China’s Chip Future Threatened as More Countries Join US Export Ban

A representative from Washington has publicly acknowledged the existence of a partnership between Japan and the Netherlands to enforce new restrictions on chip-making tool exports to China. Despite not being able to discuss the agreement in detail, Don Graves, deputy secretary of the Commerce Department, suggested that information could be obtained by reaching out to the authorities in Japan and the Netherlands.

As reported by Bloomberg last Friday, the agreement was later confirmed by two unnamed sources familiar with the matter to Reuters. The US imposed strict export controls on chip-making tools bound for China in October, to impede the country’s efforts to enhance its semiconductor industry and military capabilities.

For the restrictions to be successful, the involvement of the Netherlands and Japan, which house significant chipmakers like ASML and Tokyo Electron, was deemed crucial by Washington.

The commerce department stated in an email that it would maintain coordination with foreign partners on export controls, labeling this as a top priority. The department emphasized that multilateral controls are more effective than unilateral controls.

Representatives from the Netherlands and Japan were present in Washington for discussions led by White House national security adviser Jake Sullivan on Friday, covering a wide range of topics.

When asked if an agreement regarding semiconductors had been reached, President Biden responded: “Yes, we talked about many things, but much of it is confidential.”

China’s semiconductor industry has become the main focus of US export limitations. Beijing has invested heavily in developing its domestic sector, but its chip manufacturing facilities, known as fabs, still depend significantly on foreign equipment.

SMIC, China’s largest fab, produces chips utilized in various products including automobiles, IoT devices, and some smartphones. The US included SMIC on its Entity List in 2020, forbidding Dutch company ASML from supplying SMIC with extreme ultraviolet lithography machines.

YMTC is China’s sole participant in the worldwide Nand memory market, which has been dominated by a few US and South Korean firms. It creates and manufactures chips and was added to the US Entity List in 2022.

In 2022, YMTC introduced a chip with 232 memory cell layers, putting it on par with rivals such as Samsung from South Korea. Industry experts believe equipment export restrictions will hinder their progress.

CXMT is China’s only significant player in the design and production of Dram chips, a sector dominated by a few companies in the US, South Korea, and Taiwan.

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