The economic battle between the West and the East intensified when Japan restricted exports on Mar. 31, 2023. The West, led by the U.S., started semiconductor export restrictions last year.
Japan fulfilled its responsibility as a technological nation by restricting exports of 23 types of equipment that semiconductor firms used. Trade Minister Yasutoshi Nishimura said that this would contribute to international peace and stability.
Japan and The U.S. are restricting chip exports on the grounds of national security. It does not want China to use advanced chips for mass surveillance. The Netherlands supported the trade rules by agreeing to an American request to impose export restrictions on China. Investors barely reacted. For example, shares of chip companies like ASML continued their rise as of last week.
Despite elevated tensions between China and Taiwan, Taiwan Semiconductor (TSM) is on the rebound.
The tighter trade conditions hurt semiconductor firms on either side. It increases competition for scarce goods. This could raise the cost of tech products that rely on those chips. In addition, restricting China from high-end chips could provoke the country to act aggressively on Taiwan sooner.
The stock market is not concerned about trade restrictions. In time, the market will realize the negative impact on profits for semiconductor firms.
