HONG KONG: In 2023, America's chip war with China will only make inroads. Following the announcement of broad new export restrictions in October, Washington appears to have successfully lobbied friendly governments such as Japan and the Netherlands to join. However, a full anti-China alliance will be difficult to achieve while global semiconductor demand slows.
The latest US trade rules effectively bar Chinese buyers from purchasing ultra-high-performance microprocessors used in supercomputers, as well as software and equipment required to manufacture semiconductors above certain technological thresholds, including high-end memory chips from China's YMTC.
Most of the chips made in and shipped to China are less advanced technologies unaffected by the restrictions. Samsung Electronics and SK Hynix have secured a one-year waiver from the restrictions, but what happens afterwards is unclear. The outlook for China-dependent players in South Korea, Japan and the Netherlands is more uncertain.
Dutch chipmaker ASML is under pressure from the U.S. to stop exporting its most cutting-edge machines to China, but Washington is also pressuring its Dutch and Japanese counterparts to ban less sophisticated tools. Both governments have agreed in principle to adopt "at least some" of the US restrictions, Bloomberg reported on Dec. 12. The devil is in the details, however, as each country's trade minister has said her government will not copy American measures one-to-one.
Another source of concern is a slowdown in demand: According to World Semiconductor Trade Statistics, total chip sales will fall 4% to $557 billion in 2023, reversing a 26% increase in 2021.
Companies will be wary of quickly and fully embracing Washington's requests as a result. China will benefit from the uncertainty. It will buy time to stockpile foreign components and tools while also assisting President Xi Jinping in courting trade partners. As Beijing is well aware, wars are rarely fought and won unilaterally.
Bloomberg reported on December 12 that Japan and the Netherlands had agreed "in principle" to join the United States in tightening export controls for advanced chip-making equipment to China.
The two governments are expected to announce in the coming weeks that they will adopt "at least some" of Washington's restrictions, according to the report.
Dutch Trade Minister Liesje Schreinemacher confirmed in November that the Netherlands was in talks with the US government about new export restrictions. In an interview with the local newspaper NRC, she said her government would likely introduce new export controls, but that it would "not copy the American measures one-to-one".