WASHINGTON — The Netherlands and Japan, each makers of a number of the world’s most advanced equipment for manufacturing semiconductors, agreed on Friday to affix with the USA in barring some shipments of their most high-tech machinery to China, people conversant in the agreement said.
The agreement, which followed high-level meetings with U.S. national security officials in Washington, will help expand the reach of sweeping restrictions issued unilaterally by the Biden administration in October on the sorts of semiconductor technology that could be shared with China.
The countries didn’t publicly announce the agreement, due to its sensitivity, and details remain unclear. However the deal seems prone to put technology industries within the countries on a more even footing, stopping firms in Japan and the Netherlands from rushing in to say market share in China that has been abandoned by U.S. firms. American firms have said that possibility would put them at an obstacle.
The White House and the Dutch government declined to comment. The Japanese government didn’t immediately reply to a request for comment.
America imposed strict controls in October on the sale to China of each semiconductors and the machines used to make them, arguing that Beijing could use the technology for military purposes, like breaking American codes or guiding hypersonic missiles. But well before those restrictions were issued, the USA had been pressing the Netherlands and Japan to further limit the advanced technology they export to China.
The October rules also clamped down on certain shipments to China from countries outside the USA. Using a novel regulation called the foreign direct product rule, the Biden administration barred firms that use American technology, software or inputs from selling certain advanced semiconductors to China. But these measures applied only to chips, not the machinery used to make them.
As a substitute, the White House continued to press allies to pass restrictions limiting the sales of semiconductor manufacturing equipment by firms just like the Dutch company ASML or Tokyo Electron in Japan. The White House argued that the sale of this advanced machinery to China created the danger that Beijing could someday make its own versions of the advanced products it could now not buy from the USA.
The negotiations, that are prone to proceed, have had to beat each industrial and logistical concerns. Just like the Americans, the Dutch and Japanese were concerned that in the event that they pulled out of the Chinese market, foreign competitors would take their place, said Emily Benson, a senior fellow on the Center for Strategic and International Relations, a Washington think tank. Over time, that “could impact their ability to take care of a technological edge over competitors,” she said.
The Dutch government has already forbidden sales of its most advanced semiconductor machinery, called extreme ultraviolet lithography systems, to China. But the USA has encouraged the Dutch to also limit a rather less advanced system, called deep ultraviolet lithography.
Governments have also faced questions on whether or not they possess the legal authority to issue restrictions like the USA, in addition to extensive technical discussions about which technologies to limit. Japan and the Netherlands will still likely require a while to make changes to their laws and regulations to place latest restrictions in place, Ms. Benson added, and it could take months or years for restrictions within the three countries to mirror each other.