Chip War: US tightens Noose on China with Japan-Netherlands Deal

The United States' deputy commerce secretary has confirmed the existence of a "deal" with Japan and China that will limit exports of chip-making tools.

"We can't talk about the deal right now," Don Graves said on the sidelines in Washington, quoted by Reuters and the Guardian. "But you can certainly talk to our friends in Japan and the Netherlands."

Bloomberg, The New York Times and Reuters have written about the deal in the past few days. It follows a US decision to limit supplies of chip-making tools to Beijing in an attempt to limit its high-tech (including military) capabilities.

Not just selling chips

Since October, President Joe Biden's administration has also banned companies that use American technology or software from selling certain semiconductors to China.

Until now, however, the restrictions only applied to the chips - not the tools to create them. The fear in Washington is that if it has them, China will be able to simply manufacture anything it cannot buy from the US or other countries.

The Asian giant has invested heavily in its own chip manufacturing, but its factories still rely heavily on foreign-made equipment. The largest of these, SMIC (its chips are used in automotive products, IoT devices and some smartphones) was sanctioned by the US in 2020.

Why the Netherlands and Japan are important

Two major manufacturing companies, ASML and Tokyo Electron, are located in the Netherlands and Japan, respectively. The Netherlands is a leader in the creation of machines that use extreme ultraviolet lithography technology to produce chips; the export of these devices to China is prohibited. A few days ago, however, the New York Times wrote that the...