Exclusive: Top Japanese chip gear firm to honor U.S. blacklist of Chinese firms – executive

TOKYO (Reuters) – Japan’s Tokyo Electron, the world’s No.three provider of semiconductor manufacturing tools, won’t provide to Chinese shoppers blacklisted by Washington, a senior firm executive informed Reuters.

FILE PHOTO: A person walks behind a signboard with emblem of Tokyo Electron Ltd in Tokyo, Japan, April 28, 2015. REUTERS/Yuya Shino/File Photo

The choice exhibits how Washington’s effort to bar gross sales of know-how to Chinese firms, together with Huawei Technologies, is ensnaring non-American firms that aren’t obliged to comply with U.S. regulation.

China, which is locked in a crippling commerce struggle with the United States, is pushing to construct its semiconductor trade to cut back its reliance on U.S., Japanese and European suppliers for chip-making equipment.

“We would not do businesses with Chinese clients with whom Applied Materials and Lam Research are barred from doing businesses,” the executive stated, referring to the highest U.S. chip tools firms.

“It’s crucial for us that the U.S. government and industry see us as a fair company,” he stated, citing Tokyo Electron’s lengthy U.S. partnership for the reason that 1960s, when it began off as an importer of U.S. tools.

He didn’t need to be named given the sensitivity of the matter. Applied Materials and Lam Research declined to remark.

Another main Japanese chip tools provider can be contemplating halting shipments to blacklisted Chinese firms, an individual conversant in the matter stated.

“The issue is beyond something we can decide on our own,” stated the individual, who additionally declined to be recognized.

Executives at different tools suppliers stated they have been speaking intently with the Japanese trade ministry.

“We haven’t received any specific instructions from the ministry,” one of the executives stated. “We are aware that we could be in deep trouble if we take advantage of the U.S. export ban to expand businesses with China.”


The Tokyo Electron executive didn’t specify the names of the Chinese shoppers, however state-backed reminiscence chipmaker Fujian Jinhua Integrated Circuit Co is at present on a listing of entities that can’t purchase know-how items from U.S. firms.

Fujian Jinhua didn’t reply to an emailed request for remark. A handful of different Chinese corporations and analysis establishments are on a ‘red list’ that U.S. corporations have been suggested to keep away from.

Huawei’s chip arm, HiSilicon, is a so-referred to as fabless firm specializing in chip design and thus is just not usually a purchaser of chip-manufacturing gear. But Huawei additionally faces main dangers from non-U.S. suppliers adhering to the U.S. blacklist.

British chip designer ARM, owned by Japan’s SoftBank, has halted relations with Huawei, probably crippling the Chinese firm’s capability to make new chips for its future smartphones.

But Taiwan Semiconductor Manufacturing Co, international chief in chip manufacturing and maker of many Huawei chips, has stated it will proceed to be a provider to Huawei.

U.S. regulation specifies that any product comprising 25% or extra U.S. content material is topic to the U.S. export management restrictions.

But the Japanese chip tools executives didn’t cite that as a cause for slicing off provides to some Chinese corporations.

“It’s not impossible for Japanese companies like Tokyo Electron to replace their U.S. rivals and complete production lines for China,” an executive at a U.S. chipmaker stated. “But in reality, that’s very difficult considering a U.S. backlash.”


Five Japanese corporations rank among the many world’s prime 10 chip tools firms. The extremely specialised chip tools trade is comparatively small, however the gear is strategically vital for all semiconductor producers.

Making chips includes quite a few processes that require differing types of tools. Each market section is often dominated by only a few gamers.

Tokyo Electron controls almost 90% of the marketplace for microchip coaters and builders. It competes immediately with Applied Materials and Lam Research in some segments.

Beijing has been investing closely to develop home chip tools suppliers as half of an effort to obtain its objective of producing 70% of the semiconductors it makes use of by 2025.

But trade sources say applied sciences at these suppliers are nonetheless far behind, leaving China depending on imported tools.

Today, solely 16% of the semiconductors utilized in China are produced in-nation, half of that are made by Chinese firms, in accordance to the Center for Strategic and International Studies, a Washington-based suppose tank.

But aggressive investments by native chipmakers and international gamers like Samsung Electronics made China the world’s No.2 marketplace for chip tools final yr.

Many chip tools producers are forecasting substantial revenue drops this yr because the China-U.S. commerce struggle dampens demand for chips and chip tools globally.

Reporting by Makiko Yamazaki; extra reporting by Stephen Nellis in San Francisco, Editing by Jonathan Weber and Himani Sarkar

Our Standards:The Thomson Reuters Trust Principles.

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