Sony AI CEO Hiroaki Kitano and NEC CEO Takayuki Morita say US sanctions may impact China's ability to procure chips but question their long-term effectiveness
Context & Ripple Effects
Two months after experts painted a dire picture for China's semiconductor industry under the new US export controls, two of Japan's most senior AI and tech executives are pushing back on the consensus. Sony AI CEO Hiroaki Kitano and NEC CEO Takayuki Morita concede the controls may bite near-term but argue they will not hold over time — a notable split inside the allied camp that followed an earlier FT analysis of the sanctions' inflationary cost to Western manufacturers.
The skepticism reads differently with hindsight: subsequent reporting shows Beijing responding exactly as Kitano and Morita implied it would — retrofitting older ASML DUV lithography tools, mandating at least 50% domestically made equipment for new fab capacity, discouraging local buyers from Nvidia's H20, and the US considering extending controls to AI memory chips from Micron, SK Hynix, and Samsung.
First-order effects
- Chinese chipmakers face a real but temporary procurement squeeze on advanced chips and chipmaking tools, per both executives' assessment.
- Sony AI and NEC are publicly signaling that Japan's industry does not view the US controls as a durable solution — a diplomatic wrinkle for Washington's coalition-building.
Second-order effects
- Western manufacturers and customers absorb higher costs as sanctions fragment the chip supply chain, the inflation worry the November FT analysis documented.
- China doubles down on substitution: retrofitting legacy DUV machines, the undocumented 50% domestic-equipment rule for new capacity, and state-backed hard-tech venture funds of over $7.1 billion each steer procurement away from US-aligned suppliers.
Third-order effects
- If the pattern holds, export controls function less as a cap on China's compute access than as a subsidy for its indigenous toolchain — eroding the leverage of future restriction rounds like the proposed memory-chip curbs.
- The semiconductor supply chain structurally bifurcates into US-aligned and self-sufficient Chinese stacks, raising the long-run price floor for everyone outside China.
The trend: US chip export controls are shifting from containment toward acceleration of China's semiconductor self-sufficiency, with allied executives increasingly doubting their durability.