China Targets Japanese Chipmaking Materials as Trade Dispute Deepens

China has opened an anti-dumping probe into dichlorosilane, a high-purity chemical used in semiconductor manufacturing, escalating its dispute with Japan just days after Tokyo criticized Beijing’s new export controls. China’s Ministry of Commerce said the investigation will last up to one year, with a possible six-month extension.

Dichlorosilane is a core input for producing thin films used across logic, memory, and analog chips. Japan is the world’s leading supplier of ultra-high-purity dichlorosilane, making the probe particularly sensitive for the global semiconductor supply chain. Chinese authorities did not name specific companies, though major Japanese producers include Shin-Etsu Chemical, Sumitomo Chemical and Mitsubishi Chemical.

The investigation follows a rapid escalation in bilateral tensions after Japanese Prime Minister Sanae Takaichi made remarks in early November suggesting Tokyo could deploy its military if China used force against Taiwan. Beijing reacted sharply, and a day earlier had announced export controls on dual-use items destined for Japan, explicitly linking the measures to the Taiwan comments.

Japan’s government formally protested the controls. Chief Cabinet Secretary Minoru Kihara said the measures “deviate significantly from international practice” and were unacceptable. According to estimates from the Nomura Research Institute, dual-use goods imported from China totaled ¥10.7 trillion ($68.4 billion) in 2024, accounting for roughly 42% of Japan’s imports from China.

Markets reacted swiftly. Japanese automaker stocks declined on concerns over supply disruptions, while rare-earth related shares rose. Analysts warned that China could further tighten controls on medium and heavy rare earth elements, materials essential for batteries, electronics, and military hardware. Japan currently sources about 70% of its rare earth imports from China, according to the Japan Organization for Metals and Energy Security.

Economists caution that the economic impact could be significant if restrictions broaden. Nomura estimates that a three-month disruption of rare earth supplies could cost Japan about ¥660 billion and reduce GDP by 0.11%. China’s dual-use export control list covers more than 800 items, spanning chemicals, electronics, sensors, shipping equipment, and aerospace technologies.

China appears to be leveraging ambiguity as a strategic tool. Analysts at Teneo said the lack of clarity around implementation may be designed to pressure Tokyo into concessions without immediately triggering retaliation.

The dispute has already spilled into other areas, including restrictions on tourism, diplomatic protests at the United Nations, and increased military maneuvers. China’s Ministry of Commerce and the People’s Liberation Army Daily framed the export controls as necessary to protect national security and regional stability.

So far, U.S. support for Japan has been muted. Japanese and U.S. officials reaffirmed coordination in a call this week, but Washington has not publicly challenged Beijing’s actions. As supply-chain weaponization returns to the forefront, the episode highlights how strategic materials — from chip chemicals to rare earths — are once again central to geopolitical power plays in Asia.