The Netherlands and Japan join the US in limiting chip exports to China
Japan and the Netherlands will limit exports of chip-making tools to China after reaching a deal with the United States designed to make it harder for the Chinese military to develop advanced weapons.
Several people familiar with the trilateral agreement said the countries reached an agreement on Friday after a final round of high-level talks at the White House. The deal comes three months after Washington imposed unilateral export controls that prevented US companies from selling advanced chip-making equipment to Chinese groups.
The White House declined to comment. But the agreement marks a significant milestone in US efforts to work with allies to thwart Chinese efforts to develop its semiconductor industry.
Joe Biden̵[ads1]7;s administration has been negotiating with the countries for two years, but faced resistance because they worried about the effect on their chip-making tool companies, particularly ASML in the Netherlands and Tokyo Electron and Nikon in Japan.
In October, the United States announced sweeping unilateral export controls designed to complicate Chinese efforts to acquire, or develop, advanced semiconductors for use in supercomputers and other military-related applications, such as artificial intelligence, nuclear weapons modeling and hypersonic weapons.
The US chipmaking tool groups that dominate the sector – Applied Materials, Lam Research and KLA – were concerned that the October move would impose restrictions on them, but not ASML and Tokyo Electron. At the time, Alan Estevez, the Commerce Department’s top official for export controls, justified the move, saying it would prove to allies that the United States had “skin in the game” and was willing to make tough decisions.
Estevez and Tarun Chhabra, the National Security Council official driving the move, stepped up efforts in recent months to convince allies during visits to Tokyo and The Hague.
Several people said the three countries had decided not to make the details public because of the sensitive nature of the discussions. Washington wanted to give Japan and the Netherlands room to decide how the restrictions should be communicated. It is still unclear which mechanisms the countries will use to impose the restrictions on their chip tool companies.
Tokyo and The Hague are also concerned about being seen to have signed up to a US policy specifically targeting China.
Dutch Prime Minister Mark Rutte said this week that while public attention on chip tool exports had been focused on Japan, the Netherlands, the US and China, the discussion was “broader than that”.
The increase in pressure on the allies in recent months came after US national security adviser Jake Sullivan signaled a significant change in policy in September. In a speech, he said the United States should abandon its “sliding scale” approach of trying to be two generations of chips ahead, and instead “maintain as big a lead as possible.”
Rutte told the Financial Times in an interview that the Netherlands saw “eye to eye” with those who argued that Western high-end chips should not be used in weapons in some countries. He said Western nations and Asian partners needed to maintain the “leading edge” in chips.
He added that the debate was wider than just one Dutch company. Rutte said he was “completely convinced” that it was possible to reach a “solution with the many partners we are discussing with” and added that “The Hague coordinated with everyone”.
In a statement, ASML said it understood “that steps have been taken towards an agreement between governments which, in our understanding, will be focused on advanced chip manufacturing technology, including but not limited to advanced lithography tools. Before it enters into force, it needs to be detailed and implemented in legislation that will take time.”
ASML added that based on comments from government officials and their understanding of the timeline, “we do not expect these measures to have a material effect on the expectations we have published for 2023”.
Bloomberg first reported the deal.
follow Demetrius of Sevastopol and Sam Fleming on Twitter
