ASML seems to be doing well in the geopolitical debate around chip machines

The fog that hung around export restrictions for ASML has somehow lifted. Yesterday, under pressure from the US, the Dutch cabinet first confirmed in a letter to the House of Representatives that some chip machines can no longer be delivered to China. By the way, without naming this country.

“The Netherlands hopes not to alienate the country too much by not mentioning China,” says Maaike Okano-Heijmans, a geopolitics and technology expert at the Clingendael Institute. “We partly agree with the logic of the Americans, but this is not an anti-Chinese story. This is a difference that the Chinese government will also read.”

Stop China’s technological development

Talks with the US on restrictions have been going on for a long time. This country had already announced the measures in October. The goal: to stop China’s technological development. The fear is that China could use the soon-to-be-banned machines to manufacture chips that could be used for high-tech military applications, for example.

It is unclear exactly what the US wants. “They seem to be somewhere in the middle,” Okano-Heijmans concludes.

It can be said that the Netherlands gave something to the USA. This raises the question of what the state is getting for it. The Clingendael expert says this question is difficult to answer. “Also, you might ask yourself what the costs will be if we don’t comply. The US shows goodwill to support us again if needed. And that doesn’t necessarily have to be in the chips section.”

a positive result

The results do not seem necessarily unfavorable for ASML. ASML’s newest machine, Extreme Ultraviolet (EUV), has been subject to an export ban to China for several years. It will now definitely be a type of machine from the Deep Ultraviolet (DUV) series. Based on Minister Schreinemacher’s (foreign trade) letter in which he speaks of “most advanced”, ASML assumes that this is the most modern version of the DUV.

According to the ASML annual report, forty such machines were sold last year. This produced a total of 5.2 billion euros, ie an average of 130 million euros per machine. It is unclear how many of these machines went to China. However, most of the machines ASML ships to the country are old-style machines. You are not subject to restrictions.

ASML does not want to say how many DUV machines of the newest type have been ordered by Chinese customers this year. The company said yesterday that the restrictions will have no impact on its sales prospects this year and for the longer term.

With that extra clarity, things don’t change right away. The Veldhoven company is contractually bound. If it stops the export of machinery in accordance with the law, both the customers and the Chinese government can remedy the situation. It’s probably due to legal claims.

legislation pending

ASML cannot act until restrictions are secured by law. It is expected to be released in the summer. It is unclear whether the law will come into effect immediately. Also, there is a long lead time for orders. So China can’t order a few more “fast” machines.

The order book for this year is already fully booked. ASML has an order list of 40 billion euros.

Source: NOS