While Japan plans to join the United States in restricting exports of advanced semiconductor manufacturing equipment to China, attention is being paid to what items Tokyo will select for the curbs.

Such restrictions would help prevent China from using semiconductor technologies for military purposes, but would also impact Japanese companies doing business with China.

Senior officials of Japan, the United States and the Netherlands, at a meeting in Washington on Jan. 27, shared a view that it is necessary to restrict semiconductor exports to China more strictly, according to a person familiar with the matter.

In October last year, the United States effectively banned the export of semiconductor manufacturing equipment and related technologies to China due to national security concerns, including the possibility of an invasion of Taiwan.

The United States had asked Japan and the Netherlands, both home to influential makers of semiconductor manufacturing equipment, to introduce similar restrictions.

Japan has already been cooperating with the United States to reinforce the semiconductor supply chain, and now it sees a need to work together on chip export restrictions as well to counter China’s growing military threat.

Japanese companies may have to reconsider overseas strategies. Toshizo Tanaka, chief financial officer at Canon Inc., which manufactures lithography equipment essential for semiconductor manufacturing, said that “tighter restrictions may be introduced in various aspects.”

“We’ll respond while closely monitoring the situation,” said a senior official at Advantest Corp. <6857>, a major manufacturer of semiconductor-related equipment.

An official at Tokyo Electron Ltd., which relies on China for nearly 30 pct of its sales, declined to comment on the issue.

Japan “will not impose extensive restrictions like those in the United States” so as not to deal a heavy blow to domestic companies, a person familiar with the matter said.

In December last year, China took U.S. chip export controls to the World Tarde Organization.

If Tokyo imposes stricter restrictions, Beijing may retaliate, including by taking Japan to the WTO and restricting imports of Japanese products.

Japan thus faces the challenge of balancing the strengthening of economic security with promotion of business activities while avoiding a complete decoupling in the technology sector.

JIJI Press