The news: A joint agreement led by the Biden administration to limit exports of advanced chip-manufacturing components to China has the support of Japan and the Netherlands, per PCMag.
Building a silicon fence around China: The agreement blocks China’s access to photolithography equipment. The tools are essential in designing and producing high-end chips at scale.
Implementing the restrictions could take months, but other steps to curtail China’s technology innovation are well underway.
Reprisal is expected: China is “100% sure” to retaliate over the Japanese backing of US restrictions on semiconductor exports, and firms facing the fallout should look for markets elsewhere, said Shigeharu Aoyama, a representative of Japan’s ruling Liberal Democratic Party.
What’s next? “This sets the next escalating move in the US-China tech war a bit more meaningfully and could weaken yuan sentiment in the near term,” said Fiona Lim, a foreign-exchange strategist at Maybank in Singapore.
Our take: With its economy on the ropes, expect intensifying pushback from China as Beijing struggles to recover from 2022’s losses. Lack of access to important chipmaking technology could widen the innovation gap between China and Taiwan, the US, and South Korea.
This article originally appeared in Insider Intelligence's Connectivity & Tech Briefing—a daily recap of top stories reshaping the technology industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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