TOKYO (Reuters) – Japan's Tokyo Electron, the world leader in semiconductor manufacturing equipment, will not deliver to Chinese customers blacklisted by Washington, according to Reuters.
During a visit by US Department of Transportation Minister Elaine Chao to the Chinese Ministry of Transport in Beijing on April 27, 2018, Chinese and US flags are set for a signing ceremony. REUTERS / Jason Lee
The Decision Reveals How Washington Is Efforts To ban the sale of technology to Chinese companies, including Huawei Technologies, is misleading non-US companies that are not required to comply with US law.
China, involved in a crippling trade war with the United States, is pushing to build its semiconductor industry to reduce its reliance on US, Japanese and European chipmaking suppliers.
"We would not do business with Chinese customers with whom Applied Materials and Lam Research are not allowed to do business," said the executive, citing leading US chip equipment companies.
"For us, it is crucial that the US government and industry consider us a fair business," he quoted Tokyo Electron's long US partnership since the 1960s when it was an importer of US equipment started.
He did not want to be named because of the sensitivity of the matter. Applied Materials and Lam Research declined to comment.
Another large Japanese chipmaker is also considering phasing out supplies to blacklisted Chinese companies, a person familiar with the matter said.
"The problem can not be decided alone," said the person, who also refused to be identified.
Executives from other outfitters said they communicate closely with the Japanese Ministry of Industry.
"We have not received any specific instructions from the ministry," said one of the executives. "We are aware that if we use the US export ban to expand our business with China, we could be in big trouble." Customers, but state-backed memory chip manufacturer Fujian Jinhua Integrated Circuit Co is currently on a list of companies that can not buy technology products from US companies.
Fujian Jinhua did not respond to an emailed request for a comment. A handful of other Chinese companies and research institutes are on a "red list" that was advised to avoid US companies.
HiSilicon, Huawei's chip arm, is a so-called fabless company focused on chip design, and therefore usually not a buyer of chipmaking equipment. However, Huawei is also exposed to major risks when suppliers outside the US cling to the US blacklist.
British chip designer ARM, part of the Japanese SoftBank, has closed its relationship with Huawei, potentially hampering the Chinese company's ability to produce new chips for its future smartphones.
Taiwan Semiconductor Manufacturing Co, the world leader in chip manufacturing and manufacturing of many Huawei chips, has announced that it will continue to be a supplier to Huawei.
US. The law states that products with a US content of 25% or more are subject to US export control restrictions.
However, the Japanese executives for chip equipment did not cite this as a reason to discontinue supplies to some Chinese companies.
"For Japanese companies like Tokyo Electron, it's not impossible to replace their US competitors and complete production lines for China," said a senior executive at a US chipmaker. "But in reality, this is very difficult given the setback in the US."
CHINA CHIP TECHNOLOGY LAGS
Five Japanese companies are among the world's top 10 chip equipment companies. The highly specialized chip equipment industry is relatively small, but the transmission is of strategic importance to all semiconductor manufacturers.
Making chips involves many processes that require different types of devices. Each market segment is usually dominated by a few players.
Tokyo Electron controls almost 90% of the market for microchip coaters and developers. It competes directly with Applied Materials and Lam Research in some segments.
Beijing has invested heavily in the growth of domestic chip suppliers to achieve its goal of producing 70% of the semiconductors it uses by 2025, making China dependent on imported equipment.
Today, only 16% of the semiconductors used in China are manufactured in-house, half of which are made by Chinese companies, according to the Washington-based think tank, Center for Strategic and International Studies.
But aggressive investments by local chip manufacturers and foreign players such as Samsung Electronics made China the second largest market for chip equipment in the world last year.
Many chipmakers are forecasting a significant decline in profits this year, as China-USA. Trade wars are slowing demand for chips and chip equipment worldwide.
Reporting by Makiko Yamazaki; additional reporting by Stephen Nellis in San Francisco, editors Jonathan Weber and Himani Sarkar