China Asks WTO To Scrutinise Chip Export Restrictions

Beijing continues to protest against the US-led move to restrict China’s growth in the chip business with strict export controls.

Last Friday all official channels that gave Beijing access to advanced semiconductor manufacturing equipment were officially blocked, after Japan joined the United States and the Netherlands when it said it would restrict exports of 23 types of semiconductor manufacturing equipment going forward (without naming China directly).

The US had announced its sweeping export controls for semiconductor manufacturing equipment in October 2022, and the Netherlands had announced in early March that it too would restrict the export of the chip making kit to China.

Chinese response

The US, the Netherlands and Japan are the only three countries that are home to manufacturers of advanced machines to print microchips.

The Netherlands of course is home to ASML Holding, which dominates the market for lithography systems used to create chips’ minute circuitry.

Japan meanwhile is home to major chip equipment makers such as Nikon and Tokyo Electron.

China this week reacted angrily to Japan’s move, after Reuters quoted the Chinese commerce ministry as saying on Tuesday that is is seriously concerned about Japanese export restrictions on chip manufacturing equipment and called on it to correct its “wrong practice.”

“China will take decisive measures to safeguard its rights and interests if Japan insists on obstructing the chip industry cooperation between the two countries,” the Chinese ministry reportedly said in a statement.

Meanwhile Japan is seeking to take advantage of the move, after the chip equipment industry association SEMI noted earlier this week that Japan is expected to sharply increase its spending on semiconductor equipment.

It said Japan is expected to spend $7 billion (£6bn) on wafer fabrication plant equipment in 2024, an 82 percent increase over this year.

That compares with a 2 percent increase for China, and amounts to higher than the combined spending in the area in Europe and the Middle East.

Taiwan of course remains the biggest spender, with $24.9 billion expected next year, SEMI said.

WTO plea

Meanwhile Reuters reported that China has urged the World Trade Organisation (WTO) to scrutinise US-led technology export restrictions, Chinese state television said on Wednesday.

Chinese representatives told a WTO meeting this week that Japan, the Netherlands and the United States should report their plans and subsequent measures to the body.

Beijing urged the WTO to step up supervision on the matter, broadcaster CCTV said.

A Geneva-based trade official confirmed that China had raised the issue and asked the WTO to strengthen its monitoring of the measures, during a reportedly tense two-day meeting of its Council for Trade in Goods.

The US has previously said its actions relate to national security grounds and should not be subject to review by the WTO.

The move of the three nations in alignment to curb chip exports to China “violates the fairness and transparency principles of WTO,” CCTV reportedly said.

The state broadcaster did not give details of any WTO response to China’s remarks.

It should be noted that China had already responded to the US export restrictions last year with a official WTO complaint.

Beijing alleged the US actions were inconsistent with articles governing trade between member nations.

But with Japan now onboard, China will no longer be able to access advanced chip making equipment, and will have to rely on its domestic capabilities to bolster advanced chip production.

ASML recently revealed that it had suffered a data theft of its IP – by a former employee located in China.

It is understood that the data that was misappropriated involved documents.