Consider Regulations in Coordination with the US Regarding Semiconductor Exports to China

To prevent China from using advanced technology for semiconductors that could possibly be used for military purposes, the U.S. has successively strengthened controls on semiconductor exports to China.

The exportation of semiconductors and manufacturing equipment to China was regulated by new rule-strengthening measures announced in October. In December, it was announced that 36 companies and organizations related to China, including large semiconductor companies, were added to a de facto embargo list.

China has presented a case to the World Trade Organization in strong opposition, but if the U.S. is looking at it from a national security perspective, it seems to be a justifiable measure. It appears that the U.S. has also requested that Japan and the Netherlands, both of which also possess high-tech semiconductor manufacturing equipment, keep in step with the measures.

Semiconductors that are used for technology such as artificial intelligence and supercomputing are critical for cutting-edge military development. Preventing the outflow of such semiconductor technology has major strategic significance with respect to blocking China’s pursuit of hegemony.

This move has a large influence on the economic security of Japan, which is directly faced with China’s military threat. Japan should consider concrete semiconductor exportation regulations while taking into consideration the U.S.’ regulations.

The laws can be applied extraterritorially, as the strengthened U.S. regulations are binding for Japan and other foreign businesses that export to China if they use more than a certain amount of U.S. technology. However, if U.S. technology is not used, the product falls outside the web of regulations, so we might see requests for similar restrictions on advanced technology from countries such as Japan.

Essentially, semiconductor export controls should not be enacted solely by any one country but rather should be implemented in coordination by countries such as the U.S., Japan, Europe, South Korea and Taiwan. If regions with no regulations become loopholes, the effects on economic security would lessen. Moreover, the presence or absence of regulations can have a clear effect on the business environment of companies in different countries. Given these points, it is not advisable for the U.S. to strengthen regulations on its own.

On the other hand, Japan should consider regulations because the methods used up until now have not been able to completely avert the outflow of technology secrets that could be repurposed for military use. Japan is regulating exports in accordance with an international framework that controls exports of manufactured goods and technology that can be used for weapons. However, these frameworks are not agile enough to manage remarkable innovations of sensitive technologies.

It has already been pointed out that for these reasons, it is necessary for the U.S., Europe and other countries that possess advanced technology formulate a new international commerce management framework. Export controls on cutting-edge semiconductors ought to also be considered as a part of this plan.

Whether or not Japanese companies have U.S. regulations applied to them extraterritorially depends on the U.S. government’s judgment. To prepare for this risk, the U.S. and Japan should plan to coordinate regulations to the best of their abilities.