The United States is increasingly seeking control over exports of ASML’s core chip machines. This is the prevailing feeling at the moment in Veldhoven, the company’s headquarters. This is due to new restrictions imposed by the Americans last month, which the chip machine giant has met with disappointment.
Moreover, there is a possibility that it will not stay this way. Unsurprisingly, new restrictions were introduced. Washington informed The Hague about this in advance, and therefore ASML was also aware of it. The House of Representatives also expressed criticism when it was discussed during question time at the end of October.
The new measures come a year after the United States first took sweeping steps to counter China’s technological advances as much as possible. The logic is this: the most technologically advanced are militarily superior. America is doing its best to prevent China from gaining power.
Close the gaps
“The update is intended to close all regulatory loopholes,” said Emily Benson of US think tank CSIS. “In the long run, these measures could have a very significant impact on China’s capabilities.”
The US saw such a gap in exports of ASML’s chip machines. The company was never allowed to export its newest EUV (Extreme Ultraviolet) devices to China. After intense negotiations, the Dutch government agreed earlier this year to take additional measures targeting three models of older DUV (Deep Ultraviolet) devices. These are machines that are already in China. Two more older models have now been added.
This has created a notable difference between the Netherlands and the US: ASML is allowed to ship more machinery from The Hague than from Washington. The government there has adjusted the rules so that if there is a single American screw in it, the export of the machine must be controlled (previously this threshold was 25 percent and ASML does not affect this).
The chip machine manufacturer is not satisfied with this. It also raises the question of whether America will also target other companies in the chip sector or beyond in this way.
Discussions regarding the latest move are expected to be held at the diplomatic level between Washington and The Hague in the near future. But the question is, will they achieve anything? Outgoing Minister Schreinemacher (foreign trade) also announced that he would go to Brussels.
A month ago, Chinese manufacturer Huawei appeared with a surprise. The company, which has been on the US blacklist since 2020 and therefore should not purchase advanced chips, has a new phone with an advanced 5G chip.
The chip was produced at 7 nanometers (nm) size on an ASML DUV machine by Chinese manufacturer SMIC and on various machines from other companies. Since the customer determines what will be produced, everyone involved has no influence on it.
The number of nanometers gives information about the developments in the chip industry. The smaller the number, the faster and more energy efficient the chip. Development is already advanced: ASML’s EUV machines are being used by Taiwanese manufacturer TSMC to produce chips at 3 nm. These are included in the latest iPhone.
Maintenance contracts can slow development
A Chinese manufacturer is expected to be able to produce 7nm on a large scale, says Jan-Peter Kleinhans of the German think tank Stiftung Neue Responsibility. “TSMC did this five years ago and we knew SMIC did it too.”
The only way the US can slow down production even further is through ASML’s so-called maintenance contracts with manufacturers in China. These are very important: Without such contracts, machines will no longer work after a few weeks or months, depending on the type. Missing a part can be fatal.
“I assume the US will not allow ASML to continue servicing newer machines in China,” says Kleinhans. “The question is how the American and Dutch governments will deal with this.” The government wants to examine this on a case-by-case basis to prevent problems in the wider chip chain. The expectation is that ASML will definitely notice something.
Kleinhans predicts that 7 and 6 nm chips will be the last chips China will be able to produce on a large scale. He says it’s really hard to make 5 nanometers and smaller without EUV.
Source: NOS
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
