Chinese officials have repeatedly warned Japan about tightening semiconductor sanctions in line with the U.S., but Bloomberg reports that Japan will restrict sales and maintenance of semiconductor equipment in line with U.S. policy. If it decides to do so, it could face “serious economic consequences” from China. Japan finds itself uncomfortably caught between a rock and a hard place as pressure mounts from the United States over possible new rules.
China’s stance is driven by its access to advanced semiconductor technology, but the worst effects of China’s retaliation are likely to be felt in a completely different industry in Japan. The fear is that China’s retaliation will focus on blocking supplies of essential goods for Japan’s auto industry.
Japan is an archipelago consisting of 14,125 islands that are densely populated but poor in resources. Japanese industry can be characterized as ingenious, hardworking, and dependent on imports of important raw materials. One of the country’s largest employers is Toyota, the world’s largest car manufacturer. The company produces about 10 million cars a year, many of them in Japan. It is consuming many resources, with neighboring China being the closest and most obvious source. Japanese politicians must tread carefully between the dragon and the bald eagle.
One saving grace for Japan may be that the semiconductor industry is not attracting as much attention as it used to. A Bloomberg report highlights the role of just one major company, Tokyo Electron (TEL), in this China sanctions issue.
TEL is a cutting-edge semiconductor manufacturing equipment manufacturer active around the world. The company manufactures a wide range of such tools and claims to be number one in the world in shipping coasters/developers, gas chemical etchers, diffusion furnaces4, and batch deposition equipment. The company is also a leading provider of plasma etching, metal deposition and probing equipment.
For a detailed example of the types of machines that TEL is currently deploying to the industry, in July we introduced the new Acrevia, a new gas cluster beam (GCB) system tailored to refine patterns created by EUV lithography. I reported on.
Bloomberg has not received comment on the pending report from the U.S., Japanese, or TEL governments. However, China’s Ministry of Foreign Affairs strongly opposed the sanctions, calling them unfair. Perhaps China’s burgeoning semiconductor industry cannot cope with being cut off from TEL equipment and its own maintenance.
