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Japan’s Chip Czar Backs US Push to Contain Chinese ‘Hegemony’

Japan’s Chip Czar Backs US Push to Contain Chinese ‘Hegemony’

(Bloomberg) -- An influential Japanese politician has thrown his weight behind Washington’s widening campaign to contain China’s chip ambitions, warning that Beijing is part of a group of nations seeking global hegemony and must be curbed.

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Ruling party heavyweight Akira Amari, the main architect of Tokyo effort to elevate Japan’s semiconductor industry, said his country must join the US in imposing restrictions on exports of the latest chip materials and machinery to China. But such sanctions need to be carefully calibrated to avoid a complete decoupling that could threaten global economic stability, Amari told Bloomberg News.

The former head of Japan’s Ministry of Economy, Trade and Industry, which is responsible for Japan’s export control measures, also argued that one way to counter China was to help Japan regain its ability to design and manufacture semiconductors — echoing sentiments now prevalent from Brussels and Seoul to Washington. He’s advocating for 10 trillion yen ($78 billion) in government and corporatate investments to make that happen, including with incentives similar to the US Chips Act that provides for more than $50 billion in support.

“Countries like China, Russia and North Korea are vying for global hegemony, and we should never help them achieve that,” Amari told Bloomberg News in an interview. “We must join the US in stopping exports of cutting-edge chips that can be diverted for military use and pose serious security concerns.”

The 73-year-old lawmaker’s views echo Japan’s growing alarm over China’s military prowess, which has prompted Prime Minister Fumio Kishida to seek an increase in the country’s security budget. Advanced semiconductors — which power artificial intelligence and supercomputers — have become a focus of security experts due their military capability.

Japan and the Netherlands are home to the key suppliers of chip manufacturing equipment and materials, making the two countries’ cooperation essential for the US chip restrictions to be effective. The two US allies are poised to join Washington in that push, as soon as the end of this month, Bloomberg News has reported.

That said, discussion is needed on which chips constitute a threat, as there doesn’t seem to be a consensus between the US and the Netherlands, Amari said. “Western nations should communicate which chips pose a threat if exported, and come to an agreement on where to draw the line between what is cutting-edge or sensitive and the rest.”

A complete parting with China, one of the world’s largest markets, would be unrealistic, the lawmaker said. No restrictions should hamper businesses’ ability to export nonsensitive semiconductor components or other goods, such as commodities, he said.

Amari is behind efforts to earmark more money for the construction of chip factories in the world’s third-largest economy. The incentives, while far short of the US’s now, have helped make the quake-prone country a contender in the race to build domestic chip capacity. Taiwan Semiconductor Manufacturing Co. is building a factory with Sony Group Corp. in Kumamoto, western Japan, and is considering building another. The American memory chip giant Micron Technology Inc. is also building capacity.

The government and companies must invest at least 10 trillion yen over the next decade for Japan to regain its leadership in the semiconductor industry, Amari said.

A key part of Japan’s ambition is newly-created Rapidus Corp., which seeks to make leading-edge chips with funding from the government and companies like Toyota Motor Corp and Sony, as well as technological support from IBM. While Japan has cornered the market on certain chip gear and materials, it has fallen far behind in production of logic integrated circuits. The country was once seen as such a rising power in semiconductors that it clashed with the US over its industrial policies.

“This is the last chance for Japan to rise as a chip power,” Amari said. “It’s important we learn from past mistakes. We stood against the US on chips in the past, and that was a mistake.”

--With assistance from Isabel Reynolds and Peter Elstrom.

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