China Threatens Japan with Economic Retaliation Over Semiconductor Sanctions

The United States and its allies are ramping up semiconductor sanctions against China. Recent reports indicate that China has warned Japan of severe economic retaliation if it imposes additional restrictions.

Bloomberg reported on Monday that a senior Chinese official repeatedly warned that there would be severe economic repercussions if Japan further restricts the sale and maintenance of semiconductor equipment to China.

The U.S. has been pressing the Japanese government to impose stricter sanctions to prevent companies like Tokyo Electron from providing advanced semiconductor manufacturing equipment to China.

One major concern is that China might retaliate by blocking the supply of essential minerals crucial for automobile manufacturing, particularly impacting Toyota.

This situation mirrored a 2010 incident when China restricted rare earth exports during a territorial dispute with Japan in the East China Sea. At the time, it significantly impacted Japan’s electronics industry, particularly Toyota. Japanese officials are worried about a similar scenario.

Concerns extend beyond Tokyo Electron, a semiconductor equipment manufacturer facing export restrictions, as the impact on Toyota is also significant.

The United States has continuously urged the Japanese government to impose additional sanctions on companies like Tokyo Electron. These sanctions prevent them from selling or maintaining advanced semiconductor manufacturing equipment in China. The Japanese also consider applying the Foreign Direct Product Rule (FDPR). If that applies, the U.S. government must approve all exports that utilize U.S. software, equipment, or technology, regardless of where the product is made.

U.S. and Japanese authorities and Tokyo Electron did not provide comments in response to Bloomberg’s request.

The Chinese Foreign Ministry stated that it strongly opposes unfair sanctions and drawing others into joining a blockade of technology against China.

Bloomberg reported that a semiconductor company based in the Netherlands, ASML, plans to limit some equipment maintenance in China in compliance with U.S. sanctions.