted in October, the U.S. requires authorization for exporting technology, manufacturing equipment and personnel for producing cutting-edge chips, including those used in supercomputers -- in effect, banning such exports. The restrictions also apply to equipment made by foreign companies using U.S. technology.
The global market for chipmaking machinery is dominated by U.S. company Applied Materials, the leader, second-placed Dutch company ASML Holding, and third-ranked Japanese company Tokyo Electron.
The U.S. likely approached Japan and the Netherlands for cooperation because the two countries produce chipmaking equipment that does not rely on U.S. technology.
Chip technology determines the quality of missiles and other military equipment. Washington, motivated by national security concerns, wants to gain the cooperation of like-minded allies to ensure the ban has its desired effect.
Japan has already been looking into steps it can take. Specific restrictions will be ironed out by taking into account the impact they will have on domestic companies. Tokyo will continue discussions with Washington and Amsterdam.
In Japan, trade of civilian goods that can be used for military purposes is restricted by the Foreign Exchange and Foreign Trade Act. Exporting certain items or technology requires authorization from the minister of Economy, Trade and Industry.
Items can be added to the list of sensitive goods by revising ministry ordinance. If necessary, the government will consider revising the foreign exchange act. Such a legislative process would take at least several months.
According to the Semiconductor Equipment Association of Japan, overseas sales of Japanese-made manufacturing equipment came to 2.97 trillion yen ($22.9 billion) in fiscal 2021, up 51% on the year. China was the top customer, purchasing 992.4 billion yen worth of products, or 33% of the total.
Of Tokyo Electron's approximately 2 trillion yen in group sales for the fiscal year ended March 2022, China accounted for 26%.
If Japan introduces new regulations, China could take retaliatory measures. China has filed a complaint against the U.S. measures with the World Trade Organization.
