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Chip-making tool suppliers are rushing to comply with new US restrictions. Photo: Bloomberg

Tech war: ASML, Lam Research rush to pull US engineers out of China chip operations as fresh US restrictions kick in

  • ASML, which has a global monopoly in the supply of EUV lithography systems, is said to be restricting US staff from serving Chinese clients
  • US employees of chip-related businesses in China are rushing to comply with new regulations from the US Bureau of Industry and Security

ASML Holdings and Lam Research, the world’s top chip-making tool providers, are scrambling to comply with the latest US trade restrictions on China by pulling American engineers out of their operations in the country, according to reports and a source familiar with the matter.

ASML, which has a global monopoly in the supply of extreme ultraviolet (EUV) lithography systems, has issued an internal memo asking its US employees, including green card holders, to refrain from directly or indirectly serving customers in China until further notice, according to a source familiar with the matter. The move is aimed at addressing compliance risks following a new US requirement that restricts the involvement of US persons in advanced chip facilities in China.

“ASML is still actively assessing which particular fabs are affected by this restriction,” according to a memo the company issued to its US management team, the authenticity of which was confirmed by a person familiar with the situation who declined to be identified as they are not authorised to talk with the media.

ASML’s second-quarter sales data shows shift away from mainland China

Meanwhile, wafer fabrication equipment supplier Lam Research, along with KLA Corp, which supplies process control systems for the semiconductor industry, have pulled US engineers out of supporting equipment installed with Chinese clients, including China’s top memory chip maker Yangtze Memory Technologies Company, according to a Wall Street Journal report, which cited sources familiar with the matter.

In a visit to Lam Research’s Shanghai office at the Zhangjiang Hi-Tech Park, known as the city’s Silicon Valley, employees approached by the Post turned away when asked about the matter. A marketing official from the Shanghai office said the company had nothing to say on the issue.

Lam’s reticence on the matter comes as US employees of chip-related businesses in China rush to comply with new regulations from the US Bureau of Industry and Security. The latest restrictions are expected to inflict a heavy blow on China’s semiconductor industry as engineers and executives with US passports or citizenship play an important role in China’s developing chip industry.

Broader US ban on ASML sales to China will hurt firm’s revenue, analysts say

Wang Lifu, a Shanghai-based analyst at semiconductor consultancy ICWise, said suppliers such as ASML and KLA, as well as their Chinese clients, would suffer.

ASML, headquartered in Veldhoven, Netherlands, established its China operations in 2000 and currently owns 12 office buildings in the country. Founded in 1980, Lam Research is a Silicon Valley-based supplier of wafer fabrication equipment, whose founder David K. Lam is a Chinese-born engineer who previously worked at Xerox, Hewlett-Packard, and Texas Instruments.

China has been an important market for Lam Research and it still has a number of job openings in Shanghai, ranging from field service engineers to technologists, according to the company’s website.

Shen Bo, ASML senior vice-president and country manager for China, said that the company has grown the number of its local personnel from less than 500 in 2017 to more than 1,500 as of the end of August, according to a report by Chinese media outlet Jiemian News.