Current US President Donald Trump can hardly be suspected of favoring China, and the measures to curb China’s technological development proclaimed by his predecessor may seem insufficiently strict to him. According to rumors, Trump’s team is preparing additional restrictions in a number of areas.
Image source: Tokyo Electron
Bloomberg reports this, mentioning the negotiations held by the new US administration with representatives of Japan and the Netherlands. The American side traditionally demands more synchronous actions from the authorities of these countries to limit the export of equipment for the production of chips and the provision of related services to China. If the same Netherlands demonstrated relative loyalty to American initiatives in this area under Biden, under Trump they began to voice objections.
In fact, it is not profitable for companies from the Netherlands and Japan to limit the export of equipment and materials for chip production to China, since the relevant US sanctions at the end of last year allowed them not only to multiply the supply of products to China, but also to raise the share of revenue in this geographic direction to half of the total. Perhaps, given the not very loyal mood in Europe, it will not be easy for Trump to synchronize his efforts to further counteract China with the Dutch authorities. The latter are required to prohibit representatives of the same ASML from sending their specialists to China to service the equipment of this brand used there. Preliminary agreements in this area were reached under Biden, but it is Trump who hopes to consolidate them in practice.
Trump’s team is also discussing the possibility of tightening restrictions on the supply of certain types of computing accelerators to China. It is also possible that export controls in other geographic areas could be tightened. For example, even taking into account the latest innovations under Biden, up to 1,700 computing accelerators can be shipped to most countries in the world without a license in a single shipment. This threshold is proposed to be lowered.
The Trump administration will also have to implement a number of initiatives that were planned under Biden but not completed. For example, Chinese memory manufacturer CXMT may lose access to equipment using American technology, as happened with the same SMIC. The latter, by the way, can still purchase some American-made equipment for some of its enterprises. In the event of an escalation of restrictions, the US authorities may prohibit it from doing this as well. Japanese suppliers are not interested in imposing sanctions against CXMT, so the initial initiative to increase restrictions on this company failed at the international level.
The Biden administration is also rumored to be planning to further restrict shipments of Nvidia computing accelerators to China, which were designed to meet the conditions of previous U.S. restrictions. Their predecessors did not have time to introduce them, but in this case, the Trump team could easily pick up the baton. Nvidia management condemned such steps even under Biden, so now the story will unfold according to a scenario determined by Nvidia’s contacts with members of the current U.S. government.
On the Japanese stock market, news of possible sanctions against China has caused Tokyo Electron shares to fall by 4.4%. Last fiscal year, the company generated up to 44% of its revenue in China, so such news is working to its detriment.