The Full Picture of Semiconductor Export Controls [2026 Latest] | How US-China Tensions, TSMC Kumamoto, and Rapidus Reshape Japanese Supply Chains

Hello, this is Hamamoto from TIMEWELL. Since the start of 2026, the pace of movement around semiconductors at the international level has clearly accelerated. On April 3, a bipartisan bill known informally as the MATCH Act was introduced in the US House, calling on allies to align with expanded export controls. In the same month, China's Ministry of Commerce added 40 Japanese companies to its export control and unreliable entity lists. In addition, reports in February indicated that TSMC's second Kumamoto fab will shift from the originally planned 6/7nm node up to 3nm.

Line up the events of the past few months and it becomes clear that semiconductors are no longer just commodities—they are strategic goods that can shape a country's national security. TIMEWELL supports customers on the front lines of export compliance, so we hear daily from semiconductor equipment and materials makers saying, "we're not even sure which lists our customers are on." Below, I walk through the timeline from the October 2022 BIS rules to the April 2026 MATCH Act, and dig into the key issues that Japanese companies need to address.

US controls against China: what has piled up over the past three and a half years

The starting point for understanding US semiconductor controls against China is the comprehensive export control package announced by BIS on October 7, 2022. For the first time, concrete technology boundaries were drawn: logic at or below 16/14nm, DRAM at or below 18nm, and NAND with 128 or more layers. Advanced semiconductors above those thresholds, along with the equipment used to make them, were effectively banned for export to China. At the same time, the Foreign Direct Product Rule (FDPR) was extended to China, applying controls to products containing US-origin technology even when routed through Japan or South Korea.

In October 2023, the second package addressed loopholes in AI chip exports. At the time, NVIDIA was shipping derivatives such as the H800 and A800 to China with specifications deliberately trimmed to sit under the existing rules. BIS responded with a new metric, Total Processing Performance (TPP), designed to measure overall compute more comprehensively, and swept these derivatives into scope. In December 2024, the third package was announced, bringing significant revisions: 140 companies added to the Entity List, expanded HBM controls, and tightened foreign direct product controls on advanced-node manufacturing equipment.

When the Trump administration came in, the AI Diffusion Rule—prepared under Biden—was formally rescinded in May 2025. But the regulations themselves did not loosen. They simply shifted to an individual licensing regime, and operations became arguably less transparent. News in February 2026 that a limited volume of NVIDIA H200 (5,000–10,000 modules, equivalent to 40,000–80,000 chips) had been approved for China suggests that exceptional approvals are being used as bargaining chips. Then in April 2026, the "Multinational Adjustment of Technology in Critical Hardware Act," commonly known as the MATCH Act, was introduced in the House to extend equipment controls to older generations and to ask allies to align. Depending on how the bill progresses, the reach of these controls could expand further.

Japan's 23-item rules: design and scope

Japan activated its own semiconductor manufacturing equipment controls in 2023. METI announced its plan to add 23 items on March 31, published the amendment to the ministerial ordinance on goods on May 23, and brought it into force on July 23. The rules cover advanced equipment used in six major process steps—cleaning, deposition, thermal processing, lithography, etching, and inspection—that can produce logic at or below 14nm, putting them comprehensively under export controls.

The impact of these rules on Japan's semiconductor equipment industry has been significant. In 2022, exports of semiconductor manufacturing equipment from Japan to China stood at roughly JPY 820 billion, a 31% share and the largest single market. Around ten companies were named as the main affected players, including Tokyo Electron, SCREEN Holdings, Nikon, Advantest, and Disco. After the rules took effect, these vendors' China revenues declined sharply, and they have been compensating with orders from friendly markets—United States, Taiwan, South Korea, and Europe.

It is worth emphasizing that these rules do not stop at the equipment makers who directly export. The 23 items include numerous components, materials, and control software, meaning that secondary and tertiary suppliers also need to assess classification. Under FEFTA, a mistaken classification leading to an unauthorized export can be penalized with up to three years' imprisonment or significant administrative sanctions, so compliance is no longer optional for top-tier suppliers to equipment makers. In fact, TIMEWELL is increasingly approached through equipment makers with requests such as "we are struggling internally to determine where our parts land under the 23-item appendix." To automate classification and end-user screening of this kind, we offer TRAFEED, an AI export compliance agent, which teams use to cross-reference the text of the 23-item ordinance against transaction details and support decision-making.

The trilateral US-Japan-Netherlands framework that isn't easy to see

For US controls against China to bite, cooperation from Japan and the Netherlands—suppliers of advanced semiconductor manufacturing equipment—was essential. The most advanced lithography tools needed to produce below 14nm logic are effectively monopolized by ASML in the Netherlands, and Japanese vendors hold large global shares in etching, deposition, cleaning, and inspection. Built on this structural reality, a de facto agreement among the US, Japan, and the Netherlands was reached in January 2023, and the three-party framework—where each side enforces parallel controls through its own legal system—began to move.

On the Dutch side, the government expanded export controls on semiconductor manufacturing equipment in September 2023, and from January 1, 2024, added NA 0.33 EUV machines and the TWINSCAN NXT:2000i and above DUV lithography tools to controls. In April 2024, it revoked part of the already-issued export licenses for China, and entering 2026, debate has turned to whether to extend controls even to maintenance and parts supply for previously installed equipment. The Dutch Minister of Economic Affairs is reportedly caught between protecting domestic industry and maintaining alignment with allies, and ASML's China revenue share is estimated to have dropped from 49% in 2024 to the low 20% range by 2026.

