Global Courant
Japan’s new restrictions on the export of advanced semiconductor manufacturing equipment went into effect on Sunday. They were drafted at the instigation of the United States and formally announced three months ago. They are broadly formulated, but are mainly aimed at China.
At this stage, it is difficult to predict its impact on Japanese equipment manufacturers or Japan-China relations, but a group of Japanese politicians are already questioning the wisdom of Prime Minister Fumio Kishida’s apparent eagerness to side with the US in a trade war with China.
These politicians are supporters of Ishibashi Tanzan, a journalist-turned-politician who advocated an independent foreign policy and good relations with the People’s Republic of China in the years after World War II.
Individual export licenses are now required to export 23 specific types of semiconductor manufacturing equipment, including cleaning (three pieces), deposition (11 pieces), annealing (one piece), lithography (four pieces), etching (three pieces), and inspection (one piece).
Cleaning: Tokyo Electron, Screen Holdings
Deposition: Tokyo Electron, Kokusai
Glow: Screen Holdings
Lithography: Nikon, Canon
Etching: Tokyo Electron, Hitachi
Inspection: Hitachi, Lasertec
Extreme ultraviolet (EUV) lithography, nano-imprint lithography, photomasks, epitaxial wafers and high-speed valves are specifically mentioned, indicating that restrictions may also affect some other companies, such as Hoya, Toppan and Horiba.
This equipment now falls into the category of items that can be used for military purposes, the export of which is regulated by Japan’s Foreign Exchange and Foreign Trade Control Law.
In a broad sense, they do (through the use of semiconductors in weapons systems, computers, and artificial intelligence), but so do other types of semiconductor manufacturing equipment that are not on the list.
The vagueness appears to be deliberate, giving the government free rein to grant or deny export licenses while supporting the US.
In theory, equipment used at process nodes down to 45 nanometers could be affected. In practice, the controls can be quite limited. Optimistic and pessimistic views on the restrictions compete, but the actual impact won’t be known until quarterly revenue trends emerge and affected companies comment.
At worst, the impact could be quite severe, jeopardizing billions of dollars in revenue and triggering retaliatory measures in the form of Chinese restrictions on the export of critical materials such as gallium nitride, germanium and rare earths.
Japan will account for 30% of China’s imports of semiconductor manufacturing equipment by 2022, according to the International Trade Center of the Ministry of Foreign Affairs. In the fiscal year ending March 2023, 23% of Tokyo Electron’s sales were generated in China. Japan’s total trade with China was 61% greater than total trade with the US by 2022. There’s a lot to lose.
This has not escaped the attention of the Ishibashi Tanzan Study Group, a cross-party association of Diet members formed to discuss policies that advance Japan’s interests as a trading nation and not simply follow those of the US.
The group is led by Iwaya Takeshi, a former defense minister of the ruling Liberal Democratic Party (LDP), Shinohara Takashi of the largest constitutional opposition party, and Furukawa Motohisa of the People’s Democratic Party.
Furukawa Yoshihisa, a former LDP justice minister, serves as chief secretary. He was quoted by Toyo Keizai (The Oriental Economist) as saying, “Tanzan stressed that ‘just following America is not good for both Japan and America. We will cooperate with America, but we will not subordinate ourselves to America.’”
Group inspiration
Ishibashi Tanzan was born in Tokyo in 1884. The son of a Buddhist priest named Sugita, he took his mother’s surname, Ishibashi, but later became a priest himself.
After graduating from Waseda University, where he studied philosophy, he went to work as a journalist, first for the Mainichi newspaper and then for Toyo Keizai magazine, where he rose to become editor-in-chief and, in 1941, president of the company. Waseda is one of the top two private universities in Japan.
Ishibashi opposed Japanese militarism and colonialism and, after the war, the policies of the American occupation. He was appointed Minister of Finance in May 1946 by Prime Minister Yoshida Shigeru. He was elected a member of the Reichstag in April 1947 and a month later he was purged for his independent views.
After returning to politics in 1951, he supported the revision of Article 9 of the Japanese constitution, which renounces war as a sovereign right of the nation, and the reconstruction of the Japanese armed forces.
Ishibashi was appointed minister of international trade and industry by Prime Minister Yukio Hatoyama in 1954 and succeeded him as prime minister in 1956. Forced to resign for health reasons after only two months in office, he remained in politics, visiting the People’s Republic of China in 1959 and opposing the revision of the US-Japanese security treaty in 1960.
The revised Security Treaty formalized the US right to maintain military bases in Japan in exchange for a US commitment to defend Japan from attack. It remains the cornerstone of US-Japan relations today.
In China, Ishibashi met with Premier Zhou Enlai. The joint communiqué they released after the meeting stated:
“Both sides believed that the peoples of China and Japan should hold hands and contribute to peace in (the) Far East and the world… Mr. Ishibashi stated that the Chinese and Japanese peoples, according to their actual situation, should make efforts for exchanges and developments in the political, economic and cultural fields.
Prime Minister Zhou agreed with his statement, pointing out that the development of political and economic relations between the two countries should be integrated rather than separated. Mr. Ishibashi agreed.”
Ishibashi died in 1973, but his ideas lived on as an alternative to the US-centric policies of successive LDP governments. They are now enjoying a resurgence due to US trustworthiness concerns generated by former President Donald Trump, and the rise of protectionism and escalation of tensions with China under President Joe Biden.
Even if there is no outward change in Kishida’s foreign policy, the Ishibashi Tanzan Study Group can be considered an exercise in contingency planning and a signal to China that Japan is not pursuing a unilateral policy — that is, risk hedging from the standpoint of a nation dependent on international trade as opposed to the “risk reduction” now touted by the US, which distorts that trade.
In an op-ed published this month by the Nikkei newspaper under a pseudonym, the author wrote that the link between the formation of economic blocs and war is one of the lessons of history and that if Japan wants to live as a trading nation, it should not worry about choosing between the US and China, but should focus more on conquering the market.
A delegation from the study group reportedly plans to visit China in August.
Follow this writer on Twitter @ScottFo83517667.
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