Export of ASML machines to China further limited

This article was last updated on June 30, 2023

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Overview

In two months’ time, from 1 September, new restrictions will apply to the export of chip machines from ASML to China, Minister Schreinemacher for Foreign Trade has announced. The details about the rules have been published.

The rules mean that makers of chip machines, in particular ASML, must now apply for an export license for certain models as standard. In this way, the government can, if it wants to, stop exports to a specific country.

Although the political message is clear, the consequences for ASML remain limited. For a few years now, export restrictions to China have been in place for ASML’s very latest machines, the so-called EUV (Extreme Ultraviolet).

National security

According to Schreinemacher, the aim of the measures is that “our technology, Dutch technology, does not end up in the hands of companies or organizations where the technology can ultimately be used against us”. This is about national security.

The minister emphasizes that the measures are ‘country neutral’, so not specifically aimed at a specific country, although she acknowledges that there are many such machines in China: “China will also notice the consequences.”

In March it was already announced that there would be restrictions, but ASML did not yet know the technical details and did not know when they would take effect. The Veldhoven company now says it must apply for an export license to ship its “most advanced” DUV machines.

ASML is in very good shape, the demand for the machines is extremely high. As previously estimated, these measures will therefore have no financial consequences for the company. Machines that were supposed to go to China now get a different destination. The pain will therefore be felt mainly in China.

The Ministry of Foreign Affairs expects that twenty permits will be applied for each year. A permit is sometimes valid for several machines.

Consequences of maintenance contracts

What was still unclear in recent months, to the frustration of ASML, was what would happen with the so-called maintenance contracts. After a machine is sold by the company, maintenance is also required. Employees of the company do this on the spot in China.

Formally speaking, the maintenance contracts also fall under the new rules, but the Dutch government wants to spare them in practice. People consistently speak of the “surgical” application of measures, so that the consequences do not affect the entire chip sector. The government wants to prevent this from creating a new chip shortage.

The new rules are annoying for Chinese customers, but at the same time it means that current production can probably continue. According to Schreinemacher, China has taken note of the information.

One step further

With today’s announcements, it may not be finished yet. Reuters news agency reports that the US is working on new measures that can also prevent the export of older chip machines from ASML to China.

With a new US rule, the US could have a say in equipment that contains a small percentage of US hardware or software. Schreinemacher and ASML did not want to respond to this today.