Dutch government stops chip giant ASML exports to China

This decision marks a significant escalation in the ongoing chip war between Western nations and China.

The export controls, although effective since September 2023, allowed the company to continue shipping the machinery until January. Yet, this was then revoked by the Dutch government earlier this week, with reports linking it to pressure from the Biden administration on both ASML and the Dutch government.

These regulations echo the US-led strategy to restrict China's access to essential parts of the high-end microchip manufacturing supply chain. These measures also extended to ASML's less advanced deep ultraviolet systems, necessitating government permits for exports.

ASML, known for its high-tech machines crucial to manufacturing advanced microchips, was set to ship several chip-making machines to China. The company is the sole maker of advanced extreme NXT:2050i and NXT:2100i ultraviolet lithography machines used by the likes of TSMC, Samsung and Intel to manufacture bleeding-edge chips for companies like Apple and Nvidia.

Despite these restrictions, ASML insist the move will only impact “a small number of customers in China.” The company had obtained necessary licenses to fulfill existing contractual obligations it had with Chinese buyers before the initial deadline, however, future prospects indicate a likely halt in exports to Chinese customers starting January 2024.
This development is part of a larger 'chip war', with the West and China competing for dominance in semiconductor technology. The US and its allies Japan and The Netherlands have implemented various policies to secure domestic chip supplies – with the US implementing its ‘CHIPS for America Act’ and the EU’s ‘European Chips Act’ - while limiting China's access to advanced semiconductor technology.

Previous export controls imposed by the West on China have seen a tit-for-tat scenario play out, with China last year announcing policies requiring special licences for companies exporting key chip materials following the first news of the Dutch restricting chip machinery to China.

Nvidia CEO Jensen Huang, the world’s most valuable semiconductor company and major player of AI chips, has previously warned of the “enormous damage” from the escalating battle over chips between Washington and Beijing. Nvidia last October received directives from the US to immediately cease shipments of some of its AI chips to China.