China’s semiconductor industry fears Japanese curbs on exports of crucial chipmaking equipment will be so broad that they risk hitting its production of lower-grade silicon, used in everything from cars to washing machines.
Tokyo has said it intends to put restrictions on exports of 23 types of crucial chipmaking equipment from July, as it aligns itself with the US and the Netherlands in implementing sweeping export controls that could limit China’s access to cutting-edge chips.
However, Chinese industry executives who have examined the fine print of the intended rules say they could potentially go further than the US in restricting China’s ability to make semiconductors.
“Japan’s export controls will be more disturbing to China than Washington’s sanctions last year,” said a Chinese chip factory executive, who did not wish to be named.
Last October, Washington put limits on the export of equipment capable of producing chips at miniaturisation levels of less than 14 billionths of a metre, or in some cases, 16 nanometres.
The nanometre node refers to different generations of chip production technology. The most advanced chips for smartphones, for example, are 3nm ones, whereas more mature chips for household appliances, vehicles, and Internet of Things gadgets are produced at 28nm and above.
However, Japan’s specifications encompass chips as basic as 45nm, in export controls for equipment such as that used in immersion lithography provided by Nikon, because some of the technology can be essential in producing advanced chips.
A Chinese government official who works closely with chipmakers said the Dutch lithography giant ASML only expected restrictions on machines that produced advanced chips, while its smaller rival Nikon would face more extensive limits in Japan.
One person close to ASML said the company was still awaiting final details from the Dutch government, which is expected to spell out its restrictions by mid-July.
“What the Japanese government is saying is that they will require licences for everything — whether they grant those licences or not is the question . . . the Japanese are further ahead than us,” the person said.
Nikon said it did not anticipate any impact from Japan’s export controls for the current 2023-2024 fiscal year. Another equipment supplier, Tokyo Electron, expects its annual revenues to fall 23 per cent from a year earlier to ¥1.7tn ($12.3bn), but executives declined to comment on how much of the decline was a result of the measures and which of its equipment would be affected.
China’s Semiconductor Industry Association, which represents 900 companies, warned last month that the scope of exported equipment that could be restricted by Japan was “too broad” and could affect supply chains for more mature chip technology.
It called on the Chinese government to “take decisive countermeasures if the Japanese government insists on destroying the friendly and co-operative relationship between the Chinese and Japanese semiconductor industries”.
According to research company TrendForce, chips produced at 28nm and above nodes are expected to occupy 75 to 80 per cent of the production capacity of foundries globally in the next three years.
Such mature chip production is also a key part of China’s strategy in response to US restrictions. China’s largest chipmaker SMIC has ramped up production of lower-grade chips and is building four new factories after being put on the US entity list for export controls.
Although it has directed funding and lent policy support to local equipment suppliers, China is still highly reliant on imported chipmaking tools and had hoped to turn to Japan and South Korea for replacements for US technology as geopolitical tensions increased.
Instead, there are now fears that Japan’s potentially tighter restrictions on equipment exports could be a sign of things to come from other governments.
“We are concerned about whether the US and Netherlands governments will issue export controls as strict as Japan’s,” said a government official working closely with Chinese fabrication plants.
However, Applied Materials, Lam Research and KLA, three of the biggest US tool manufacturers for chipmakers, have all said commerce department clarifications meant they should be able to ship equipment to help make older-generation chips.
Government officials in Tokyo cautioned it would be difficult to judge which restrictions were the most stringent based on the specifications alone, since companies could still get a licence to export the equipment even if they needed to go through the screening process. And while Washington’s measures specifically target China, Japanese export controls have a far wider geographical coverage.
“The systems are different, so it’s not an apples-to-apples comparison,” one Japanese official said.
Additional reporting by Andy Bounds in Brussels
Source: Economy - ft.com
