The Dutch government announced new regulations in early September to expand the export controls on ASML, a Dutch company, to China. The latest news indicates that the United States and Japan are nearing an agreement to restrict technology exports to the semiconductor industry in China.
In the past few months, officials from the Biden administration have been engaged in intensive negotiations with their counterparts in Japan and the Netherlands to establish a complementary export control system. This means that Japanese and Dutch companies will not be targeted under the U.S. Foreign Direct Product Rule (FDPR).
The White House hopes to announce new export control measures before the November presidential election, including a measure that would require non-U.S. companies to obtain a license when selling products to China.
On September 10, the Dutch government stated that ASML must obtain a license to provide spare parts and software updates for the semiconductor manufacturing equipment previously sold to Chinese customers, which are now subject to export restrictions.
The Financial Times reported on September 17 that the Japanese government is concerned that if it implements export control measures pushed by the United States, China may block the export of critical minerals, especially gallium and graphite. Sources familiar with the matter said Beijing has issued threats to the Japanese government and companies. However, U.S. and Japanese government officials familiar with the negotiations stated that progress has been made in the U.S.-Japan talks.
The U.S. and Japan have been discussing how to limit the impact of any retaliatory actions by China.
The U.S. export controls aim to address the loopholes in existing regulations and increase restrictions to make it harder for China to acquire key semiconductor manufacturing tools. These restrictions will impact ASML and Japan’s Tokyo Electron.
The U.S. also hopes to limit services provided by these companies, including software updates and tool maintenance. These control measures will have similar implications for individuals already working with U.S. companies and American citizens.
At the core of the negotiations is coordinating export control rules among the three countries so that Japanese and Dutch companies are not bound by the FDPR.
The White House and the Department of Commerce have not commented on the Financial Times report. The Japanese Embassy in Washington has not issued a comment.