US officials to talk with Dutch counterparts about restricting exports of chip-making gear to China

Officials from the United States are meeting with counterparts from the Netherlands in Washington, D.C. on Friday, Jan. 27, to talk about putting up new restrictions on exporting semiconductor manufacturing equipment to China.

The two nations could reach an agreement on mutual export bans on the same day if they can agree on the details, said one source who spoke with Reuters on condition of anonymity. The source added that it is also possible that even if the two nations immediately reach an agreement, no public announcement may be made just yet. (Related: Experts: Semiconductor ban accelerates severing of US-China ties.)

Back in October, the administration of President Joe Biden published wide-ranging export controls, including measures to tightly restrict Chinese access to American semiconductor manufacturing technology, as part of a new trade war to slow down the communist nation’s technological and military advances.

But since publishing those export control, the White House has not been able to convince key allies, most notably the Netherlands and Japan, to implement similar controls on exports. Their participation is seen as essential to making the restrictions effective.

Fortunately for the White House, Japanese officials are also expected to discuss terms with their U.S. and Dutch counterparts regarding setting new limits on what technology in the semiconductor manufacturing industry can be supplied to Chinese companies.

Dutch, Japanese companies crucial producers of equipment for making semiconductors

The Netherlands’ cooperation is necessary due to the country being home to ASML Holding NV, the world’s leading maker of deep ultraviolet lithography equipment, which is critical for making semiconductors.

Other key companies that work with the necessary technologies for manufacturing semiconductors include America’s Applied Materials and Japan’s Nikon Corporation and Tokyo Electron.

If the three companies are able to come to an agreement, their nations’ governments would set strict limits on the export of certain goods manufactured by the above-mentioned companies to China, without which attempts to set up similar production lines may be impossible.

Another person that spoke with Reuters said a central concern for Japanese and Dutch negotiators is that even small changes to the supply chain could reignite the global chip shortage that created havoc for the past two years and has only started easing these last few months.

Dutch officials are also standing by their stance that any export controls must be tailored to the national security concerns of the three nations and not give the appearance that the U.S. is simply trying to manipulate the global semiconductor market to favor its own chipmaking industry.

Export controls could push China to develop its own semiconductor tech

Following reports that negotiations between the Dutch and U.S. may conclude soon, China’s chipmakers declined in the stock markets, including Shanghai’s Semiconductor Manufacturing International Hua Hong Semiconductor. The offshore Chinese yuan also dropped in value against the dollar, reversing gains made in recent weeks.

“This sets the next escalating move in the U.S.-China tech war a bit more meaningful and could weaken yuan sentiment a tad in the near-term,” noted Fiona Lim, a foreign exchange strategist at Malayan Banking Berhad in Singapore.

China has been trying to fight back against U.S. efforts to prevent it from accessing crucial technologies. In December, Beijing filed a dispute with the World Trade Organization in an attempt to overturn U.S.-imposed export controls to no avail.

“If they cannot get those machines, they will develop them themselves,” said ASML CEO Peter Wennink, who warned that the export controls could push China to put more resources into developing its own semiconductor industry. “That will take time, but ultimately they will get there.”

Watch this clip from G News suggesting that it will take China at least 20 more years to catch up with the U.S. on semiconductor development.

This video is from the Chinese Taking Down Evil CCP channel on Brighteon.com.

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Sources include:

SCMP.com

Bloomberg.com

Brighteon.com