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US in talks with critical chip tech countries Netherlands, Japan. Topic? China sanctions

Uncle Sam well aware of strategic importance of lithography industry crucial to production nodes

The Netherlands and Japan may be about to introduce tougher restrictions aimed at curbing China's ability to produce advanced semiconductors, egged on by pressure from the US.

The White House has been steadily ratcheting up its restrictions on advanced chip technology exports to China over recent months, while also cajoling partners and allies to join it in further limiting Beijing's access to both chips and chipmaking equipment.

Japan and the Netherlands are both key producers of photolithography machinery used in the production of chips, and officials from the two countries are set to conclude talks with US officials today on a new set of limits on what can be supplied to China, Bloomberg reports, citing anonymous sources familiar with the negotiations.

The sources claimed there are no plans for a public announcement of the restrictions, which will most likely be quietly implemented by the countries involved.

It appears that the restrictions will involve the Netherlands agreeing to extend restrictions on the equipment that ASML, one of the leading photolithography machinery makers, is able to sell to Chinese companies.

ASML is the sole global supplier of extreme ultraviolet lithography (EUV) machines, used in the most advanced production nodes, but there is already a ban on supplying these to China. It appears the ban will be extended to also cover less advanced deep ultraviolet (DUV) lithography equipment as well.

In Japan, the same restrictions are likely to be applied to manufacturers there producing DUV equipment, such as Nikon.

Countries such as the Netherlands were understood to be reluctant to join the US in extending export restrictions as some felt they were being asked to take an economic hit in order to satisfy Uncle Sam's crusade against China.

In particular, Dutch trade minister Liesje Schreinemacher had indicated that the country would not necessarily go along with US plans.

"I know there's a lot of pressure internationally but I will be fighting for open trade and against protectionism," she told a panel at the World Economic Forum in Davos last week.

Other European countries have also proven less than enthusiastic in joining the US campaign against China's tech industry, with Germany in particular showing no sign of cutting its reliance on Huawei technology for its 5G telecoms networks.

In Taiwan, the CEO of chipmaking giant TSMC also expressed his displeasure at the ongoing dispute recently, stating that it was interfering with the global semiconductor industry and creating new difficulties to conducting business.

The South China Morning Post, meanwhile, reports on concerns in Japan that the country will face a backlash from Beijing for joining in with US sanctions, and that Japanese companies doing business in China will suffer because of this.

It quotes a lawmaker from Japan's ruling Liberal Democratic Party in saying that Japanese companies may be forced to look for markets elsewhere if they find themselves facing fallout from the US-China dispute.

Similar fears were voiced last year by Japanese memory maker Kioxia, which said that China may retaliate against export controls by ramping up domestic investment in NAND technology as a long-term solution to being cut off from advanced memory chip supplies.

Others have also warned that the chip war may be having an effect on China, but is also hurting Western industries and global trade, with reports last year pointing out that cutting off access to Chinese technology could raise prices for businesses and consumers around the world, at a time when many are already facing the threat of rising inflation driving up prices. ®

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