China warns Japan of severe economic repercussions over semiconductor sanctions

Amid growing tensions over semiconductor technology, Japan faces increasing pressure from the United States to align with its sanctions against China.

Senior Chinese officials have consistently cautioned Japan about aligning its semiconductor sanctions with those of the US. According to Bloomberg, if Japan follows the US lead in restricting the sale and maintenance of semiconductor equipment, it could face “severe economic repercussions” from China. With growing pressure from the US regarding potential new regulations, Japan finds itself in a difficult position, Caliber.Az reports, citing foreign media.

China’s stance is driven by its desire for access to advanced semiconductor technology, but the real impact of Chinese retaliation would likely be felt in a completely different sector in Japan—the automotive industry. There are concerns that China could target critical supplies for Japan’s car manufacturers. Japan, a resource-poor archipelago of 14,125 islands, relies heavily on ingenuity, hard work, and imports of raw materials.

One of its largest employers is Toyota, the world’s largest carmaker, which produces around 10 million vehicles annually, many of which are sold within Japan. This requires a substantial amount of resources, and China, its close neighbour, is a primary supplier. Japanese policymakers are thus caught between the pressure from the US and the potential consequences of Chinese retaliation. 

A potential silver lining for Japan is that its semiconductor industry no longer holds the prominence it once did. Bloomberg’s report points to one major player, Tokyo Electron (TEL), as a key figure in the ongoing semiconductor sanctions issue. TEL is a global manufacturer of advanced semiconductor production equipment. The company produces a comprehensive range of such tools and claims to be the world leader in shipments of coaster/developer, gas chemical etching, diffusion furnace, and batch deposition machines.

TEL is also a key player in the plasma etching, metal deposition, and probe equipment sectors. For a more specific example of the machinery TEL is currently introducing to the industry, in July, we reported on Acrevia, a new gas cluster beam (GCB) system designed for refining patterns produced by EUV lithography. 

The Chinese Foreign Ministry strongly condemned the sanctions, calling them unjust. It remains to be seen how China’s rapidly expanding semiconductor industry will cope with the potential disruption of being cut off from TEL’s equipment and direct maintenance services.

By Naila Huseynova