Dutch to restrict semiconductor tech exports to China, joining US effort 

AMSTERDAM/WASHINGTON - The Netherlands’ government has said it is planning new restrictions on exports of semiconductor technology to protect national security, joining the United States’ effort to curb chip exports to China.

The announcement on Wednesday marked the first concrete move by the Dutch, who oversee essential chipmaking technology, towards adopting rules urged by Washington to hobble China’s chipmaking industry and slow its military advances.

The US in October imposed

sweeping export restrictions on shipments of American chipmaking tools to China,

but for the curbs to be effective it needs other key suppliers in the Netherlands and Japan, who also oversee key chipmaking technology, to agree.

The allied countries have been in talks on the matter for months.

Dutch Trade Minister Liesje Schreinemacher announced the decision in a letter to Parliament, saying the restrictions will be introduced before the summer.

Her letter did not name China, a key Dutch trading partner, nor did it name ASML Holding, Europe’s largest tech company and a major supplier to semiconductor makers, but both will be affected.

It specified one technology that will be impacted is “DUV” lithography, the second-most advanced machines that ASML sells to computer chip manufacturers.

“Because the Netherlands considers it necessary on national security grounds to get this technology into oversight with the greatest of speed, the Cabinet will introduce a national control list,” the letter said.

A White House representative did not immediately respond to a request for comment.

Chinese Foreign Ministry spokesman Mao Ning said on Thursday that China resolutely opposed the Dutch decision and that Beijing had lodged representations with the Netherlands.

“We hope the Dutch side will adhere to an objective and fair position... act to safeguard its own interests, and not follow the abuse of export control measures by certain countries,” Ms Mao said at a regular news briefing, without naming countries.

China has frequently called the US a “tech hegemony” in response to its export controls.

ASML said it expects to have to apply for licences to export the most advanced segment among its DUV machines, but that would not impact its 2023 financial outlook.

ASML dominates the market for lithography systems, multi-million dollar machines that use powerful lasers to create the minute circuitry of computer chips.

The company expects sales in China to remain about flat at €2.2 billion (S$3.1 billion) in 2023 – implying relative shrinkage even as the firm expects overall sales to grow by 25 per cent.

Major ASML customers such as Taiwan Semiconductor Manufacturing Co and Intel are engaged in capacity expansions.

ASML has never sold its most advanced “EUV” machines to customers in China, and the bulk of its DUV sales in China go to relatively less advanced chipmakers.

Its biggest South Korean customers, Samsung and SK Hynix, have significant manufacturing capacity in China.

The Dutch announcement leaves major questions unanswered, including whether ASML will be able to service the more than €8 billion worth of DUV machines it has sold to customers in China since 2014.

Ms Schreinemacher said the Dutch government had decided on measures “as carefully and precisely as possible... to avoid unnecessary disruption of value chains”, adding: “It is for companies of importance to know what they are facing and to have time to adjust to new rules.”

Japan is expected to issue an update on its chip equipment export policies as soon as this week, sources said. 

“For national security reasons we constantly review export rules, but it doesn’t mean we have decided anything at this point,” Japan’s Minister for Economy, Trade and Industry (Meti) Yasutoshi Nishimura said in Parliament when asked about possible restrictions. 

A Meti official involved in export controls told Reuters there was no plan to announce any changes on Thursday or Friday. 

The official spoke on condition of anonymity. REUTERS