Netherlands to restrict semiconductor machine exports after U.S. pressure

The Netherlands is embroiled in political tensions between the United States and China, with the former seeking to ensure that cutting-edge chip technology is not used by Beijing. Dutch Foreign Trade Minister Liesje Schreinemacher said that “the existing export control framework for specific equipment used for semiconductor production should be expanded, in the interest of national and international security.” China has worked to strengthen its domestic semiconductor industry, but it lags far behind countries such as Taiwan, South Korea and the US

An employee stands next to cables inside an ASML Twinscan XT1000 lithography machine during production at the ASML factory in Veldhoven, the Netherlands.

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“Given technological developments and the geopolitical context, the government has concluded that the existing export control framework for specific equipment used in semiconductor manufacturing needs to be expanded, in the interest of national and international security. Trade Minister Liesje Schreinemacher said in a letter to parliament on Wednesday.

Although the letter does not refer to China, it comes after pressure from the White House, which in 2022 imposed export controls that restrict Beijing from accessing certain semiconductor chips. At the time, US officials realized that unless other countries imposed similar restrictions, export controls would lose effectiveness over time.

As of 2018, the US has reportedly asked the Dutch government to stop ASML from shipping its extreme ultraviolet lithography machines to China. ASML has not shipped the equipment to China yet.

Following the Dutch government’s announcement, ASML said in a statement that, “it will take time for these controls to be translated into legislation and come into force”.

“Based on today’s announcement, our expectation of the Dutch government’s licensing policy and the current market situation, we do not expect these measures to have a material effect on our financial outlook,” the company said on Wednesday, adding that “additional controls of export do not relate to all immersion lithography tools, but only to what is called the “most advanced”.

ASML said it is not clear what the Dutch government means by “state-of-the-art” cars.

However, it said the regulations mean it will have to apply for a license to export its so-called immersion deep ultraviolet (DUV) lithography machine, which is used to make memory chips. These chips are used in a host of devices, from smartphones to laptops and servers, and may ultimately be used for artificial intelligence applications.

Last month, ASML said a former employee in China had obtained data related to its proprietary technology.

China has worked to strengthen its domestic semiconductor industry, but it lags far behind the likes of Taiwan, South Korea and the US.

China’s Ministry of Foreign Affairs said Thursday it opposes the politicization of economic and trade cooperation and hopes the Netherlands will take an objective stance, according to Reuters.

Speaking on CNBC Streets on Thursday, Anna Rosenberg, head of geopolitics at Amundi Asset Management, said the latest announcement from the Netherlands is “a big deal” for President Joe Biden.

“The United States has been trying to get the EU to sidestep its China policies for a while, and it has much more leverage with the EU now than before. [Ukraine] war, simply because the EU is now almost entirely dependent on the US for its security,” she added.