Japanese semiconductor export controls take effect today! Experts say that equipment | semiconductors | exports
On July 23rd, following the United States and the Netherlands, Japan's new regulations restricting the export of semiconductor manufacturing equipment officially came into effect.
Previously, after more than a month of consultation, on May 23, the Japanese Ministry of Economy, Trade and Industry announced an amendment to the Foreign Exchange Law, which included 23 categories of semiconductor equipment required for advanced chip manufacturing as export control objects.
At the regular press conference of the Ministry of Commerce held on July 13th, spokesperson Shu Jueting expressed her hope that Japan, from the perspective of safeguarding its own interests and the overall situation of China Japan economic and trade cooperation, will abide by its commitments to free trade and market economy, abide by international economic and trade rules, avoid political interference in economic and trade cooperation between the two countries, restrict normal independent operation of enterprises, and fair competition between enterprises.
Chen Zilei, a professor at Shanghai University of International Business and Economics and director of the Japan Economic Research Center, told First Financial that Japan's introduction of export control regulations for semiconductor equipment this time is a serious Cold War consciousness, violates the principles of free trade under the World Trade Organization, and goes against economic globalization and multilateralism. "The Japanese side's' unilateral 'promotion of the implementation of this regulation will not only have a certain impact on China and Japan, but also on the semiconductor industry and supply chains in the entire East Asian region and even globally. Japanese companies will also bear huge losses as a result, and this' shared loss' approach is truly detrimental to others and not beneficial to oneself."
Japan's new regulations restricting the export of semiconductor manufacturing equipment have come into effect
The influence of the United States cannot be ignored
The 23 semiconductor materials and equipment restricted for export by Japan this time include various critical materials, such as hydrogen fluoride, etching solution, polyimide, and high-purity nitrogen.
Specifically, there are four aspects involved in the field of lithography/exposure, namely advanced process lithography machines/adhesive development machines/masks and manufacturing equipment; There are three aspects involved in the field of etching, namely wet/dry/anisotropic high-end etching; There are three aspects involved in the cleaning field: copper oxide film, surface oxide removal by drying method, and single chip cleaning after wafer surface modification. The most involved field is the thin film industry, with 11 items. In addition, there is one item each involved in the fields of heat treatment and testing.
The Japanese government has stipulated that the 23 newly added product categories, except for 42 friendly countries and regions, require individual licenses for exports to other regions. According to Chen Zilei's understanding, this means that in the future, Japanese companies involved in exporting products to China in this field must obtain a separate license approved by the Japanese Minister of Economy, Trade and Industry before they can export to China; The types of application documents and procedures required for a separate license will be extremely complex, including the need to submit additional supporting documents such as user business qualifications, export product purposes, and user commitment documents. "This creates barriers for the export of products in this field to China, seriously damaging the principles of trade liberalization and facilitation pursued under the WTO mechanism, and bringing many negative impacts on trade exchanges between China and Japan," he said.
The Japan Semiconductor Manufacturing Equipment Association stated in an exclusive response to First Financial that the export controls on semiconductor manufacturing equipment announced by the US government in October last year had a significant impact. "Due to the impact of US restrictions on semiconductor export equipment, Japanese companies have had to make changes in their layout in the Chinese market."
At the beginning of this year, the governments of the United States, the Netherlands, and Japan reached an agreement to impose new equipment export controls and restrictions on Chinese chip manufacturing. On June 30th, the Netherlands announced that some semiconductor related products such as lithography machines will be included in export controls. In response to this, the China Semiconductor Association stated at the time that if this became a reality, it would cause enormous harm to the Chinese semiconductor industry, as well as incalculable harm to the global industry and economy, and long-term harm to the interests of global end consumers. The China Semiconductor Industry Association opposes this behavior that undermines the existing global semiconductor industry ecosystem. Oppose this behavior that interferes with global trade liberalization, distorts supply-demand relations and supply-demand balance. Oppose this attempt to exclude China's semiconductor industry from the global industrial system and free market competition.
