In the ongoing struggle to maintain technological dominance, the U.S. is preparing to intensify its actions in the semiconductor industry against China.
Impact Japanese Companies
President Biden is reportedly considering leveraging the Foreign Direct Product Rule (FDPR) to impose stringent trade restrictions on Western and Taiwanese companies that continue to supply chips to Beijing, according to El economista
The FDPR allows the U.S. to regulate products manufactured abroad if they use any American technology, even in minimal amounts. This rule could significantly impact Japanese company Tokyo Electron and Dutch firm ASML, both critical suppliers of chip-making machinery. The Biden administration is actively discussing this possibility with officials in Tokyo and The Hague, hoping to compel these companies to restrict their business with China.
Tighten Export Controls
Stock markets have already reacted to these potential measures, with ASML shares dropping 7.5% and Tokyo Electron shares declining by 7.46%. However, the U.S. faces challenges in enforcing these restrictions due to domestic pushback. American companies argue that existing export restrictions to China have hurt their business, urging for policy revisions.
The U.S. seeks to convince its allies to tighten their export controls, particularly regarding servicing and repairing restricted equipment in China. Additional sanctions on specific chip models used in the defense industry are also under consideration, though details remain unspecified.
China has criticized the U.S. for politicizing trade, with Chinese Foreign Ministry spokesperson Lin Jian urging for a fair and open international trade system. Despite broad restrictions imposed on advanced chips and manufacturing equipment in 2022 and subsequently tightened, China's tech advancements continue to pose concerns for the U.S.
