Possible Chinese export ban for ASML is a balancing act for the Netherlands

ANP

NOS Nieuws•vandaag, 11:52

Nando Kastelein

editor Tech

Nando Kastelein

editor Tech

The sale of ASML’s chip machines to China is in doubt and against this uncertain background the company will present its annual figures tomorrow. The high-tech giant from Veldhoven is doing well, but at the same time billions are at stake.

America wants the Netherlands to impose far-reaching restrictions on the export of chip machines to China. For the government, this is a kind of balancing act. Insiders tell the NOS that the cabinet wants to prevent a ban from having too great an impact on the entire chip industry, but that at the same time there is understanding for the wishes of the Americans. They want to do everything they can to stop China’s further technological development.

Which machines are at stake?

Since 2019, the company has been subject to a de facto ban on the sale of the very latest machines to China (EUV, Extreme Ultaviolet). But ASML has been selling so-called DUV (Deep Ultraviolet) machines to China for years, which can be used to make a large number of different chips and can be seen as the company’s ‘workhorse’.

No license is now required for export and the chip machine maker does not know what the customers use the machines for. DUV covers a large number of machine types, from models intended for the production of fairly simple chips to more advanced chips.

These machines are indispensable for China’s chip production. In 2021, this will generate a turnover of 2.7 billion euros for ASML, 15 percent of the total turnover.

Prime Minister Rutte said last week, after his conversation with President Biden in the White House, that the Americans’ request not to issue an export license is not so black and white. “It’s really much more subtle and precise and surgical.” This was a somewhat cryptic comment, which means that the Dutch cabinet is not unquestioningly going along with the American request.

Instead of using the blunt axe, a total ban, they want to end up with an export ban for a number of specific types of chip machines.

AFP

ASML was on the agenda last week during Rutte’s visit to Biden in the White House

It is unclear what demands the US has put on the table in talks with the Netherlands. The talks, which have been going on for a long time, are shrouded in mystery.

Last October, America introduced rules for its own industry, with restrictions on buying and producing advanced chips and restrictions on American personnel working for Chinese companies. Those measures then hit the chip industry like a bombshell and much is still unclear. Insiders say that the analysis of the impact is still ongoing.

Concerned about shortages

The Dutch government fears that recklessly implemented measures can have major consequences for ASML and the global chip sector. The industry has been suffering from chip shortages for two years and a far-reaching export ban could exacerbate those shortages many times over.

Without naming it literally, Rutte referred to those chip shortages last week. According to him, there is a lot of “overlap” in the mindset of the Americans and that of the Netherlands, he said in a conversation with NOS.

Like the Americans, he also believes that technology should be prevented from being used in Chinese defense applications. But he is also concerned that shortages will arise in all kinds of production lines, just like during the corona period, when there were major shortages of face masks, for example. “That also applies to chips. They are also important, sometimes quite simple chips in the car industry. You don’t want those supply chains to be endangered.”

It is unclear exactly how far the talks have progressed and it is expected that The Hague will remain silent about the agreements made.

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