Roving Periscope: The West and Japan tighten microtechnology screws on China
Virendra Pandit
New Delhi: After investing billions of dollars in developing the semiconductor industry and building up inventories of raw materials, China has suddenly discovered that it actually depends heavily on its arch-enemy, Japan, and its Western allies for technology transfers—the very countries the Dragon has for long been sermonizing, hectoring, and threatening, alternately.
In the latest U-turn, as curbs on Japan’s chip-making microtechnology took effect on Sunday, Beijing requested Tokyo to not disrupt this key industry. Japan’s latest curbs add to technology restrictions the US and its allies have imposed on China on security concerns that it could ‘weaponize’ them.
The Japanese restrictions that took effect Sunday limit Chinese access to tools for etching microscopically small circuits on advanced chips for smartphones, Artificial Intelligence (AI), and other key applications. The Netherlands also joined the United States in limiting access to chipmaking tools that Washington says Beijing could use to develop weapons.
“We are deeply dissatisfied and regret the act,” said Mao Ning, a foreign ministry spokesperson in Beijing, as she urged Japan to prevent relevant measures from interfering with the normal semiconductor industry cooperation between the two countries.
The Communist Party-ruled authoritarian China has invested billions of dollars in building Chinese chip foundries but still needs Western and Japanese technology to produce the most advanced chips. The fresh curbs threaten to delay its efforts to develop microtechnology industries.
The United States imposed curbs on Chinese access to chips and chipmaking technology under then-President Donald Trump in 2019. The Biden administration broadened those controls to block access to chip design and manufacturing tools as well.
Chinese President Xi Jinping’s government has been slow to respond, possibly to avoid disrupting its fledgling technology industries.
In June, Beijing tried to rattle Japanese and South Korean chip manufacturers by announcing an export review process and restrictions for gallium and germanium, two metals used in making semiconductors. It ordered export restrictions on these two technology-critical elements in retaliation for new Western restrictions on its semiconductor industry.
The Chinese restrictions, which take effect on August 1, will apply to gallium and germanium metals and their compounds, which are key materials for making semiconductors and other electronics, the media reported.
The Chinese Ministry of Commerce said the export controls on gallium- and germanium-related items were necessary “to safeguard national security and interests”.
Exporters in China will need to apply for permission from the ministry, with information about the end users and how the materials will be used.
Approval from the State Council, China’s Central Cabinet, will be needed “for the export of items listed in this announcement that has a significant impact on national security”, the ministry added.
Operators caught violating the controls could face administrative punishment or even criminal charges.
The decision came after the Netherlands also announced new export controls on advanced chip manufacturing equipment recently, following the US’ lead to curb China’s chip-making capabilities.
Companies in the Netherlands, including ASML – amongst the world’s most important producers of semiconductor machinery – will need to apply for a license to export certain advanced semiconductor manufacturing equipment overseas.
The Dutch restriction will come into effect on September 1.
China claimed it was “an abuse of export control measures and seriously disrupted free trade and international trade rules”.
In addition, Japan’s export restrictions on 23 types of chip-related equipment and materials will also take effect soon.
Interestingly, China is the world’s largest producer of the two elements, with more than 95 percent of the global gallium output and 67 percent of germanium production. It is also the top producer of rare earth elements, a group of 17 metals essential to modern technologies, including advanced space technology and weapons. The country has more than 90 percent of the world’s rare earth production capacity.
In other words, China has accumulated hardware but lacks the right software!
Concerns have grown that China could “weaponize” its dominance in these critical elements amid competition between Beijing and Washington, which has escalated since the US launched its trade war in 2018.
China also introduced an export control law in 2020 and added more items to its list, including some rare earth-related items.
The items included in the control lists include gallium nitride, gallium oxide, gallium phosphide, gallium arsenide, indium gallium arsenide, gallium selenide, gallium antimonide, zone-refined germanium ingot, zinc-germanium diphosphide, germanium epitaxial growth base, germanium dioxide and germanium tetrachloride.
