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The Dutch government has yet to agree to any additional restrictions on ASML’s exports to Chinese chip makers. Photo: Shutterstock

US pushes Netherlands to ban Dutch tech supplier ASML from selling older semiconductor manufacturing equipment to China

  • Washington’s proposed new restriction would expand an existing moratorium on the sale of the most advanced chip-making systems to China
  • If the Netherlands agrees, it would significantly broaden the range and class of chip-making gear now forbidden from heading to China
The US is pushing the Netherlands to ban ASML Holding from selling to China mainstream technology used in making a large chunk of the world’s semiconductors, expanding its campaign to curb the country’s rise in chip production, according to people familiar with the matter.
Washington’s proposed new restriction would expand an existing moratorium on the sale of the most advanced chip-making systems to China, thwarting Beijing’s plans for the country to become a world leader in the semiconductor industry. If the Netherlands agrees, it would significantly broaden the range and class of chip-making gear now forbidden from heading to China, potentially dealing a serious blow to mainland chip makers from Semiconductor Manufacturing International Corp (SMIC) to Hua Hong Semiconductor.

American officials are lobbying their Dutch counterparts to bar ASML from selling some of its older deep ultraviolet lithography, or DUV, systems, the people said. These machines are a generation behind cutting-edge, but still the most common method in making certain less-advanced chips required by cars, smartphones, computers and even robots.

ASML’s American Depositary Receipts extended losses to as much as 8.3 per cent, the biggest intraday drop since March 2020, after Bloomberg’s initial report. Shares in Nikon Corp, a smaller rival to the Dutch firm in that sphere of chip making gear technology, slid as much as 8.6 per cent in Tokyo – heading for their biggest drop in almost two years. SMIC and Hua Hong also fell more than 1 per cent in early Hong Kong trading on Wednesday.

Employees are seen working on the final assembly of ASML’s Twinscan NXE: 3400B semiconductor lithography machine, with its panels removed, in Veldhoven, the Netherlands, on April 4, 2019. Photo: Reuters
The issue about ASML arose during US Deputy Commerce Secretary Don Graves’ visit to the Netherlands and Belgium in late May and early June to discuss supply chain issues, said the people, who asked not to be identified because the discussions were private. During that trip, Graves also visited ASML’s headquarters in Veldhoven and met the company’s chief executive Peter Wennink.

“ASML’s sales could narrow by 5-10 per cent if it’s banned from selling deep ultraviolet tools in China,” Bloomberg Intelligence analysts Masahiro Wakasugi and Brian Moran said in a report. “As the chip equipment maker’s revenue already reflects a ban on extreme ultraviolet tool shipments to [China], it may experience less impact versus peers such as Applied Materials, which derives 25-30 per cent of its sales from China.”

The Dutch government has yet to agree to any additional restrictions on ASML’s exports to Chinese chip makers, which could hurt the country’s trade ties with China, the people said. ASML is already unable to ship its most advanced extreme ultraviolet, or EUV, lithography systems, which cost about 160 million euros (US$164 million) per unit, to China because it cannot obtain an export licence from the Dutch government.

Washington’s push on ASML comes as US President Joe Biden separately considers easing some of the Trump-era tariffs on consumer goods from China. While China may welcome such a move at a time of tense relations between the two powers, Biden’s administration has continued his predecessor’s efforts to restrict China’s access to US technology.
Dutch chip manufacturing equipment maker ASML Holding’s headquarters in Veldhoven, the Netherlands. ASML opposes a proposed ban on sales of older semiconductor lithography systems to Chinese customers. Photo: Shutterstock

The US Department of Commerce and the Dutch Ministry of Foreign Affairs declined to comment.

“The discussion is not new,” an ASML spokeswoman said. “No decisions have been made and we do not want to speculate or comment on rumours.”

ASML is the world’s top maker of lithography systems, machines that perform a crucial step in the process of manufacturing semiconductors. ASML’s dominance of the market for that type of equipment means that further cutting China off from access to its products would undermine Beijing’s ambitions to make the country more self-sufficient in producing the crucial electronic components.


“China’s share of the global chip equipment market is negligible,” said Alex Capri, a research fellow at the Asia-based Hinrich Foundation, characterising chip production as “a choke point” in the country’s plans to bulk up its semiconductor muscle.

The older generation of machinery, DUV, is less capable than more advanced EUV lithography equipment, but remains indispensable in manufacturing many of the types of chips that are currently experiencing acute shortages. Washington is focused on banning sales of the most advanced type of DUV technology, immersion lithography machines, the people said.

China’s chip output rebounds but still lower than a year earlier

American officials are also trying to exert pressure on Japan to stop shipping the same technology to Chinese chip makers, one of the people said. Japan’s Nikon competes with ASML in this area.

Immersion lithography is also known as argon fluoride immersion, or simply ArFi. ASML sold 81 ArFi systems in 2021, compared with four from Nikon, giving the Dutch firm a 95 per cent market share, according to China-based Founder Securities.

“We have no information regarding this matter,” a Nikon spokeswoman said.

Dutch Prime Minister Mark Rutte said in June that he is against reconsidering trade relations with China and called for the EU to develop its own policies toward Beijing. China is the Netherlands’ third-biggest trade partner after Germany and Belgium.

ASML opposes a ban on sales of DUV lithography equipment to Chinese customers because it is already a mature technology, Wennink said earlier this year. China-based facilities, run by either domestic or foreign companies, account for 14.7 per cent of ASML’s total revenue in 2021, according to company disclosures and data compiled by Bloomberg.

ASML flags possible IP infringement by ‘little giant’ in China

ASML is also alleging potential intellectual property infringement by a Chinese tech firm supported by the country’s government.

US efforts to block the export of chip-making equipment began under the Trump administration. Washington pressured the Dutch government to prevent sales of EUV lithography systems, which are required to produce the most sophisticated semiconductors and in which ASML has a monopoly.

Major US chip equipment makers including, Applied Materials and Lam Research Corp, are already banned from selling certain advanced products to SMIC because of national security concerns. The potential DUV ban could further hit SMIC and its Chinese peers.

“Lithography equipment is the most difficult equipment for China to replace when it comes to semiconductor production,” said Johnson Wang, an analyst at Taiwan Institute of Economic Research. “Without access to foreign DUV lithography equipment, the progress of China’s chip industry could come to a halt.”