The Netherlands and Japan join the US to curb semiconductor tech sales to China

Briefly: Japan, the Netherlands and the US reached a deal on Friday (27 January) to restrict exports of advanced semiconductor technology to China. The agreement will prevent Dutch firm ASML and Japanese firms like Nikon from selling state-of-the-art chip manufacturing equipment to China.

Last October, the Biden Administration announced a series of unilateral export controls to slow China’s military modernisation. The executive action also forbade foreign semiconductor companies that use any American-made inputs from selling chips to China.

But until now, those restrictions didn’t apply to certain advanced manufacturing equipment (ultraviolet lithography machines) that ASML, Nikon, and others produce. In other words – potatoes and cooking oil were already off-limits; now, the deep fryers are too.

While the deal has not been formally announced, it represents another step forward in the Biden Administration’s efforts to coordinate with allies on China. Without ASML, which produces 90% of the world’s lithography machines, China’s technological development could be set back several years.

Intrigue’s take: The USA-NED-JPN agreement will play into pre-existing fears in Beijing that the West is out to ‘get’ China. The deal will also be seen as proof by Chinese officials that their goal of technological self-sufficiency is the right one. The US effort to tap China’s brakes may ultimately end up hitting the accelerator instead.

Also worth noting:

  • China’s top nuclear lab has continued to use advanced US semiconductor chips despite a decades-long export ban.
  • On Friday, China’s Ambassador to the World Trade Organization said that American trade restrictions violated international rules.