China has threatened severe economic retaliation against Japan if Tokyo tightens restrictions on sales and servicing of chipmaking equipment to Chinese firms, complicating US-led efforts to limit China’s access to advanced technology, as reported by Jenny Leonard, Mackenzie Hawkins, and Takashi Mochizuki for Bloomberg.
Japan fears Beijing may respond by cutting off access to critical minerals vital for automotive production, particularly affecting companies like Toyota, which plays a significant role in Japan’s chip policy.
The US has pressured Japan to impose further restrictions on chipmaking tool exports, but Japanese analysts warn against simply aligning with Washington. Although the Biden administration is confident in reaching an agreement with Japan, tensions are high due to potential US measures like the foreign direct product rule (FDPR). The situation is complicated by Japan’s internal politics and the upcoming US presidential election.
