While market share and profits are key factors in growth, maintaining business relations with the U.S. ie equally if not more important.
In a significant development, the world’s third biggest supplier of semiconductor manufacturing equipment, Japan’s Tokyo Electron, stated it will stop supplying its Chinese clients that have been blacklisted by Washington.
China is locked in a crippling trade war with the United States. U.S. allies, including Europe and Japan have said they will side with the U.S. on the trade war. On its part, China is pushing to build its semiconductor industry and reduce its reliance on U.S., Japanese and European suppliers for chip-making machinery.
“We would not do businesses with Chinese clients with whom Applied Materials and Lam Research are barred from doing businesses,” said an executive from Tokyo Electron. “It’s crucial for us that the U.S. government and industry see us as a fair company”.
Tokyo Electron has partnered with the U.S. since the 1960s.
The executive preferred the cover of anonymity given the sensitivity of the matter.
Applied Materials and Lam Research declined to comment.
As per another source familiar with the matter at hand, another major Japanese chip equipment supplier is also considering halting shipments to blacklisted Chinese firms.
“The issue is beyond something we can decide on our own,” said the source on the condition of anonymity.
According to executives at other equipment suppliers, they are communicating closely with the Japanese industry ministry.
“We haven’t received any specific instructions from the ministry,” said one of the executives. “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.”
China’s state-backed memory chipmaker Fujian Jinhua Integrated Circuit Co is currently on the U.S. list of entities which barrs it from buying technology goods from U.S. firms.
Fujian Jinhua did not respond to request for comment.
A handful of other Chinese companies and research institutions have also been placed on the Entity’s List.
Huawei faces growing risks from non-U.S. suppliers who are adhering to the U.S. Entity’s List.
Already, British chip designer and SoftBank-owned ARM, has halted relations with Huawei, which effectively cripples the Chinese company’s ability to make new chips for its future smartphones.
Taiwan Semiconductor Manufacturing Co, a global leader in chip production and maker of many Huawei chips, has stated it will continue to be a supplier to Huawei.
U.S. law specifies that any product comprising 25% or more U.S. content is subject to the U.S. export control restrictions.