ASML Suppliers Plan to Cut China Exposure As Chip War Heats Up

 

Suppliers to Dutch chip equipment giant ASML are considering building plants in Southeast Asia instead of China as the chip war between Beijing and the West heats up.

Officials from a dozen tech companies are set to visit Vietnam, Malaysia and Singapore next week, according to a note from the Brabant Development Agency, a Dutch public body involved in organising the trip.

“The majority of the companies (are) joining because they are considering to expand/setup production locations in either Vietnam or Malaysia,” said the note prepared by the agency together with Brainport Industries, which represents 200 high tech manufacturing companies based near the Dutch city of Eindhoven.

 

Also on AF: Uncertainty Haunts ASML’s China Customers on New Chip Export Curbs

 

The possible investments are part of a wider, long-term strategy to reduce exposure to China, two people familiar with the plan told Reuters.

The dozen companies on the mission are almost all contractors to ASML, one of the world’s top suppliers to semiconductor manufacturers such as TSMC, Samsung and Intel. Some have production facilities in China.

The development follows the Dutch government’s announcement on Wednesday that it would restrict exports of critical chipmaking technology to protect national security. It marked the first concrete move by the Netherlands to join the US effort to cut off China’s access to advanced chips.

 

HQ in Singapore, plants in Vietnam

Among the companies on the mission is Neways, which helps ASML develop electrical control units, power controls and wiring systems for lithography systems. A spokesperson for Neways declined comment.

ASML supplier NTS Group, which is a provider of precision mechanics tools, is another company that will join the business trip, Brainport said.

The other companies on the trip are Bestronics, AAE BV, BKB Precision, HQ Group, KMWE Group, Sempro, Sioux Technologies and VDL ETG, according to Brainport and documents reviewed by Reuters.

“VDL Group has different branches in Asia… We have no intention at all of leaving China,” the company said in a statement.

Other companies could not be reached for comment on Friday.

Singapore is being considered as a potential location for regional headquarters, the note said.

One person familiar with the organisation of the trip said one of the companies was in advanced talks with partners in Vietnam to build a factory. A second company was also likely to invest there, the person said declining to name the firms.

A second person involved in the organisation of the trip said that Malaysia was also a likely choice for new investment because some of the companies already have facilities there.

 

• Reuters, with additional editing by Vishakha Saxena

 

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Infographic: ASML in the Centre of the Chip War