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(Bloomberg) -- Key US lawmakers urged Japan to strengthen restrictions on sales of chipmaking equipment to China, warning that if Tokyo fails to act, Washington could impose its own curbs on Japanese companies or bar toolmakers that sell to China from receiving US semiconductor subsidies.
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The top Republican and Democrat on the House China Select Committee outlined their concerns in a letter dated Oct. 15 to Japanese Ambassador to the US Shigeo Yamada that was reviewed by Bloomberg.
They dismissed arguments that restrictions have had a material negative impact on chip equipment companies like Tokyo Electron Ltd., and emphasized the importance of cooperation between the US, Japan and the Netherlands — home to the five most important semiconductor toolmakers — in slowing China’s chip ambitions.
Suggestions that those companies have been hurt by existing restrictions “do not appear to stand up to scrutiny,” wrote Committee Chairman John Moolenaar, a Republican, and the panel’s top Democrat, Raja Krishnamoorthi. Asked for comment on the letter, a committee spokesperson pointed to that line. The Japanese embassy didn’t immediately respond to a request for comment.
The letter cited increases in the stock prices of Tokyo Electron, ASML Holding NV, Lam Research Corp. and Applied Materials Inc., as well as chip subsidy programs from the US and European Union, as evidence of the limited impact of export controls.
Those companies have generally reaped rewards from the artificial intelligence boom. None of them has so far received direct government grants from the US Chips and Science Act, but their customers — chip manufacturers like Intel Corp. or Samsung Electronics Co. — can use 25% tax credits to purchase their equipment for US facilities.
Still, China remains a crucial and lucrative market for all chip toolmakers, and officials in Tokyo and the Hague are cautious about imposing further restrictions. US companies, meanwhile, have argued that tighter curbs from Washington give their foreign competitors an unfair edge. Additional unilateral controls, they say, would be detrimental to American industry without comparable measures from allies.
The Biden administration has pressured Japan and the Netherlands to strengthen their chip controls, part of a yearslong campaign to prevent Beijing from accessing AI that could benefit its military. In particular, US officials are seeking bans on Japanese and Dutch persons maintaining and repairing advanced gear in China, in line with rules Washington has already put in place for US persons. They also want allies to curb the sale of additional tools, to match a broader package of new US regulations that’s still under deliberation.