HomeLatest newsThe Netherlands and Japan are silent on China and chips

The Netherlands and Japan are silent on China and chips

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The US still has some way to go to convince its allies to sacrifice their export earnings

At first glance, Washington’s agreement with the Netherlands and Japan to cut some chip exports to China on Friday looks like a diplomatic victory. But the lack of details suggests the United States still has some way to go in convincing its allies to sacrifice their export earnings to rein in China’s semiconductor industry.

After introducing sweeping new restrictions against the People’s Republic in October, the US authorities have put pressure on friendly governments to follow suit. Companies like Dutch giant ASML and Tokyo Electron enjoy near-monopolies in chip-making equipment, specifically lithographic machines and silicon wafer coatings. Stopping them from selling to Chinese companies would deal a severe blow to Beijing’s technological progress.

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It is a dilemma for the authorities in the Netherlands and Japan. ASML and Tokyo Electron generate, respectively, 15% and 26% of their annual sales in China, with the People’s Republic being Japan’s largest trading partner. That may explain why both governments have refused to specify exactly what the new restrictions are. Dutch Prime Minister Mark Rutte has gone so far as to say details will not be disclosed.

This is difficult to assess for the market. Shares of Japanese suppliers including Tokyo Electron, ASML rival Nikon and Canon opened flat on Monday. Investors may continue to scratch their heads for some time.

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