Japan, South Korea and the Netherlands will be able to supply chip making machines to China after increased US sanctions

New sanctions being prepared by the US authorities against unfriendly countries, as it became known this week, will not affect the ability of Japanese and Dutch companies to supply their equipment for the production of semiconductor components to China. Such a release can be considered a gesture of goodwill by the United States towards its allies.

Image source: Tokyo Electron

As Reuters reported today, new export control rules set to be approved by US authorities in August will formally allow US regulators to control the supply to third countries of equipment using US-origin technology, even if such equipment is manufactured outside the US. The big news is that Japan, South Korea and the Netherlands will be exempt from having to follow these new US export controls.

Thus, manufacturers of equipment for the production of chips from these three countries will be able to continue supplying their products to China – provided that they do not violate previously established US export controls. This news has already caused an increase in stock prices of relevant companies. In particular, shares of Japanese Tokyo Electron immediately rose in price by 7.4%, the highest since February of this year, shares of Disco jumped by 5.8%, and securities of Screen Holdings strengthened by 9.2%.

However, even so, the new export control rules should make it more difficult for several large Chinese enterprises to access advanced chip production equipment imported into the Middle Kingdom. The rules will apply to Taiwan, Israel, Singapore and Malaysia. The latter is a major transit hub for semiconductor products, but it is difficult to say to what extent such a ban will actually affect the possibility of supplying chip production equipment to China from other countries.

The new rules will lower the threshold for the content of US-origin technology in equipment that is subject to US export controls. This means that American regulators may come to the attention of those products that were not previously controlled. Formally, to ban delivery to China, it will be enough for equipment to contain literally a single chip of American origin. About 120 Chinese companies will be added to the US sanctions list. In addition to Japan, South Korea and the Netherlands, a total of more than 30 countries will be exempt.