Japan and the Netherlands Align Steps on Semiconductor Sanctions Against China... South Korean Semiconductors 'Under Close Watch'

US Followed by Japan and Netherlands Join Pressure on China
Top 5 Global Equipment Makers May Face Export Controls

Impact on Korean Firms in China Expected to Remain Steady
Long-Term Risks Persist Amid US-China Hegemony Competition

[Asia Economy Reporter Kim Pyeonghwa] As Japan and the Netherlands are increasingly likely to join the U.S. in semiconductor sanctions against China, the domestic semiconductor industry is closely monitoring the situation. The industry assesses that since the core axis of the sanctions is the U.S., the current level of sanctions is likely to continue, making it unlikely that the domestic impact will worsen. However, the intensifying semiconductor hegemony competition remains a long-term risk factor.

On the 14th, Bloomberg News reported, citing anonymous sources from the previous day, that Japan and the Netherlands have agreed to join the U.S. semiconductor sanctions against China within weeks. Jake Sullivan, White House National Security Advisor, stated during a regular briefing held after the report that discussions are ongoing with several countries, including Japan and the Netherlands. This statement signals that U.S. pressure to prevent China from producing advanced semiconductors will be further strengthened.

If Tokyo Electron of Japan and ASML of the Netherlands join the U.S. sanctions, all five major global semiconductor equipment companies?including U.S.-based Applied Materials, Lam Research, and KLA?will be subject to export controls. These semiconductor equipment companies accounted for an overwhelming 79.5% of the global market share as of last year. Although it is unclear what level of regulations Japan and the Netherlands will adopt, if they align with the U.S., China is expected to face significant pressure.

The domestic semiconductor industry holds the view that while Chinese companies will inevitably be affected by these developments, domestic companies may be exempt. An industry official said, "It is difficult to assess the impact as no specific details on the level of sanctions have been finalized, but since the situation is led by the U.S., we do not expect Japan and the Netherlands to impose stricter measures than the U.S." He added, "Foreign companies operating in China previously received regulatory exemptions, so we expect similar levels of regulation to continue as before."

Exterior view of the SK Hynix factory in Wuxi, China / Photo by SK Hynix

Previously, on October 18, the U.S. restricted exports of semiconductor equipment used in the production of 18-nanometer (nm; 1 nm is one billionth of a meter) DRAM, NAND with 128 layers or more, and logic semiconductors below 14 nm to China. At that time, domestic companies such as Samsung Electronics and SK Hynix, which have semiconductor factories in China, as well as Taiwan's TSMC, were granted a one-year exemption from equipment export restrictions.

The intensifying semiconductor hegemony competition between the U.S. and China remains a negative factor for the domestic industry. While the U.S. is increasing pressure on China by mobilizing its allies, China is also showing resistance. China announced the previous day that it has formally filed a complaint with the World Trade Organization (WTO), claiming that the semiconductor export restrictions cause trade disruption. On the same day, news emerged that China plans to implement a semiconductor industry support package worth 1 trillion yuan (approximately 186.06 trillion KRW) to boost its semiconductor ambitions.

Professor Jeong In-gyo of Inha University’s Department of International Trade said, "China must know that filing a complaint with the WTO will not resolve the issue, but by doing so, it internally signals its determination to respond in kind." He added, "As U.S.-China conflicts are expected to intensify in the new year, domestic impacts are inevitable."

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