Chinese President Xi Jinping warned against actions that would break industrial supply chains and create inter-continental technological barriers, in light of new Dutch policies entailing chip exports that could sever bilateral ties between both nations. 

In January, the Biden administration urged ASML, the largest Dutch semiconductor producer, to prohibit shipments of sophisticated equipment to China in another attempt to prevent Beijing from gaining an advantage in the semiconductor race.

Advanced Semiconductor Materials Lithography, or ASML, is a Dutch company specialized in producing not the semiconductors, but the Extreme Ultraviolet (EUV) lithography machines that manufacture the chips.

The article details that ASML planned to transfer the last high-end deep ultraviolet lithography machines to its Chinese partners before new Dutch export limits took effect in January, but US authorities interfered and persuaded the business to cancel them.

However, the Netherlands also needs to preserve its own interests, including the ASML's, which views China as its second biggest market after Taiwan. 

Chinese, Dutch priorities only

In a meeting with Dutch Prime Minister Mark Rutte, President Jinping said tech barriers and the severing of industrial supply chains would only lead to confrontations and divisions, adding that cooperation is the only path to follow. 

"The Chinese people also have the legitimate right to development, and no force can stop China's scientific and technological development and progress." 

Rutte's discussions in Beijing were anticipated to revolve around whether ASML would be granted Dutch government licenses to continue servicing advanced equipment worth billions of euros that it has previously sold to Chinese clients. These machines are now subject to export restrictions, with many licenses set to expire, notably by December 31. 

Although the export limitations have thus far minimally affected ASML's financial performance, the company holds a dominant position in the global market for lithography systems, essential tools in chip circuitry production. 

However, in the longer run, if the Netherlands is perceived as an unreliable business partner, Chinese chip manufacturers may opt to replace ASML's equipment with that of competitors such as Nikon and Canon.

Dutch Trade Minister Geoffrey van Leeuwen also attended the meeting and told Dutch business daily FD that he is only concerned with his country's interests as his main priority. 

His comments highlight the delicate diplomatic strain the Dutch government faces, especially with ASML becoming a focal point in the ongoing "chip war" between the United States and China.

According to state media, Xi informed Rutte that China was prepared to increase imports of "high-quality" goods from the Netherlands, although specific details were not provided. He also expressed China's readiness to maintain and advance an open, pragmatic cooperative relationship with the Netherlands.

Read more: China condemns US attempt to ban Dutch sales of chipmaking equipment