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(Bloomberg) -- Japan and the Netherlands have agreed in principle to join the US in tightening controls over the export of advanced chipmaking machinery to China, according to people familiar with the matter, a potentially debilitating blow to Beijing’s technology ambitions.
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The two countries are likely to announce in the coming weeks that they’ll adopt at least some of the sweeping measures the US rolled out in October to restrict the sale of advanced semiconductor manufacturing equipment, according to the people, who asked not to be named because they are not authorized to speak publicly on the matter. The Biden administration has said the measures are aimed at preventing Beijing’s military from obtaining advanced semiconductors.
The three-country alliance would represent a near-total blockade of China’s ability to buy the equipment necessary to make leading-edge chips. The US rules restricted the supply from American gear suppliers Applied Materials Inc., Lam Research Corp. and KLA Corp. Japan’s Tokyo Electron Ltd. and Dutch lithography specialist ASML Holding NV are the two other critical suppliers that the US needed to make the sanctions effective, making their governments’ adoption of the export curbs a significant milestone.
“There’s no way China can build a leading-edge industry on their own. No chance,” said Sanford C. Bernstein analyst Stacy Rasgon.
On Monday, China filed a dispute over the US export controls with the World Trade Organization, the country’s Ministry of Commerce said in a statement. Beijing said the restrictions threaten the stability of the global supply chain and that America’s national-security justification is dubious.
But the global opposition to China’s chipmaking ambitions is mounting. Bloomberg News reported last week that Dutch officials were planning new export controls on China. The Japanese government agreed to similar restrictions in recent weeks since the two countries wanted to act in concert, the people said. Japan had to overcome opposition from domestic companies that would prefer not to lose sales into China, one of the people said. Beside Tokyo Electron, Nikon Corp. and Canon Inc. are minor players in the market.
Japan is in discussion with the US and other countries regarding the matter, Japanese trade minister Yasutoshi Nishimura said on Tuesday at a press conference, declining to comment on the status of ongoing talks. “We are conducting hearings of domestic firms and studying the impact of the US restrictions.”