US pushes Dutch chip firm to halt China exports, Netherlands not happy

By Al Mayadeen English
Source: CNBC
5 Dec 2022 21:34
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CNBC reports that US is pressuring Dutch ASML not to send chip manufacturing equipment to China while the Netherlands does not seem keen on stopping exports to one of the largest chip markets.

An ASML cleanroom (ASML)

Amid the global struggle between powers, mainly China and the US, to gain tech superiority and establish world dominance in the industry, CNBC news outlet reported on Monday that the US "has its eyes" on the Netherlands.

The European country seems to be at the center of Washington's attention as it is the home of one of the most vital technologies to manufacture semiconductors in the world.

Advanced Semiconductor Materials Lithography or ASML is a dutch company that specializes in producing not the semiconductors, but the extreme ultraviolet (EUV) lithography machines that manufacture the chips.

ASML has a global monopoly on EUV production, being the only company in the world to make them, and supplies its products to the world's largest chip maker, Taiwanese TSMC.

The report adds that China, the second largest economy, is eager to gain access to the product.

However, according to the news outlet, the US dissuaded the Netherlands from trading the machine with China for now, however, the latter does not seem excited to be cut off from one of the world's most demanding chip markets.

EUV machines have not been shipped to China since 2019 following a number of export restrictions adopted by the Dutch government, said a spokesperson of ASML, noting however that it is anticipated that, “the direct impact of the new export control measures on ASML’s overall 2023 shipment plan to be limited.”

According to the news report, China currently possesses no EUV systems, and the United States is concerned that if ASML exports the high-tech machines to China, it would start producing "the most advanced semiconductors in the world" which has "extensive military and advanced artificial intelligence applications."

CNBC mentions in the report that Washington's pressure on the European country started in 2018 during the term of former US president Donald Trump.

Reuters published a report in 2020 stating that the authorities in the Netherlands revoked ASML's license to send EUV machines to China following heavy US pressure.

Trump launched a trade war with China that evolved into a tech fight for supremacy between the two superpowers, as the US aimed to prevent Chinese companies from accessing high-tech machines and equipment.

The former president also issued an export blacklist on American tech companies against China's largest chip producer SMIC.

However, his successor current US president, Joe Biden, increased the tech hostility against Beijing.

Earlier in October, the Bureau of Industry and Security of the US Department of Commerce passed a rule that forces American companies to get attain a special license in case they intended to sell certain semiconductors or chip manufacturing machines to China.

Dutch ASML ordered its staff in the US to deny services to Chinese clients following this decision.

The report added that US pressure on the Netherlands is ongoing.

According to the news outlet, the undersecretary of commerce for industry and security at the US Department of Commerce Alan Estevez, in addition to the senior director for technology and national security at the US National Security Council Tarun Chhabra held talks with Dutch officials earlier this month.

“Now that the U.S. government has put unilateral end-use controls on U.S. companies, these controls would be futile from their perspective if China could get these machines from ASML or Tokyo Electron (Japan),” Pranay Kotasthane, head of the high-tech geopolitics program at the Takshashila Institution, told CNBC.

“Hence the U.S. government would want to convert these unilateral controls into multilateral ones by getting countries such as the Netherlands, South Korea, and Japan on board.”

Earlier last week, US Secretary of State Antony Blinken praised the “growing convergence in the approach to the challenges that China poses,”, especially with the EU.

However, the report added, the Netherlands does not seem to be exactly in line with Blinken's statement.

“Obviously we are weighing our own interests, our national security interest is of utmost importance, obviously we have economic interests as you may understand and the geopolitical factor always plays a role as well,” said the Minister for Foreign Trade and Development Cooperation of the Netherlands Liesje Schreinemacher last week.

Beijing is “an important trade partner,” she added.