Chen Zilei also told First Financial that the implementation of Japan's semiconductor equipment export control bill this time is part of its cooperation with the so-called "economic decoupling" strategy of the United States, which has a strong Cold War color and forms a sharp contrast with the existing Sino Japanese economic and trade pattern. "Although Japanese government officials have made interviews to clarify the connection between this move and the United States, claiming that it is to prevent advanced technology from being used for military purposes. However, in terms of the content and nature of the regulation, there is no doubt that it is a specific implementation and response to the United States'" blockade "and suppression of China's high-tech industry development strategy. It is the main manifestation of the chip agreement between the United States, Japan, and the Netherlands at the beginning of this year."
"The Chinese market remains important for Japanese companies"
Many media outlets believe that although Japan does not explicitly mention "China", this move is clearly in line with the United States. This directly makes it difficult for Japanese companies to export products related to the above-mentioned fields to the Chinese market in the future.
In response to this, the Japan Semiconductor Manufacturing Equipment Association stated in its response to First Financial that the association is also very concerned about the Japanese government's statement, "the key is whether there will be any 'additional' impact. In 2022, China is the world's largest semiconductor equipment market. We believe that the Chinese market is still important for Japanese companies.".
How close is the economic and trade cooperation between China and Japan in the semiconductor field?
At present, Japanese companies occupy about 30% of the global market share in the semiconductor manufacturing equipment market and have a significant competitive advantage. China is the main export destination for Japan's semiconductor equipment, accounting for nearly 40% of its exports. According to the statistics of the United Nations International Trade Center, Japan will export about 12 billion dollars of manufacturing equipment to Chinese Mainland in 2021, accounting for nearly 40% of the equipment exported to the world, the highest in all regions, and nearly twice as much as the United States' equipment exports to China. The revenue of Japanese enterprises from Chinese Mainland accounted for 20% to 30% of the total revenue of enterprises.
Chen Zilei told First Financial that in fact, Japanese companies attach great importance to investment and production cooperation in the semiconductor industry. "For many years, the cooperation between the two countries' enterprises has achieved complementary advantages, mismatched competition, and common development. It can be said that cooperation in the semiconductor industry between China and Japan is highly in line with the interests of both countries."
Among a group of Japanese companies related to the semiconductor industry, Tokyo Electronics, the world's third-largest semiconductor equipment manufacturer specializing in semiconductor manufacturing front-end equipment, stated in an exclusive response to First Financial that as a company, it cannot respond to policy decisions involving bilateral or multilateral issues.
The financial report of Tokyo Electronics for the fiscal year 2022 shows that due to the economic situation and the impact of new US export controls on China, the performance target for that year has been comprehensively lowered. This is also the first time in nearly four years that Tokyo Electronics has lowered its financial target. Among them, the merged revenue was reduced by approximately 250 billion yen, a decrease of 10.6%. The head of Tokyo Electronics News Agency, Hayashi River, once told the media that "about half of the amount of revenue reduction comes from the impact of the new export control regulations of the United States on the semiconductor industry in Chinese Mainland."
In addition, Advantech, which specializes in semiconductor testing equipment and ranks sixth globally, has not responded. First Financial learned from several Japanese companies that dominate in special exposure equipment that they all hope to maintain cooperation with the Chinese market.
At the end of May, Wang Linjie, spokesperson for the China Council for the Promotion of International Trade, responded to inquiries and stated that the Japanese government's introduction of export control measures for semiconductor manufacturing equipment did not carefully consider the concerns of both China and Japan, which will impact the security and stability of the semiconductor industry chain and supply chain, seriously damaging the interests of Chinese and Japanese enterprises.
The Japan Semiconductor Manufacturing Equipment Association has released a forecast that the sales of semiconductor equipment produced in Japan in 2023 will decrease by 23% compared to the previous year, to 3.02 trillion yen. The reason given by the association is that demand is sluggish and it is difficult to see any signs of improvement in the short term. This is the second time in 2023 that the Japan Semiconductor Manufacturing Equipment Association has lowered its equipment sales expectations. However, for the future, the Japan Semiconductor Manufacturing Equipment Association believes that in the medium to long term, the global market demand for semiconductor equipment will continue to grow.
