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Japan has been advised by United States lawmakers to tighten restrictions on electronics and chip sales to China.
Those same lawmakers also clearly indicated the future of Japanese embargoes if the country fails to comply with these restrictions on the sales of semiconductors and equipment.
Several United States electronics companies benefit from the 25% tax credits to purchase equipment for U.S. facilities. Some of these purchases come from foreign trade partners like Japan, so the nation’s part in the cycle of chip-making is at risk if it continues to deal with China.
Japan urged to cease chip trade with China or risk consequences
A letter showing the opinions of House China Select Committee Chairman John Moolenaar and Ranking Member Raja Krishnamoorthi was drafted to Japanese Ambassador Shigeo Yamada.
This stated, “We write to seek your urgent action to address the flow of Japanese semiconductor manufacturing equipment (SME) to the People’s Republic of China (PRC). The export of Japanese, U.S., and Dutch SME technology to the PRC is significantly contributing to a growing global dependency on the PRC’s semiconductor manufacturing capacity and enabling its industry to manufacture advanced semiconductors.”
Since the CHIPS Act came into force, China’s role in the global chip trade has been a constant narrative.
China has been a lucrative market for electronics companies, and the country is strengthening its position in the artificial intelligence market, which the United States is trying to curb by banning or restricting advanced semiconductor sales to their rival.
The CHIPS Act allows the United States government to provide financial incentives for the domestic creation of semiconductors and equipment. As a result, the United States invested more in 2023 semiconductor manufacturing than in the past three decades combined.
“Congress also retains the ability to adjust restrictions placed on CHIPS Act funding, including whether funds should be restricted to companies or countries that ship sophisticated SME to the PRC,” the letter concluded. “Without this action, we believe the PRC will continue to threaten our collective security interests using sophisticated SME.”
So, Japan’s part in the international electronics trade merry-go-round may yet hinge on its involvement in selling semiconductors to China.
