China threatening retaliation against Japan over chip curbs

One Japanese fear is that Beijing could react by cutting its access to critical minerals

China has threatened severe economic retaliation against Japan if Tokyo further restricts sales and servicing of chipmaking equipment to Chinese firms, complicating US-led efforts to cut the world's second-largest economy off from advanced technology.

Senior Chinese officials have repeatedly outlined that position in recent meetings with their Japanese counterparts, according to people familiar with the matter. One specific fear in Japan, Toyota Motor privately told officials in Tokyo, is that Beijing could react to new semiconductor controls by cutting Japan's access to critical minerals that are essential for automotive production, the people said.

Toyota is among the most important companies in Japan, and is deeply involved in the country's chip policy, partly reflected by the fact that it has invested in a new chip campus being built by Taiwan Semiconductor Manufacturing Company in Kumamoto, according to one of the people. That makes its concerns a major consideration for Japanese officials, in addition to those of Tokyo Electron, the semiconductor gear maker that would be principally affected by any new Japanese export controls.