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https://www.scmp.com/tech/tech-war/article/3221582/tech-war-china-slams-japans-semiconductor-technology-export-controls

Beijing said it “firmly opposes” Japan’s latest chip-making equipment export restrictions, which have dealt a fresh blow to China’s semiconductor industry that is already grappling with growing US trade curbs amid an intensifying tech war.

China is a major market for them, and since China needs a lot of DUV machines after the EUV ban, Japan doesn't stand to benefit from such a move from what I can see. At least, it's losing billions in potential sales, so what are some benefits I might have overlooked from such a move? Are there things Japan can gain from banning the sales of chipmaking equipment to China?

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  • Same reasons for all the other bans.
    – Joe W
    Jun 28, 2023 at 0:10
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    I'm not sure why there are downvotes, especially without comment. The question is legitimate. Though, it may need rephrasing or added information to entice an answer. The answer may feel obvious to someone paying attention to current world affairs, but it isn't clear on its own.
    – David S
    Jun 28, 2023 at 14:46
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    Isn't Japan also a major chip manufacturer? So China is a competitor, and selling them the machines helps them compete.
    – Barmar
    Jun 30, 2023 at 21:30

1 Answer 1

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If you look at the post-WW2 history of Japan, it has been one of the most loyal and consistent allies of the USA. They virtually accepted all US decisions without a peep even if they were shooting themselves in their own feet.

For instance,

In the 1970s, Japan experienced remarkable economic growth. However, as Japan's economy strengthened, the country sought to expand beyond consumer electronics and turned its attention to semiconductors, which were considered crucial in the commercial technology landscape of that era. Nonetheless, the United States possessed highly advanced technology, making competing with them akin to seeking sustenance from a formidable tiger.

The Japanese government recognized that without policy support, it would be unable to effectively compete with the United States. Consequently, Japan implemented a comprehensive strategy known as the "calf protection" policy. The "calf protection" policy comprised several measures:

  • Firstly, it included strict restrictions on the import of foreign products, imposing both limited quantities and high tariffs on electronic components.

  • Secondly, it tightly controlled the establishment of branches by foreign semiconductor companies in Japan, ensuring their market share did not surpass that of Japanese companies.

  • The third aspect involved government-led cooperation among enterprises.

In 1976, Japan's Ministry of International Trade and Industry convened five prominent high-tech companies, Fujitsu, Hitachi, Mitsubishi, Nippon Electric, and Toshiba, to establish a large-scale technology research association aimed at collaborative research and development of semiconductor chips.

Leveraging its low-cost human resources and skilled workforce, Japan rapidly surpassed the United States within a decade and emerged as the leader in the global semiconductor industry. By 1985, Japanese companies had captured more than half of the global memory chip market share, with NEC, Hitachi, Toshiba, Fujitsu, and Panasonic ranking among the top 10 semiconductor companies worldwide.

However, tensions between Japan and the United States began to escalate. In 1987, the Japanese Metropolitan Police arrested two executives from Toshiba Machinery Company, Ryuji Lin and Hiroaki Tanimura, for their involvement in illegally exporting high-tech products to the Soviet Union.

The United States specifically targeted Toshiba, as it was the largest and most advanced semiconductor company in Japan and played a leading role in various segments. Toshiba faced severe sanctions, including executives receiving 10-year prison sentences, factory closures in the United States, 100% tariffs on Toshiba products sold to the United States, a 5-year export ban to the United States, and substantial fines amounting to 1 trillion yen (equivalent to $16 billion today).

The United States aimed not only to penalize Toshiba but also to undermine the Japanese semiconductor industry as a whole. Under the guise of an investigation, the CIA pressured Toshiba to disclose its core technologies and details, which were subsequently passed on to American semiconductor companies.

To further weaken the Japanese semiconductor industry, the United States orchestrated a series of agreements with Japan.

  1. In 1986, the first semiconductor agreement was signed, highlighting Japan's alleged violations of free market competition through trade protection and government subsidies. Japan was required to fully open its semiconductor market and increase opportunities for foreign semiconductor companies to enter.

  2. In 1987, the United States imposed a 100% tariff on electronic components exported from Japan to enhance the competitiveness of domestic products. Meanwhile, products exported from the United States to Japan faced no tariffs, effectively eliminating the price advantage of Japanese components.

  3. In 1991, the second semiconductor agreement stipulated that foreign semiconductor products should achieve a market share of over 20% in Japan.

These agreements and actions undertaken by the United States ultimately dismantled Japan's semiconductor manufacturing power, leading to the decline of its once prominent industry.

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