Daily Management Review

Japan Will Limit Export Of Chipmaking Machinery In Line With US And Chinese Restrictions


Japan Will Limit Export Of Chipmaking Machinery In Line With US And Chinese Restrictions
Japan announced on Friday that it will limit the export of 23 different types of semiconductor manufacturing equipment, aligning its technology trade controls with an effort by the United States to stop China from producing sophisticated chips.
Major worldwide chip equipment producers Nikon Corp. and Tokyo Electron Ltd. are based in Japan, which did not specifically name China as the target of the measures, instead stating that equipment manufacturers would need to request export authorization for every region.
"We are fulfilling our responsibility as a technological nation to contribute to international peace and stability," Minister for Economy, Trade and Industry Yasutoshi Nishimura told a news conference.
According to him, Japan aims to stop the exploitation of cutting-edge technology for military reasons and is not targeting any particular nation with its policies.
Japan's move, however, is considered as a significant diplomatic victory for the administration of U.S. President Joe Biden, which in October put broad restrictions on China's access to American chipmaking technology in an effort to halt its scientific and military advancements.
The United States' actions would be ineffectual and its companies would be at a competitive disadvantage without the assistance of global leaders in their respective industries, Japan and the Netherlands.
According to insiders, Japan and the Netherlands agreed in January to join the United States in limiting equipment exports to China that may be used to produce sub-14 nanometer chips, but they chose not to publicly announce the agreement to avoid upsetting China.
Japan has never made any agreements known in public.
A nanometre, or one billionth of a meter, is a unit of measurement used in the semiconductor industry. A chip is considered to be more advanced if it has less nanometres.
In a letter to the Dutch parliament this month, the government announced its intention to limit the export of chipmaking machinery. The market for lithography systems, which are used to produce the intricate circuitry in chips, is dominated by Dutch giant ASML Holding NV.
China encouraged the Netherlands "not to pursue export control measures by certain countries," accusing the Netherlands of being a "tech hegemony" due to its export restrictions.
Six kinds of equipment used in chip fabrication, including cleaning, deposition, lithography, and etching, will be subject to export controls, according to Japan.
At least a dozen Japanese companies, including Nikon, Tokyo Electron, Screen Holdings Co Ltd, and Advantest Corp, are likely to be impacted by the limitations, which take effect in July.
Given the lack of a robust domestic chip market, Takamoto Suzuki, head of economic research for Marubeni in China, claimed that the measures would be detrimental to Japanese equipment manufacturers.
"It will undermine the market development of Japanese companies and certainly reduce their competitiveness from a regulatory aspect," he said.
When questioned about the effect, minister Nishimura stated that he anticipated a minimal effect on domestic businesses.
Observers of the industry mention potential sales in other places.
"If you take a long-term view, the effect will be diminished, with new semiconductor plants coming into operation in places like the United States and Japan," said Takahiro Shinada, a professor at Japan's Tohoku University.
Japan is still a significant provider of chipmaking equipment and semiconductor materials, despite the fact that it has seen its market share decline to roughly 10% from where it formerly dominated chip production. A fifth of the world's chipmaking tools are produced by Tokyo Electron and Screen, while the majority of silicone wafers are made by Shin-Etsu Chemical Co Ltd and Sumco Corp.
Following the news, shares of Nikon and Advantest increased 0.8% and 1.9%, respectively, substantially in line with the 1.1% increase in the overall market. Tokyo Electron and Screen didn't change all that much.
"We will continue to comply with any rules and work to maximize our results within them," a Nikon spokesperson said.
There was no comment on the issue available from Tokyo Electron and Advantest.