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Chip equipment exports to China tumble as U.S. pushes decoupling
TOKYO -- Exports of semiconductor-manufacturing equipment from the U.S. and Japan to China fell for the first time in three years in 2022 as Washington stepped up its trade restrictions on advanced chip technology.
In the October-December quarter, Japanese exports of the equipment to China slid 16% on the year by value, while the U.S. saw a 50% plunge and the Netherlands logged a 44% drop, according to trade and other data. This was even as exports to the rest of the world from Japan and the U.S. grew 26% and 10%.
All three countries are home to top suppliers of chipmaking equipment, with Applied Materials, ASML and Tokyo Electron leading the pack by market share. With Japan and the Netherlands considering restrictions of their own, the risk of greater disruption hangs over the semiconductor supply chain.
For all of 2022, China's imports of semiconductor-manufacturing equipment fell 15% to $34.7 billion, Chinese media report -- the first decline in three years. The downtrend has continued into 2023, with total imports in January and February sinking 21% on the year, while semiconductor imports dropped 25%.
A slump in Chinese production and capital investment during zero-COVID lockdowns over that period, as well as a semiconductor market slowdown in the second half of 2022, both likely factored into the drop.
Restrictions imposed by the U.S. in October on exports of equipment and software for producing advanced chips played a role as well.
U.S.-based Lam Research, an equipment maker with strengths in such areas as etching tools, estimates that the curbs will cut its revenue by between $2 billion and $2.5 billion in 2023 -- around a tenth of the 2022 total.
Tokyo Electron, which controls nearly 90% of the market for chip-coating and -developing equipment, generated 26% of its semiconductor production equipment sales in China in fiscal 2021.
"If U.S. equipment doesn't get to our Chinese customers, they won't be able to produce, so our equipment won't get there, either," said Hiroshi Kawamoto, a vice president at Tokyo Electron.
The Biden administration has urged Japan and the Netherlands to follow its lead in order to strengthen the safeguards around advanced chip technology. Both countries are working on curbs of their own. Dutch Foreign Trade Minister Liesje Schreinemacher recently said the Netherlands plans to add more tools to its export control list as early as summer.
Japanese Economy, Trade and Industry Minister Yasutoshi Nishimura said Tokyo will "take appropriate measures based on what restrictions other countries implement."
Intel has called the latest U.S. export controls the most complicated to date. Companies are finding it difficult to gauge the impact. Without knowing the full details, "we are focusing on the risks to see how big of an effect there will be on earnings," said an executive at a Japanese supplier of semiconductor-manufacturing equipment.
Nvidia's graphics processors -- key components for artificial intelligence -- fall under Washington's curbs, and the U.S. chip company is exporting lower-performance alternative models to avoid running afoul of the ban. Industry groups have voiced concerns that the controls could discourage sales of products that fall outside their scope.
Technology outside the cutting edge remain easy to buy and sell. Demand is brisk for semiconductors for such applications as electric vehicles, and major Japanese equipment makers continue to consider China an important customer.
Silicon wafer suppliers like Sumco are relatively unaffected as well. If China moves to produce more chips at home, it "could end up buying more" wafers, Chairman Mayuki Hashimoto said.
Even so, geopolitical risks loom large for the semiconductor industry as a whole. Countries are dangling subsidies to bring semiconductor production home, a structural factor that will further dent exports to China.
Industry watchers say Beijing is under pressure from other aspects of the U.S. curbs, which also block exports of design software. "China is a decade behind in advanced [chip] development," an industry insider said.
And restrictions on American engineers working at Chinese facilities are "a heavy blow," said Minoru Nogimori of the Japan Research Institute. "It'll be next to impossible for them to catch up to U.S. technology."
Chip equipment exports to China tumble as U.S. pushes decoupling
Impact could grow as Japan and Netherlands weigh their own restrictions
asia.nikkei.com
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