Semiconductors

Curbs on ASML ‘to Stop Use of Advanced Chips by China Military’

 

Latest curbs on ASML — the world’s leading maker of tools for chipmaking — aimed to prevent China from using cutting-edge technology to power its military, a top Dutch official told the country’s parliament this month.

“China focuses on foreign expertise, including Dutch expertise in the field of lithography, to promote self-sufficiency in its military-technical development,” Trade Minister Geoffrey van Leeuwen wrote in a February 5 note, seen by Reuters.

ASML tools are used to make advanced semiconductors that can go into “high-value weapons systems and weapons of mass destruction,” Van Leeuwen said.

 

Also on AF: China’s Financial Watchdogs Vow to Maintain Strict Supervision

 

The Dutch government focuses on “the risk of undesirable end use” when reviewing export licensing decisions, he added.

Last year, the Netherlands joined US efforts to hobble Beijing’s technological progress and introduced a licensing requirement for ASML’s mid-range DUV (deep ultraviolet) lithography machines.

Lithography systems use light to print circuitry on wafers and are critical to the chipmaking process. ASML dominates the world market for these machines, and its most advanced EUV (extreme ultraviolet) tools have never been sold in China.

Van Leeuwen’s statement was a response to questions from lawmaker Femke Zeedijk, of the reformist NSC party, who asked why the government initially granted, and then quickly retracted, a licence for ASML to export several tools to undisclosed customers in China.

Zeedijk was referring to the Dutch government’s decision at the start of the year to revoke ASML’s licences to export some high-tech equipment to China. The abrupt decision came after officials had initially allowed the firm to keep selling some less advanced machines to China.

The Dutch trade minister’s answers dodged that question.

Van Leeuwen noted, however, that “several licences for the export to China of advanced semiconductor equipment have been granted” since the licencing requirement was introduced in September.

The trade ministry anticipates around 20 such requests in total this year, he added, without specifying how many will come from China.

 

‘Economic reasons’

Some of Zeedijk’s questions, such as whether the Netherlands had revoked the licences at the request of the US government, went unanswered.

“I’m not saying that there are no security issues or that this decision was wrong, but I would like to be better informed,” Zeedijk told Reuters.

“The perception is also that besides the security risk, that there are also economic reasons behind it.”

ASML — Europe’s most valuable tech firm — has sold hundreds of millions of euros worth of lithography tools to Chinese customers in recent years. Last year alone, Chinese customers bought nearly $7 billion worth of equipment from ASML. In the third quarter China accounted for 46% of ASML’s total sales.

It also overtook South Korea to become ASML’s second largest market, with a 26.3% share of its sales — just three percentage points lower than the biggest Taiwan.

China is set to bring around 18 chip plants online this year, more than in any other geographical region. Many Chinese chipmakers are focusing on building older generations of chips and using equipment that does not fall under export control policies.

The Xi Jinping government is also putting its financial might into developing self-sufficiency in all areas of the chip supply — including making chipmaking tools.

 

 

In January, ASML said it expects China sales to remain “solid” in 2024 after an exceptional 2023. The company said it does not expect to ship any of its NXT:2000i or more advanced tools to China. It will also not be able to export its NXT:1970 and NXT:1980i product lines to “a handful” of Chinese plants, due to US restrictions.

In its annual report this month, however, the firm cited the further expansion of curbs targeting China as business risks. It also noted a threat from “competitors driven by self-sufficiency”.

 

  • Reuters, with additional editing by Vishakha Saxena

 

Also read:

 

Any Expansion of China Chip Curbs Will Risk Business, ASML Says

 

ASML Sees Hit From US Chip Curbs But Could Enjoy 2025 Boom

 

Access to China ‘Essential’ as it Develops Chips: ASML CEO

 

ASML Employee Who Stole Chip Secrets ‘Went to Work at Huawei’

 

Threat of More Chip Curbs Spurs Warnings on China Innovation

 

Huawei, SMIC Set to Defy US Sanctions With 5nm Chips: FT

 

China Firms Rush to Poach Nvidia Clients With AI Chip Offerings

 

China’s Dutch Chip-Equipment Imports Jump 1,050% – SCMP

 

China Splurges on Chip Tech Kit to Beat US Sanctions – Yahoo

 

 

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at vishakha.saxena@asiafinancial.com

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