US To Japan: We'll Help You Make Chips. Now About That China Ban...

As Washington tries to persuade allies to join its China chip technology export ban, Japan is preparing for a joint research project with the US on the development of next generation advanced semiconductors.

According to reports, Japan is aiming to allocate 350 billion yen ($2.38 billion) on the US collaboration.Nikkei Asia claims a secondary supplementary budget bill for Japan’s current fiscal year will also include 450 billion yen ($3.07 billion) for production of advanced chips, as well as 370 billion yen ($2.52 billion) for securing materials essential for manufacturing.

This latest move follows increasing efforts by the US to build closer ties with allied nations in the Pacific region. Last year, Washington and Tokyo announced the launch of the US-Japan Partnership on Trade, to advance bilateral collaboration on trade-related topics and “issues of common interest”, the latter of which included semiconductor manufacturing.

Earlier this year, it was reported that the US was working with Japan to help the latter to put in place the ability to design and manufacture cutting edge 2nm chips within the next few years.

Just this morning, Japan announced it is joining NATO's cyber defense center.

This latest news falls in lockstep with these plans, as Nikkei states that the joint research hub will be established by the end of the year with the goal of developing and putting in place the ability to mass produce 2nm semiconductors by the latter half of the decade.

Participating institutions include the University of Tokyo, the National Institute of Advanced Industrial Science and Technology and science institute Riken, as well as research institutions from Europe and the US.

According to Nikkei, the 450 billion yen will be spent on building production hubs for advanced semiconductors, with subsidies for companies such as TSMC, Kioxia, and Micron Technology to site semiconductor fabrication plants in Japan, in a similar fashion to the US government’s CHIPS Act which offers subsidies for companies to set up shop there.

Meanwhile, 370 billion yen will be spent on strengthening supply chains needed to bring to Japan essential materials such as those needed for producing silicon wafers.

These moves follow reports last week that the US is pressuring allies, including Japan, to join its efforts to block China’s access to advanced semiconductor technology. Japan and the Netherlands are said to be especially in Washington’s sights as they are home to companies producing cutting edge machinery for making chips.

American companies have rallied around the idea they're being financially hurt by the ban, and are concerned international competitors are still making money in China.

The latest US sanctions are also beginning to have an effect on Chinese technology firms. As we reported last month, China's chip imports are down, and Taiwanese chipmaker TSMC has suspended production of silicon for Chinese GPU startup Biren because of the new regulations imposed by the US.

• Micron samples first DRAM built using 1-beta process node
• Chip fab locations more important than oil well placement, says Gelsinger
• TSMC downgraded as analysts warn of worst slump in a decade
• EU semiconductor investment not nearly enough, warns chip boss

Now, the Financial Times reports (paywalled) that both Biren and Chinese cloud company Alibaba may have to make changes to their chip designs and reduce their performance because of the restrictions, which cap the processing power of chips that companies are allowed to ship to China.

Both Alibaba and Biren had already tested samples of their latest chips being produced by TSMC when Washington announced the new measures, the FT said, citing anonymous sources. The companies have had to halt further production and are expected to make changes to their designs in response. ®