Japan Takes Clear Stance Against CCP by Curbing Chinese Access to Chipmaking Equipment: Expert

Read More

News Analysis

Japan’s latest export controls on chipmaking equipment aim to significantly curb China’s ability to make advanced chips. One expert told The Epoch Times that Japan’s move shows its clear stance against China’s communist regime and alignment with the United States.

The Japanese government announced on March 31 export restrictions on 23 types of advanced semiconductor manufacturing equipment spanning six key categories, including cleaning, deposition, lithography, and etching.

Tokyo said 42 countries, including the United States and Taiwan, will continue receiving the equipment under a simplified export measure. But China was not among them and will be subject to stricter controls.

The export control measures will take effect in July, according to the Ministry of Economy, Trade and Industry (METI).

Japan is China’s largest source of semiconductor equipment imports. In 2022, China imported $10.7 billion in chipmaking equipment from Japan, accounting for 37.3 percent of the total, according to Chinese customs data. Therefore, Japan’s export control is expected to deal a massive blow to China’s semiconductor industry.

According to a recent analysis by Icsmart, a Chinese tech publication, Japan has a large number of manufacturers covering most types of chipmaking equipment. And that the country’s strength in semiconductor equipment is comparable to that of the United States. Therefore, Japan is the most accessible country to build an advanced semiconductor production line.

The report said, however, Japan’s new restrictive policy means giving up the opportunity to seize the Chinese market at a time when Washington is actively curbing Chinese access to semiconductor-related technologies.

Fang Qi, a UK-based investment consultant, told The Epoch Times on April 10 that Japan’s decision to implement the broad export controls is not unexpected. For it to remain in the world stage of technology, that decision is inevitable, especially amid an ongoing spat between the United States and China over chip technology.

Semiconductor chips on a printed circuit board on Feb. 17, 2023. (Florence Lo/Illustration/Reuters)

Japan: A Chipmaking Equipment Powerhouse

Fang said that Japan’s industrial technology upgrade has mostly been completed, and it is one of the world’s leading suppliers of chipmaking equipment.

According to a report (pdf) released in November 2022 by the Semiconductor Industry Association and Boston Consulting Group, Japan accounted for 27 percent of the global supply of semiconductor equipment in 2021.

In particular, Japanese companies hold key technologies and significant market shares in a number of semiconductor manufacturing segments.

Japan’s Nikon and Canon and the Neherlands’ ASML jointly monopolize the global supply of lithography machines, a key system used to pattern the finest details on advanced microchips.

Tokyo Electron is a major supplier of semiconductor etching equipment and thin film deposition equipment. It is an industry leader in photoresist coating and developing equipment (used with lithography machines). The company’s coating equipment has a global market share of nearly 90 percent.

Japan’s Disco Corporation accounts for over 70 percent of the global semiconductor wafer-cutting equipment market share.

Screen Semiconductor Solutions Co. consistently holds the No. 1 position in the global market for semiconductor cleaning equipment, according to the company’s website.

Tokyo-based Advantest owns more than 50 percent of the semiconductor testing equipment market.

Recognizing the CCP Threat

Fang said that Tokyo has long seen the threat posed by the Chinese Communist Party (CCP) to the Indo-Pacific region, especially to Japan, and now it has begun to show a stronger and more explicit stance against it.

Japan and China have a long history of territorial disputes. In 2010, Beijing blocked all 17 rare earth product exports to Japan over a long-standing dispute about controlling unpopulated islands in the East China Sea after ships from Japan’s naval self-defense force and Chinese fishing vessels clashed. At the time, Beijing also restricted some rare earth exports to other countries, causing global rare earth prices to skyrocket.

In recent years, Japan has actively participated in the U.S.-led Indo-Pacific strategy, enabling it to cooperate more closely with the United States and Taiwan.

The world’s largest and most advanced chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC), is building a new chip plant in Kumamoto Prefecture, Japan, and is considering continuing to set up a second factory in Japan.

Last December, Japan unveiled its biggest military buildup since World War II with a $320 billion plan to buy missiles capable of striking China and ready it for sustained conflict, as regional tensions and Russia’s Ukraine invasion stoke war fears. The sweeping five-year plan will make Japan the world’s third-biggest military spender after the United States and China.

Prime Minister Fumio Kishida’s government is concerned that Moscow has set a precedent to encourage Beijing to attack Taiwan, threatening nearby Japanese islands, disrupting supplies of advanced semiconductors, and putting a potential stranglehold on sea lanes supplying Middle East oil.

On Dec. 16, 2022, Kishida’s government approved three national security plans—the National Security Strategy, the National Defense Strategy, and the Defense Force Buildup Plan—to bolster Japan’s defense capabilities amid an increasingly unstable security environment.

Japan’s Maritime Self-Defense Force’s (JMSDF) JS Mogami (FFM-1), a Japanese multi-mission stealth frigate, takes part in the International Fleet Review to commemorate the 70th anniversary of the foundation of JMSDF, at Sagami Bay, off Yokosuka, south of Tokyo, on Nov. 6, 2022. (Issei Kato/Reuters)

Strategic Partnerships to Counter Chinese Aggression

In March, the United States and Japan struck a trade deal on electric vehicle (EV) battery minerals that is key to strengthening their battery supply chains. The minerals include lithium, nickel, cobalt, graphite, and manganese.

The swiftly negotiated agreement aims to reduce U.S.-Japanese dependence on China for such materials by prohibiting the two countries from enacting bilateral export restrictions on the minerals most critical for EV batteries.

Fang believes Japan wants to expand its global influence in more ways than just economics, particularly by strengthening its military ties with the United Kingdom and South Korea.

In January, Kishida visited the UK. The two sides signed a reciprocal access agreement that greatly expanded defense cooperation between the two countries, allowing both governments to deploy troops on each other’s territory.

British Prime Minister Rishi Sunak (R) and Japanese Prime Minister Fumio Kishida shake hands after signing a defense agreement at the Tower of London, in London, England, on Jan. 11, 2023. (Carl Court/Getty Images)

Downing Street called the pact—signed by Prime Minister Rishi Sunak and Kishida in London on Jan. 11—the most important defense treaty between London and Tokyo since 1902.

The pact is part of the UK’s defense and foreign policy “tilt” toward the Indo-Pacific region, following an integrated review in 2021 that recognized the growing impact of China in the area.

In addition, talks between Britain and Japan also involve trade relations. The UK seeks to join the Asia-Pacific trade bloc, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which Japan is a founding member. At the end of March, the UK was approved to join the CPTPP, becoming the first European country to join the agreement.

South Korean President Yoon Suk Yeol (L) and Japanese Prime Minister Fumio Kishida shake hands ahead of a summit meeting at the prime minister’s official residence in Tokyo on March 16, 2023. (Kiyoshi Ota/Pool/Getty Images)

On March 16, South Korean President Yoon Suk-yeol met with Kishida at a summit in Tokyo, where both promised to turn the page on years of animosity over their countries’ difficult, shared history.

Yoon became the first South Korean president to visit Japan under bilateral arrangements in 12 years. At the summit, the two leaders said they would develop bilateral relations and pursue common interests in security, economy, and global agenda.

The lack of cooperation between the two countries has long undercut U.S.-led efforts to present a united front against China and North Korea.

Aldgra Fredly and Reuters contributed to this report.