Tech nationalism continues with China threatening Japan with severe economic consequences if it went along with the United States policy of isolating China from advanced technologies.
Senior Chinese officials have repeatedly warned Japan about ramping up semiconductor sanctions in tandem with the U.S. Bloomberg reports that if Japan decides to restrict sales and maintenance of semiconductor equipment in step with U.S. policy, it could face “severe economic repercussions” from the Chinese. With increased pressure from the U.S. about possible new rules, Japan sits uncomfortably between a rock and a hard place.
Access to advanced semiconductor tech is behind China’s posturing, but the worst effects of Chinese retaliation would likely be felt by an entirely different industry in Japan. Concerns are that Chinese retaliation would focus on blocking essential supplies destined for Japan’s automotive industry.
Japan is a densely populated but resource-scarce archipelago of 14,125 islands. You could characterize the Japanese industry as relying on ingenuity, hard work, and importing significant raw materials. One of the country’s largest employers is the world’s biggest carmaker – Toyota. The firm makes about 10 million vehicles per year, many of which are in Japan. That eats up many resources, and neighboring China is the nearest, most obvious source. Japanese politicians must tread very carefully between the dragon and the bald eagle.
Right so, obviously either “the dragon” or “the bald eagle” getting mad at Japan is not productive. Japan does need raw materials and has needed raw materials ever since industrialization began during the Meiji era. Manchuria used to be a source of raw materials but you know… seizing parts of China did not end well for Japan. But supposedly that’s ancient history so anyway… It should be pointed out Australia and the United States both have raw materials to feed the beast that is Japanese industry.
Japan produces a number of different pieces of equipment that are used in the manufacture of older, ~ 28nm, semiconductors. They also produce a number of specialty supplies for the semiconductor industry. So any export restrictions proposed by the United States may end up having a devastating effect on the Chinese semiconductor ecosystem.
It’s funny that China continues to threaten other countries while claiming a policy of non-interference in other country’s affairs. That’s humorous.
At this point though China may be getting a little desperate. The United States policy of technological isolation may be beginning to have genuine effects on China’s technological capabilities. That’s speculation because I don’t have data… I don’t know how you’d even get that data, but the point stays the same.
China is building new fabs inside its border, the United States is building fabs inside its borders, and both are working hard to achieve technological supremacy. Tech supremacy may be the ONLY way that China or the United States can achieve victory in a war against each other and I believe both countries know that.
So this sort of behavior is going to continue. We’re going to continue to see tech nationalism across the board and hopefully when it comes to the United States we’ll see both an Electronics Act and a CHIPS Act II. The United States cannot continue to rely on Chinese electronics or Taiwanese semiconductors. Both situations are a grave national security risk. How would you like it if your next computer cost $10,000 and the only way to get a keyboard was with a ration book? That’s what we are actually talking about here.
Ultimately Japan needs to move its facilities to the United States or Europe. Just like with Taiwan, having the United States and Allies supplies of semiconductors and semiconductor inputs so close to China cannot continue. Maybe it’s a good thing China is threatening Japan. Maybe Japan will wake up to the very real threat China poses.