Trade or Diplomacy
The Japanese government announced on March 31 that a semiconductor manufacturing equipment export ban would be implemented in July. The ban will be applied to 23 types of equipment used for advanced chip manufacturing. Although targets were not specified, it is highly likely that the ban is to isolate China together with the United States. The Ministry of Commerce of China implied retaliation.
Although Japan is a leading equipment supplier in the industry and China is likely to take a hit from the export control, it is predicted to adversely affect Japanese companies as well. In 2021, Japan’s semiconductor manufacturing equipment sales were 2.9705 trillion yen (US$22.664 billion) abroad with sales in China accounting for one-third. That year, the Chinese market made up 26 percent of Tokyo Electron’s sales. For certain items, the Chinese market buys up to 90 percent of production.
The tension between Japan and China is affecting Samsung Electronics and SK Hynix, too. They are running plants in China and the export control means they cannot bring new equipment into the plants.
“The United States, Japan, and the Netherlands are solidifying their alliance against China, driving Samsung Electronics and SK Hynix into the corner,” said an industry source, adding, “The South Korean government needs to make more diplomatic efforts.”