Sony's CTO and NEC's CEO say US chip export controls may temporarily impact China's ability to procure chips but question the sanctions' long-term effectiveness
Eri Sugiura / Financial Times : Tweets: @jtseo9 , @williamyang120 , @rnaudbertrand , @sroach_econ , and @sariarhohavren Tweets: @jtseo9 : In plain English, “shoveling shit against the tide”. Like all catastrophes created by the government, you never realize their full impact until decades later and by then it's too late. https://www.ft.com/... William Yang / @williamyang120 : “Tech executives in Japan have warned that the latest US chip export controls are unlikely to suppress #China's progress in artificial intelligence and super computers, calling into question the long-term effectiveness of the sanctions.” https://www.ft.com/... Arnaud Bertrand / @rnaudbertrand : Interesting: top Japanese executives believe the US's unprecedented sanctions to freeze China's tech development will prove essentially useless. NEC ceo: “the overall trend [of China's technological development] will not change” https://www.ft.com/... Stephen Roach / @sroach_econ : Overly-optimistic assessment of alternative supply line in US-led chip war. https://giftarticle.ft.com/... @sariarhohavren : NEC's CTO:"while it may be possible for the US-China technology dispute over chips to slow down China's technology progress, the overall trend will not change." Everyone is currently buying time, it wld also be tactically odd to help China close the gap. https://giftarticle.ft.com/...
Context & Ripple Effects
This is the second act of a sanction story the corpus has tracked since Huawei: when US rules first cut off Huawei, Japanese companies stepped in to help build China's $150B national 5G network, and European executives complained the sanctions shut them out of the Chinese market while US firms won exceptions (their private grievances). Now the controls have widened from one company to China's entire advanced-chip supply, and two of Japan's biggest tech names are on record doubting they work.
Sony's CTO and NEC's CEO concede the controls may temporarily squeeze China's chip procurement but argue they will not suppress its AI and supercomputing ambitions — a judgment echoed months later when Nvidia's China-specific H800 shipped as a slowed-down H100 substitute, showing demand rerouting rather than disappearing.
First-order effects
- Chinese AI and supercomputing buyers face an immediate procurement squeeze on advanced chips, pushing them toward stockpiling and downgraded alternatives like the H800 rather than outright denial.
- Japanese suppliers such as Sony and NEC are put in the same bind European firms faced under the Huawei rules: comply with US-origin controls while watching their Chinese market access erode relative to US competitors who retain exceptions.
Second-order effects
- The controls accelerate exactly the substitution pattern seen after the Huawei sanctions — non-US suppliers filling gaps and China mandating at least 50% domestically made equipment for new fab capacity — shifting revenue from US-aligned toolmakers toward domestic and third-country alternatives.
- Reports of Chinese operators retrofitting older ASML DUV lithography machines signal that blocked tools get replaced by workarounds, pressuring Washington to keep tightening rules and forcing allies like Japan to choose between alignment and market share.
Third-order effects
- If the pattern holds, export controls function as a speed bump rather than a wall: they raise costs and delay timelines but push China toward self-sufficiency in equipment and chips, steadily shrinking the leverage the controls were designed to preserve.
- The recurring asymmetry complaint — US firms exempted, allies excluded — risks fracturing the allied control regime itself, since each new round gives Japanese and European suppliers a stronger incentive to lobby against rules that cost them the Chinese market without stopping Chinese progress.
The trend: US chip export controls are becoming a substitution engine — delaying China's compute buildup while redirecting it toward domestic equipment, downgraded chips, and non-US suppliers.