US Seeks Support from Japan and Netherlands to Restrict China's Semiconductor Power

US Seeks Support from Japan and Netherlands to Restrict China’s Semiconductor Power

In an effort to exert more control over China’s semiconductor sector, the United States is turning to its allies in Japan and the Netherlands for assistance. Alan Estevez, the US Under Secretary of Commerce for Industry and Security, is set to visit Tokyo and The Hague to request additional restrictions on China’s ability to produce high-bandwidth memory (HBM) chips, which are crucial for artificial intelligence (AI) development.

The US has been trying to limit China’s access to advanced semiconductors for years, citing national security concerns. However, the results of these efforts have been mixed, with Chinese companies like Huawei making significant advancements in the field. Therefore, the US is now seeking support from allies who have implemented their own, less stringent controls, in order to create a more effective global blockade.

Japan and the Netherlands play a crucial role in the global semiconductor equipment industry. The US is looking for these countries to impose more limits on the activities of Dutch supplier ASML Holding and Japan’s Tokyo Electron, which are key providers of semiconductor equipment. Additionally, the US is asking for restrictions on the ability of these companies to maintain and repair their advanced chip-making equipment in China.

Gregory Allen, director of the Wadhwani Centre for AI and Advanced Technologies at Washington’s Centre for Strategic and International Studies, explains the significance of the US seeking support from Japan and the Netherlands. “The Netherlands and Japan have restrictions on exports but not on servicing, and that’s a critical limitation in the overall technology controls architecture.” By persuading these countries to tighten their restrictions, the US hopes to close this loophole and create a more comprehensive control system.

However, both the Dutch and Japanese governments have been resistant to US pressure, wanting more time to evaluate the impact of existing export bans and awaiting the outcome of the US presidential election in November. The US delegation’s visit to the Netherlands is expected to take place after the new Dutch cabinet is sworn in the first week of July, and it’s uncertain how the new government led by Geert Wilders will respond to US demands.

HBM chips are an essential part of the AI hardware ecosystem, as they significantly speed up access to memory and aid in AI development. Companies like Nvidia Corp and Advanced Micro Devices rely on HBM chips for their AI accelerators to work. As a result, the US has also been in discussions about restricting the export of HBM chips.

SK Hynix is currently the world’s leading producer of HBM chips, with Samsung Electronics and Micron Technology working to catch up. SK Hynix relies on equipment from ASML and Tokyo Electron for production. South Korean equipment makers Hanmi Semiconductor Co and Hanwha Precision Machinery Co are also critical players in the HBM supply chain.

Washington’s concerns extend beyond semiconductor suppliers to Chinese chip-making equipment. Lawmakers recently introduced a bipartisan bill to ban companies that receive US funding for semiconductor factories from purchasing Chinese tools for those facilities, reflecting growing worries about China’s progress in chip-making equipment.

The outcome of the US delegation’s visit to Japan and the Netherlands remains uncertain, but the US is hopeful that by working with its allies, it can establish a more robust and effective control system to restrict China’s semiconductor power.