Japan will limit exports of chip-making equipment as it aligns with US curbs in China

TOKYO, March 31 (Reuters) – Japan said on Friday it will limit exports of 23 types of semiconductor manufacturing equipment, aligning its technology trade controls with a U.S. push to limit China’s ability to make advanced chips.

Japan, home to major global chip equipment makers such as Nikon Corp ( 7731[ads1].T ) and Tokyo Electron Ltd ( 8035.T ), did not specify China as the target of the measures, saying equipment makers must apply for export permits for all regions.

– We fulfill our responsibility as a technological nation to contribute to international peace and stability, said Economy, Trade and Industry Minister Yasutoshi Nishimura at a press conference.

Japan wants to stop advanced technology being used for military purposes and does not have one specific country in mind with the measures, he said.

But Japan’s decision is seen as a major diplomatic victory for US President Joe Biden’s administration, which in October announced sweeping restrictions on China’s access to US chip-making technology to slow its technological and military advances.

Without the cooperation of industry heavyweights Japan and the Netherlands, the US measures would be ineffective and the companies would face a competitive disadvantage.

Japan and the Netherlands agreed in January to join the United States in limiting exports to China of equipment that can be used to produce chips below 14 nanometers, but did not announce the pact to avoid provoking China, sources said earlier.

Japan has never publicly recognized any agreement.

A nanometer, or one billionth of a meter, refers to a specific semiconductor industry technology, with fewer nanometers generally meaning the chip is more advanced.

In the Netherlands, the government said in a letter to parliament this month that it planned to restrict exports of chipmaking equipment. Dutch major ASML Holding NV ( ASML.AS ) dominates the market for lithography systems used to make chip minute circuits.

China, which has accused the US of being a “technological hegemony” because of its export restrictions, urged the Netherlands to “not follow export control measures by certain countries”.


Japan said it would impose export controls on six categories of equipment used in chip manufacturing, including cleaning, deposition, lithography and etching.

The restrictions, effective from July, are likely to affect equipment manufactured by at least a dozen Japanese companies, such as Nikon, Tokyo Electron, Screen Holdings Co Ltd ( 7735.T ) and Advantest Corp ( 6857.T ).

Takamoto Suzuki, head of economic research for Marubeni in China, said the measures would be a blow to Japanese equipment makers given the absence of a strong domestic chip market.

“It will undermine the market development of Japanese companies and definitely reduce their competitiveness from a regulatory aspect,” he said.

Asked about the impact, Minister Nishimura said, without elaborating, that he expected limited impact on domestic companies.

Some industry watchers point to potential sales elsewhere.

“If you take a long-term view, the effect will be reduced, with new semiconductor plants coming on stream in places like the US and Japan,” said Takahiro Shinada, a professor at Japan’s Tohoku University.

Japan, which once dominated chip manufacturing but has seen its market share drop to around 10%, remains a major supplier of chipmaking machines and semiconductor materials. Tokyo Electron and Screen make up about a fifth of the world’s chipmaking tools, while Shin-Etsu Chemical Co Ltd ( 4063.T ) and Sumco Corp ( 3436.T ) produce most silicon wafers.

Shares of Nikon and Advantest rose 0.8% and 1.9%, respectively, on the news, broadly in line with the broader market’s (.N225) gain of 1.1%. Tokyo Electron and Screen were little changed.

“We will continue to comply with all regulations and work to maximize our results within them,” a Nikon spokesperson said.

Tokyo Electron and Advantest declined to comment.

Reporting by Tim Kelly, Miho Uranaka, Kiyoshi Takenaka and Mayu Sakoda; Editing by Christopher Cushing

Our standards: Thomson Reuters Trust Principles.

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