Other Technology | June 1, 2023
The best integrated circuit manufacturing equipment is in the hands of two nations: the Netherlands and Japan. The Dutch company ASML is currently the only one capable of producing extreme ultraviolet (EUV) lithography machines that are being used by TSMC, Intel, and Samsung in their most advanced nodes. However, Tokyo Electron, Canon, and Nikon also develop highly sophisticated lithographic equipment, and all three are Japanese.
Currently, it is not possible to manufacture cutting-edge chips without the equipment from these four companies, and China does not have access to this lithography equipment. The United States prevents it with the purpose, according to the Biden administration, of preventing the country led by Xi Jinping from being able to produce the advanced semiconductors it needs to develop its military capability. In its ‘National Security Strategy,’ the U.S. government clearly expresses its concerns about China’s economic, military, and technological power.
It is so concerned, in fact, that in early March, at the request of the U.S. government, the Dutch government approved new sanctions that prevent ASML from selling its deep ultraviolet (DUV) lithography equipment to companies in China. These are China’s second most advanced chip manufacturing machines, which puts China in a very delicate position because it has never been able to access ASML’s EUV equipment.
The Chinese government’s only option to prevent its semiconductor industry from stagnating is to reach an agreement with Japan for the latter to sell them lithographic equipment without any restrictions. Wang Wentao, the Chinese Minister of Commerce, has demanded that Yasutoshi Nishimura, his Japanese counterpart, put an end to “wrongdoings that seriously violate the rules of international trade.”
At the beginning of last April, Nishimura confirmed that his country will ban the sale of 23 categories of equipment involved in the manufacturing of advanced semiconductors to China. This measure will take effect in the coming month of July and represents the definitive consolidation of the pressure that the U.S. government is exerting on its allies. Naturally, the Chinese administration is doing everything in its power to prevent this package of sanctions from Japan from coming into effect.
However, it can do something more. Something even more forceful: preventing sensitive foreign companies from accessing the colossal Chinese market. In any case, the Xi Jinping government has not remained passive. Mao Ning, a spokesperson for the Chinese Ministry of Foreign Affairs, has stated that “the use of the economy, trade, and technology as a weapon to destabilize the global industrial chain will not only harm others but also damage those who engage in such practices.” There is no doubt that this is a clear warning.
A few hours ago, the Chinese Ministry of Commerce issued a statement urging the Japanese administration to cooperate in the areas of economy and trade. Japan is navigating a delicate balance, but in the current context, this Asian country is much closer to the United States than to China, as was evident during the recent G7 summit held in Hiroshima. We will see what unfolds in the coming weeks, but it is highly likely that, as planned, Japan’s latest package of sanctions will take effect in the next month of July.
