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Tokyo Electron to cease the supply to U.S blacklisted Chinese companies

World’s third largest supplier of semiconductor manufacturing equipment, Tokyo electron takes a decision that it will not supply to any Chinese companies on the U.S. blacklist, this information was given by the senior executive to Reuters.

The choice shows how Washington’s push to bar offers of innovation to Chinese firms, including Huawei Technologies, is entrapping non-American firms that are not obliged to pursue U.S. law.  China, which is secured a devastating trade war with the United States, is pushing to assemble its semiconductor industry to lessen its dependence on U.S., Japanese and European providers for chip-production machinery

Another major Japanese chip equipment supplier is also considering halting shipments to blacklisted Chinese firms, a person familiar with the matter said. The Tokyo Electron executive did not specify the names of the Chinese clients, but state-backed memory chipmaker Fujian Jinhua Integrated Circuit Co is currently on a list of entities that cannot buy technology goods from U.S. firms.

As the Tokyo Electron holds long partnership with U.S since 1960, when it started off as an importer of U.S. equipment, the Senior executive of the company stated that, “We would not do businesses with Chinese clients with whom Applied Materials and Lam Research are barred from doing businesses “It’s crucial for us that the U.S. government and industry see us as a fair company.”

An executive at a U.S. chipmaker said, “It’s not impossible for Japanese companies like Tokyo Electron to replace their U.S. rivals and complete production lines for China, but in reality, that’s very difficult considering a U.S. backlash.”

Executives at other equipment suppliers said they were communicating closely with the Japanese industry ministry. “We haven’t received any specific instructions from the ministry,” one of the executives said. “We are aware that we could be in deep trouble if we take advantage of the U.S. export ban to expand businesses with China.  But the Japanese chip equipment executives did not cite that as a reason for cutting off supplies to some Chinese companies. Huawei’s chip arm, HiSilicon, is a so-called fabless company focusing on chip design and thus is not normally a buyer of chip-manufacturing gear. But Huawei also faces major risks from non-U.S. suppliers adhering to the U.S. blacklist.

British chip designer ARM, owned by Japan’s SoftBank, has halted relations with Huawei, potentially crippling the Chinese company’s ability to make new chips for its future smartphones. But Taiwan Semiconductor Manufacturing Co, global leader in chip production and maker of many Huawei chips, has said it would continue to be a supplier to Huawei

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