ASML Halts Shipments of Machines to China at US Request

ASML Holding, a prominent semiconductor equipment supplier based in the Netherlands, has canceled shipments of its machines to China at the request of the United States President Joe Biden’s administration. This development comes as part of the US government’s crackdown on Beijing’s efforts to develop its own advanced semiconductor industry, an area where China has heavily relied on imported technology.

US Curbing Beijing’s Access to Imported Technology

In recent years, the US and its allies have become increasingly cautious about China’s access to imported technology, particularly in the semiconductor sector. With China aiming to reduce its dependence on foreign technology and establish its own chip manufacturing capabilities, the Biden administration is taking measures to block China’s access to advanced technology.

Dutch Government Partially Revokes ASML’s Licences

ASML confirmed that the Dutch government has partially revoked licenses for the shipment of certain lithography systems to China, affecting a small number of customers there. The decision to revoke the licenses aligns with the stance of the US administration. This move reflects the growing concerns within Western governments about the transfer of sensitive technologies to China.

Impact on Chinese chipmakers

News of the canceled shipments from ASML has had a significant impact on Chinese chipmakers, with Semiconductor Manufacturing International Corporation (SMIC) experiencing a decline of up to 3% in its stock value. This reaction highlights the dependence of Chinese chipmakers on advanced machinery and technology from global suppliers like ASML.

Limited number of machine shipments cancelled

While ASML has complied with the US request by canceling shipments, the exact number of affected devices remains undisclosed. The cancellation of a limited number of machines is likely to have a direct impact on China’s efforts to enhance its semiconductor industry, hindering its technological progress.

US Pressure on ASML

The US National Security Adviser, Jake Sullivan, called the Dutch government to discuss the matter, indicating the extent of the US government’s involvement. In response, Dutch officials requested that the US directly communicate with ASML regarding the equipment shipments. The US government’s direct intervention suggests the significance it places on curbing China’s access to advanced semiconductor technology.

China’s Reaction and Call for Respect for Contracts

The Chinese Foreign Ministry condemned the US intervention as an act of “hegemony,” implying that the US is using its power to impede China’s access to advanced technology. Additionally, China urged the Dutch government to “respect the spirit of the contract and world order,” emphasizing the obligations that arise from international agreements.

History of US Pressure on ASML

The pressure on ASML from the US government began in 2019 when the Trump administration pushed the Dutch government to ban sales of ASML’s extreme ultraviolet lithography machines to China. This initial move indicated the US government’s concerns about China’s progress in developing its semiconductor industry. Following suit, the Dutch government further tightened export controls on China in 2020, restricting the shipment of deep ultraviolet lithography machines from ASML.

ASML’s CEO concerns

ASML’s outgoing CEO has publicly opposed the measures imposed by the US and the Dutch government, warning that these actions may inadvertently push China to develop competing technology. The CEO argues that instead of limiting China’s access to advanced technology, a collaborative approach would be more fruitful, fostering mutual innovation and advancement in the semiconductor industry.

The recent cancellation of ASML’s machine shipments to China at the request of the US administration underscores the significance of the semiconductor industry and the issues surrounding technology access. As the US and its allies crack down on China’s attempts to build its own advanced semiconductor industry, tensions between major players in the tech world continue to escalate. The repercussions of the US pressure on ASML highlight the delicate balance between technology transfer, national security concerns, and global collaboration in fostering innovation. The outcome of these actions will shape the future of the global semiconductor industry and its competitive landscape.

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