Heavy blow: People on an elevated walkway with an electronic ticker display in Shanghai. There are growing concerns that Tokyo’s restrictions on chipmaking equipment companies and exports to China will come back to hurt Japan. — Bloomberg
TOKYO: Japan’s chip export controls will deal a heavy blow to its chipmaking equipment companies, as most of them count China as their largest market, Japanese and Chinese experts say.
Highlighting that being Washington’s pawn will only harm Tokyo, they said the restrictions will motivate Chinese companies to pour in more resources for breakthroughs in crucial technologies.
The comments came as Commerce Minister Wang Wentao urged Japan to correct its wrongdoing in imposing chip export controls, which seriously violated international economic and trade rules, according to a statement released by the Commerce Ministry on Monday.
Wang made the comments last Friday during talks with Yasutoshi Nishimura, Japan’s Economy, Trade, and Industry Minister, at the Asia-Pacific Economic Cooperation Ministers Responsible for Trade meeting in Detroit, Michigan.
Wang said China is willing to work together with Japan to promote pragmatic cooperation in key economic and trade areas and provide a fair, transparent and predictable business environment.
Tokyo said earlier this month that it will put restrictions on exports of 23 types of crucial chipmaking equipment starting in July, aligning its trade rules with the United States’ push to curb China’s ability to make advanced chips.
Experts said such rules are overly broad, and the scope of controlled items far exceeds the internationally accepted list of controlled items, which will weigh heavily on the companies concerned.
Masahiko Hosokawa, a business professor at Meisei University, said it will be difficult for Japanese companies to do business unless the Japanese government clarifies the specific products or components that are subject to the export controls, what conditions must be met for exports to be allowed, and when the export controls will take effect.
Takamoto Suzuki, who heads economic research at Marubeni, a Japanese conglomerate engaged in trading and investment, said the problem is that Japanese chip companies depend heavily on exports because the domestic chip market is not robust.
“This situation could impede the progress of the Japanese industry and ultimately diminish its competitiveness,” Suzuki said.
The Chinese mainland is the largest export destination for Japanese semiconductor equipment manufacturers.
In 2022, such exports from Japan to the Chinese mainland reached 820 billion yen (RM27bil), exceeding 30% of Japan’s total chipmaking equipment exports and almost double the amount of US exports in the same sector, according to data from the Chinese Academy of International Trade and Economic Cooperation.
Zhang Wei, vice-president of the academy, said that for Japanese chip equipment makers, the Chinese mainland market accounts for about 20% to 30% of their overall sales revenue.
“The restrictions will cause huge losses for them,” Zhang said.
The impact is already evident. Tokyo Electron, which derived about 26% of its total net sales from the Chinese mainland market in 2022, is anticipating significant downward pressure. The company expected its annual revenue to fall 23% from a year earlier to 1.7 trillion yen (RM55.9bil). — China Daily/ANN