On the Japanese side, METI applies general permissions to 42 friendly countries, so exports to the US, South Korea, Taiwan, and Europe are substantively unaffected. However, the MATCH Act introduced in the US Congress in April 2026 seeks to extend semiconductor equipment controls against China to older generations, and if it passes, the reach of controls may extend beyond Japan's own 23-item framework. Equipment makers such as Tokyo Electron and ASML have already shifted their mid-term plans to reflect lower China revenues, but the mutual influence among allies' laws is a persistent operational burden for export control teams.

TSMC Kumamoto and Rapidus: the domestic industry being rebuilt behind the scenes

Export controls slow down advanced manufacturing capacity on the Chinese side, which conversely means strong motivation to build out manufacturing capacity on the allied side. Grounded in this logic, TSMC Kumamoto (JASM) and Rapidus have been stood up in Japan. Both are backed by major government subsidies, with JASM's first and second fabs combined receiving up to JPY 1.208 trillion, and Rapidus receiving cumulative public support exceeding JPY 920 billion.

JASM's first fab opened in February 2024 and produces logic from 28/22nm up to 12/16nm at a scale of 55,000 wafers per month. The second fab was announced in February 2024, originally targeting 6/7nm at launch, but reports in February 2026 indicate the production node will be upgraded to 3nm. At a December 2025 press conference, JASM President Yuichi Hotta stated, "construction of the second fab is progressing steadily," explicitly denying observations in some reports suggesting a "pause." The domestic materials sourcing rate is expected to rise from 46% in 2025 to over 50% in 2026, with a goal of reaching 60% in 2030.

Rapidus is building a mass-production fab in Chitose, Hokkaido, using 2nm Gate-All-Around (GAA) transistors. Production tool installation began in December 2024, process tuning was carried out in March 2025, and operation of a GAA prototype chip was confirmed in June 2025. Mass production is planned for 2027, and multiple customers including Tenstorrent in the US have already announced design outsourcing deals. While export controls suppress China's advanced manufacturing, Japan is moving to complete its own advanced node production base—a national strategic timeline in which the years around 2027 are widely seen in industry as the decisive window.

The counterattack from SMIC and Huawei—and what Japan needs to watch in 2026

You cannot ignore moves on the Chinese side either. In August 2023, SMIC surprised the world by embedding a 7nm-class Kirin 9000S (N+2 process) into Huawei's Mate 60 Pro. Less than three years later, in early 2026, SMIC has pushed the "N+3" 5nm-class process into mass production, powering Huawei's new flagship Kirin 9030. This has been achieved by pushing multi-patterning with DUV lithography to its limits, and while yields are estimated at only 30–40% (versus TSMC's 80%+), the Chinese government is absorbing the inefficiency through subsidies on national security grounds. Huawei and SMIC are also reportedly targeting tape-out of a 3nm GAA chip in 2026 and continue to develop a domestic laser-driven plasma EUV approach.

In China's AI chip market, NVIDIA, which once held over 90% share, had fallen to about 50% as of January 2026, with the remaining half taken by domestic players such as Huawei's Ascend series. The limited approval of H200 exports to China in February 2026 should be read in this context—a selective transaction that presupposes progress in domestic substitutes, used as currency in US-China negotiations. For Japanese equipment and materials makers, China demand is unlikely to recover in the short term, and the strategic pivot continues toward new fab projects in the US, Taiwan, and Europe.

So what should Japanese companies watch in 2026? From our vantage point on the compliance front lines, there are four issues. First, the fate of the US MATCH Act. If passed, it could restrict the export of equipment, parts, and materials to China beyond Japan's own 23-item framework. Second, the reverse risk of whether your supply chain has been caught in China's export control lists targeting Japan. With 40 Japanese companies and organizations added in February 2026, effects are beginning to appear in semiconductor-related materials and intermediate goods. Third, improvements in the precision of end-user screening. Renamed affiliates inside China and diversion transactions through third countries are increasing, and the ability to see through a counterparty's actual identity has become a management issue. Fourth, opportunities to join domestic supply chains radiating out from TSMC Kumamoto and Rapidus. A moment when subsidies and demand move simultaneously is historically rare, and new business is opening up across materials, equipment, and design services.

Summary: the new normal for export compliance at semiconductor-related companies

Export controls around semiconductors have been reshaped remarkably in the three and a half years since the BIS rules of October 2022. Multiple layers now move in parallel—the first, second, and third US packages, Japan's 23-item rules, the Netherlands' EUV/DUV controls, the MATCH Act, and China's export controls targeting Japan—and looking at any single law in isolation won't give you the full picture. Whether you are an equipment maker, materials maker, trading company, or electronic components maker, you need an ongoing capability to see where your transactions sit across these layered controls.

TRAFEED, the AI export compliance agent offered by TIMEWELL, is a service that automates classification and end-user screening across major regimes, including US EAR, Japan's FEFTA, the EU Dual-Use Regulation, and China's Export Control Law. Adoption among semiconductor-related companies has grown particularly fast, with users praising its ability to cross-check 23-item classification and match counterparties against the Entity List and China's export control lists targeting Japan in a matter of minutes. Semiconductor export controls are a field where operating on the extension of past practices will inevitably leave gaps. To prepare for what's coming after 2026, I strongly recommend rebuilding your internal classification logic and screening processes now.

Related articles worth reading alongside this piece include China's export controls on Japan and the reality Japanese companies face, Latest US export controls and tariff policy trends, What the blocked Makino Milling acquisition tells us about US investment screening, and Supply chain strategy around critical minerals. Read together, they bring the economic security context around semiconductors into sharper, three-dimensional relief.