Japanese officials have recently announced plans to impose export controls on 23 types of semiconductor manufacturing equipment. This move is in line with the US trade policy aimed at reducing China's ability to produce advanced chips. As the home to some of the world's largest semiconductor manufacturers, such as Nikon and Tokyo Electron, Japan's leadership did not specifically target China. Instead, they indicated that Japanese companies would need permission to export to all regions, emphasizing their commitment to promoting international peace and stability and preventing the use of advanced technologies for military purposes.

Reuters reports that Japan's decision can be viewed as a significant diplomatic victory for the administration of US President Joe Biden, which announced sweeping restrictions on China's access to US chip design in October 2022. Japan's cooperation is crucial, alongside the Netherlands, for the success of the US policy.

Japanese officials will impose export controls on six categories of equipment used in chip manufacturing, including cleaning, deposition, lithography, and etching. These restrictions will affect about 12 companies, including Nikon, Tokyo Electron, Screen, and Advantest.

The head of economic research at China's Marubeni expressed concerns about the impact of these measures on Japanese hardware makers due to the absence of a strong domestic chip market. He predicts that this could undermine the sales development of Japanese companies and reduce their competitiveness.

Although Japan was previously a dominant player in the chip industry, its market share has now shrunk to around 10%. Tokyo Electron and Screen alone produce a fifth of the world's chip manufacturing tools, while Shin-Etsu Chemical Co and Sumco produce most of the silicon wafers.