'Semiconductor Equipment Powers' US vs Japan and Netherlands, Fierce Struggle Over China's Regulatory Measures

President Joe Biden [Photo by AP]

[Asia Economy Reporter Jeong Hyunjin] The Biden administration in the United States is strongly pressuring its 'allies' the Netherlands and Japan to apply semiconductor export controls targeting China. Since early this year, these two countries, which have been receiving such demands from the U.S., have resisted considering the interests of their domestic companies, but the power struggle among them behind the scenes appears to be intensifying.

On the 13th (local time), Bloomberg News cited multiple sources to report this atmosphere, stating that the Biden administration's semiconductor regulations are pressuring the world to confront China, surpassing former U.S. President Donald Trump.

Last month, the Biden administration announced export restrictions blocking exports of semiconductors, semiconductor software, equipment, and related personnel to China. Considering that the U.S., the Netherlands, and Japan hold an absolute share in the global semiconductor equipment market, the U.S. is demanding that the Netherlands and Japan apply the same trade measures. The global semiconductor equipment industry is led by U.S. companies such as Applied Materials, Lam Research, and KLA, as well as Japan's Tokyo Electron and the Netherlands' ASML.

Several sources familiar with the negotiations between the Netherlands and the U.S. described to Bloomberg that the U.S. is acting like a 'bully.' This expression refers to the U.S. pressuring the Netherlands not to permit exports of ASML's extreme ultraviolet (EUV) lithography equipment, which is essential for advanced semiconductor processes and is uniquely produced worldwide by ASML.

A Japanese government official also said that negotiations between the U.S. and Japan are still ongoing, describing the atmosphere as if the U.S. could disregard Japan's sovereignty. Bloomberg reported that the Japanese government is responding to the U.S. request by not reacting, based on the bureaucratic nature of Japan, which takes some time to make decisions rather than outright rejecting the request.

The Netherlands and Japan cannot ignore their relations with China considering their own trade and the interests of their semiconductor equipment companies. Bloomberg reported that ASML and Tokyo Electron have lobbied their respective governments to resist yielding to U.S. demands.

However, the Biden administration is reportedly still optimistic about persuading the Netherlands and Japan to introduce export controls targeting China. Although negotiations are difficult, they believe it is possible if they share concerns related to U.S. national security. In fact, several Biden administration officials have publicly stated that they are negotiating with the Netherlands and Japan and hope to reach an agreement. However, sources evaluated that the timing of a deal is unpredictable.

Bloomberg initially reported that the U.S. had an opportunity earlier this year to reach an agreement with its allies. It prepared the 'Wassenaar Arrangement,' a multilateral export control regime aimed at blocking China's access to advanced semiconductor manufacturing equipment, which was relatively relaxed compared to the export controls announced last month. During this process, the U.S. requested adding not only advanced but also mature process technologies to the regulation targets, which ultimately caused the negotiations to collapse. Bloomberg reported, "Since then, Japan and the Netherlands have opposed the U.S. demands related to semiconductor regulations."

Ian Chong, Associate Professor at the National University of Singapore, said that countries like South Korea, India, Singapore, and Malaysia, which must delicately balance between the U.S. and China, will face even greater difficulties, adding, "Whether they choose a side or not, it will be very difficult for them to escape on their own in this situation."

Meanwhile, President Biden will hold his first face-to-face summit with Chinese President Xi Jinping on the 14th during the G20 summit. The U.S.-China leaders are expected to discuss semiconductor export controls along with the Ukraine war and North Korea's nuclear issues at this meeting.

This content was produced with the assistance of AI translation services.