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US chip industry worried it may lose out to rivals over China ban

Just hang on while we convince the rest of the world, Commerce Sec tells makers

US companies that build chipmaking equipment have been told to tough it out as they face a ban on selling to customers in China, while their rivals elsewhere in the world currently have no such restrictions.

According to reports, US Secretary of Commerce Gina Raimondo told makers of chip manufacturing kit that they may need to wait "as long as nine months" before the Washington government can persuade allied nations to get on board with its program of measures to limit China's access to advanced semiconductor technologies.

As we reported this week, the US is trying to persuade its allies to join it in implementing export controls on any advanced chip technologies to China, as well as any equipment that could be used to manufacture such products.

It appears that some US companies are alarmed at the amount of revenue they may lose from sales to China as part of complying with the new restrictions imposed by Washington, and also worried that the business may simply go to rivals in other countries instead.

The Register reported last month that California-based Lam Research, a supplier of wafer fabrication equipment, warned that the new export controls could cost it as much as $2.5 billion in lost revenue in 2023.

Applied Materials, another supplier of kit for semiconductor manufacturing, told its investors that the new rules could lose the company up to half a billion dollars in sales during the quarter we are now in.

In response, the US said to be working on an agreement that would see companies in the Netherlands and Japan also subject to restrictions on sales of semiconductor equipment to China. The Netherlands is the home to ASML, one of the largest suppliers of lithography systems for chip manufacturing, while Canon in Japan is just one of the companies there building similar equipment.

But reaching such an agreement aimed at leveling the playing field (from America's viewpoint) could take six to nine months, Raimondo is reported to have told a meeting of the companies affected, according to Bloomberg, which cited sources "who requested anonymity."

It could take longer than that, of course, as other countries will be reluctant to impose export sanctions on their own semiconductor companies just as the industry is facing a downturn in the market.

But America has ways of persuading allies to go along with what it wants, as the UK discovered when it attempted to resist US demands for a ban on Huawei kit in telecoms networks.

US representatives, including the Under Secretary of Commerce for Industry and Security Alan Estevez, are due to be in the Netherlands for discussions on this issue later this month, Bloomberg said. ®

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