Japan and Netherlands Join US in Imposing Tough Restrictions on China's Chip Industry

Biden Administration's concerns about China's military and AI capabilities drive new sanctions.

Japan and the Netherlands have joined the US in tightening restrictions on the export of chip manufacturing technology to Chinese companies, in an effort to limit China's ability to increase its own domestic chip production. This comes after the Biden administration announced similar restrictions in October 2022, due to fears that easier access to advanced semiconductors would enhance China's military and artificial intelligence capabilities.

The agreement between Japan and the Netherlands was reported by several major news outlets, but there are no plans for a public announcement. The Netherlands Prime Minister Mark Rutte stated that the topic is sensitive and that communication will be limited.

One of the key companies affected by the Netherlands' restrictions is ASML, the world's only producer of ultraviolet lithography machines, which are crucial to the production of advanced semiconductors. The restrictions are expected to prevent the sale of some of the older deep ultraviolet lithography (DUV) machines, further limiting the ability of Chinese companies to produce advanced chips. Although ASML CEO Peter Wennink has said that any restrictions will not prevent China from eventually building its own versions of the machines, it will take time.

In Japan, the restrictions are expected to impact companies such as Nikon and Tokyo Electron. The White House has also used its influence to stimulate domestic chip production by signing the $280 billion CHIPS and Science Act, which includes $52 billion in subsidies for semiconductor manufacturing. Intel, TSMC, and Samsung have all announced or are building new semiconductor manufacturing facilities in the US.