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The US is pushing Japan and the Netherlands to tighten restrictions on exports of chipmaking equipment to China, following a series of advances by blacklisted Chinese tech companies Huawei and SMIC.
Washington imposed unilateral export controls in October 2022 in an effort to slow Chinese efforts to build or obtain high-performance semiconductors that can be used for military purposes.
The Netherlands and Japan, where companies specialise in the production of advanced chipmaking equipment, joined the US last year by enforcing export curbs on sophisticated machines and components.
But despite the controls, Chinese mobile phone maker Huawei and Shanghai-based Semiconductor Manufacturing International Corporation — both of which are on a US trade blacklist — revealed in August they had produced an advanced chip used in Huawei’s Mate 60 series phone.
The Biden administration wants Tokyo and The Hague to go further to close gaps in the existing regime, said people close to the talks. The countries remained divided over where the loopholes were, said one person.
Possible measures include restricting exports of less sophisticated machines, as well as introducing restrictions on servicing and repairs offered for machines already purchased by Chinese clients before the controls took force. Bloomberg first reported the talks.
A European official confirmed Washington was applying pressure but did not give more details. The Dutch ministry of trade declined to comment. A Japanese trade ministry official said Tokyo was having talks with various countries but declined to comment further.
The Hague is pressing Brussels to co-ordinate export controls after being isolated last year. In a proposal sent to other governments, seen by the FT, it stressed the need to “avoid fragmentation of national controls within the EU”. Such controls are a national competence but Brussels in January put forward proposals to play a bigger role.
Three people familiar with the US government effort told the Financial Times that Washington was also trying to persuade South Korea to join the Netherlands and Japan by imposing similar controls.
South Korea has not replicated the Dutch and Japanese controls because its companies do not manufacture chipmaking equipment as sophisticated as the machines produced by the Netherlands’ ASML or Japan’s Tokyo Electron.
But a person familiar with the US-South Korea talks said that China’s heavily-subsidised chipmakers, including SMIC, had been using less sophisticated equipment to produce advanced chips at a loss.
“The Chinese don’t have to worry about the efficiency of the process — they can use trailing edge equipment to produce leading edge chips because they can afford to bleed money in a way no one else can,” the person said.
“This is making the Americans nervous, so they want to expand the scope of controls to include more non state of the art machines.”
The person added the South Korean government would be reluctant to introduce the curbs, which would affect smaller producers of tools and components. “These medium-sized companies, most of which are relatively unknown, are regarded as the backbone of the Korean economy.” The South Korean government declined to comment.
A person familiar with the situation said the US government had also raised concerns over Japanese and South Korean semiconductor companies selling critical equipment parts to sanctioned Chinese entities after US companies suspended deliveries because of the controls.
Chinese imports of foreign semiconductor equipment surged to record highs last summer just before the Dutch and Japanese controls, as chipmakers in the country prepared for the curbs.
On Thursday, Chinese foreign minister Wang Yi condemned US efforts to deny China access to advanced technologies.
“The US has been devising various tactics to suppress China and keeps lengthening its unilateral sanctions list, reaching bewildering levels of unfathomable absurdity,” Wang told a press briefing in Beijing.
“If the United States insists on suppressing China, it will ultimately harm itself.”
Additional reporting by Nian Liu in Beijing
Source: Economy - ft.com
