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Japan tightens the screws on China’s chip ambitions with 23-categories export ban

Japan has announced that it will tighten export controls on 23 types of semiconductor manufacturing equipment, such as etching machines and lithography systems, starting from July 2023. The move is seen as a response to the U.S. pressure to limit China’s access to advanced chip technology, which is vital for applications such as artificial intelligence, supercomputers and military equipment.

The new regulations will require Japanese exporters to obtain a license from the Ministry of Economy, Trade and Industry (METI) before shipping the controlled items to China or any other country that poses a security risk. The license application process will take about 90 days, and the approval will depend on the end-user and end-use of the equipment.

Japan is one of the world’s leading suppliers of semiconductor manufacturing equipment, along with the U.S. and the Netherlands. According to METI, Japan’s exports of semiconductor manufacturing equipment to China amounted to 1.1 trillion yen ($10 billion) in 2022, accounting for about 20% of Japan’s total exports of such equipment.

The U.S. has been urging its allies to join its efforts to curb China’s ambitions in the semiconductor sector, which is seen as a strategic industry for both economic and national security reasons. In October 2022, the U.S. Department of Commerce imposed new export restrictions on advanced semiconductors and related items to China, targeting companies such as Huawei and SMIC, China’s largest chipmaker.

The U.S. and Japan have also been cooperating under the Japan-U.S. Commerce and Industry Partnership (JUCIP), a bilateral framework for dialogue on trade and technology issues. The two countries have agreed to share information and coordinate policies on export controls, especially regarding semiconductor manufacturing equipment.

However, Japan has also emphasized that its new export controls are not identical to those of the U.S., and that it has its own criteria and standards for determining which items are subject to restrictions. Japan has also stated that it does not intend to harm its economic relations with China, which is its largest trading partner.

Some experts have argued that Japan’s export controls are not enough to prevent China from acquiring advanced chip technology, as China can still source equipment from other countries or develop its own capabilities. Others have warned that Japan’s move could trigger retaliation from China or affect Japan’s competitiveness in the global semiconductor market.

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