US seeks to pressure allies’ chip gear makers to join export control

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People attending a meeting of US semiconductor equipment manufacturer representatives with US Secretary of Commerce Gina Raimondo said that Dutch company ASML and Japanese chip gear makers such as Tokyo Electron Limited (TEL), Nikon Corp., and Canon Corp. are likely to be required for complying the US export control to ban China’s access to advanced semiconductor technologies.

Raimondo said in another CNBC interview that the US has called its allies to follow and issue similar restrictions. “This is targeted,…It is powerful, but it’s also targeted to get the national security job done and not punish US companies,” Raimondo said.

However, efforts to reach agreements with allies on restrictions may take 9 months, but US semiconductor manufacturers such as Applied Materials, KLA, and Lam Research are already required to apply for licenses to sell equipment to China following the new rules announced in early October.

China contributes more than 30% of sales for Applied Materials, KLA, and Lam Research.

As US companies complained that other non-US competitors are likely to take away their market share in China while they were bound by the export control restrictions, the US government is likely to pressure on allies such as the Netherlands and Japan. There are also advanced semiconductor tool gear makers in Germany and South Korea. German chancellor Olaf Scholz already expressed unwillingness to decouple from China by bringing a big business delegation with him to Beijing on November 4.

“The recent US restrictions represent a strongly zero-sum approach to confronting China on technology, an approach that isn’t equally compelling to countries that don’t see themselves as locked in a battle to be one dominant global superpower,” wrote Matt Sheehan, a Carnegie Endowment for International Peace fellow, who assumed that companies would aim to reduce US components so that they are only subject to the veto power of their home government and not the US. That could end up making more US companies lose more businesses.

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