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Japan Restricts Semiconductor Equipment Exports to Prevent China from Obtaining Advanced Technology

TOKYO -- Japan added advanced semiconductor-manufacturing equipment to its export control list on yesterday, a move that aligns Tokyo with U.S. measures meant to keep chip technology out of China's hands.


Japan now requires export licenses for semiconductor-manufacturing equipment

Twenty-three items have been added to the list, including equipment needed to form circuit patterns and test chips.

This will make it harder for China to import high-tech chipmaking tools, industry watchers said, and is expected to provoke a response from Beijing.

"Producing cutting-edge semiconductor devices will be almost hopeless for China, at least in the short and medium term," said Yoshiaki Takayama, a research fellow at the Japan Institute of International Affairs.

Among the newly added items is equipment related to EUV (extreme ultraviolet) lithography, a process that traces the complex circuit patterns in the world's most advanced chips.

Japan's move to restrict access to chipmaking tools comes after the U.S. toughened controls on exports to China in October, with an eye toward chips used in supercomputers and artificial intelligence, which have potential military applications.

The U.S. had called on Japan and the Netherlands, two of the world's biggest suppliers of semiconductor-manufacturing equipment, to take similar steps. The Netherlands' new restrictions are set to take effect in September.

Dutch manufacturer ASML controls the market for EUV lithography machines, while Japan is home to such leading chip industry suppliers as Tokyo Electron and Screen Holdings.

Japan is China's top source of semiconductor-manufacturing equipment, accounting for about a third of Chinese imports by value in this segment in 2022, according to the International Trade Centre.

The export controls will increase suppliers' reporting requirements to Japan's Ministry of Economy, Trade and Industry. A simpler application process is allowed for 42 countries and territories.

While they face restrictions at the high end, Japanese suppliers still have opportunities for growth in China in areas other than the industry's cutting edge. Exports of equipment to make older, so-called legacy chips remain strong. China has ramped up production of these chips in response to U.S. restrictions.

For Japan, a bigger concern is how Beijing will respond to the export controls. China said in May that it would ban the use of chips made by U.S.-based Micron Technology in vital infrastructure, a move widely seen as a reprisal against Washington. Starting in August, China will require export licenses for gallium and germanium compounds, which are used in the semiconductor and electronics industries.

Gallium nitride semiconductor materials are a strong suit for Japan, which may have to look beyond China for supplies. China has also hinted at further responses.

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