The Netherlands and Japan, makers of some of the world’s most advanced semiconductor manufacturing equipment, agreed on Friday to join the United States in Except for shipments of some of their high-tech devices to China, people familiar with the agreement said.
The agreement, which followed high-level meetings with US national security officials in Washington, will help broaden sweeping restrictions. Issued unilaterally by the Biden administration in October on the types of semiconductor technology that can be shared with China.
The countries have not publicly announced the agreement, due to its sensitivity, and details remain unclear. But the deal appears to put the countries’ technology industries on a fairer footing, preventing companies in Japan and the Netherlands from rushing to claim market share in China that American companies have given up. American companies said that prospect would put them at a disadvantage.
The White House and the Dutch government declined to comment. The Japanese government did not immediately respond to a request for comment.
The United States imposed severe restrictions in October on China’s sale of semiconductors and the machinery used to make them, arguing that Beijing could use the technology for military purposes, such as cracking US codes or guiding hypersonic missiles. But long before these restrictions were issued, the United States was pressuring the Netherlands and Japan to further restrict the advanced technology they exported to China.
The October rules also restricted certain shipments to China from countries outside the United States. Using a new regulation called the Foreign Direct Product Rule, the Biden administration has barred companies that use American technology, software or input from selling some advanced semiconductors to China. But these measures only apply to the chips, not the machinery used to make them.
Instead, the White House has continued to pressure allies to pass restrictions limiting sales of semiconductor manufacturing equipment by companies such as Dutch firm ASML or Japan’s Tokyo Electron. The White House argued that selling these advanced machines to China created a risk that Beijing might one day make its own versions of advanced products that it could no longer buy from the United States.
The negotiations, which are likely to continue, have had to overcome trade and logistical concerns. The Dutch and Japanese, like the Americans, worried that if they pulled out of the Chinese market, foreign competitors would take their place, said Emily Benson, a senior fellow at the Center for Strategic and International Relations, a Washington think tank. Over time, she said, “this may affect their ability to maintain a technological edge over competitors.”
The Dutch government has already banned the sale of more advanced semiconductor machines, called extreme ultraviolet lithography systems, to China. But the United States encouraged the Dutch to constrain a slightly less advanced system, called deep ultraviolet lithography. The deal reached Friday includes at least some restrictions on that equipment, according to a person familiar with its terms.
Governments have also faced questions about whether they have the legal authority to issue restrictions like the United States has, as well as extensive technical discussions about which technologies to restrict. Japan and the Netherlands will likely need some time to make changes to their laws and regulations to put in place new restrictions. And it could take months or years for the restrictions in the three countries to reflect each other, Benson added.
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