China To Gain Military Edge With ASML Tool – Dutch Government

The Dutch trade Minister, Geoffrey van Leeuwen has expressed concerns over ASML’s computer chip equipment being potentially utilized for Chinese military purpose that has influenced recent ruling to withhold export licenses, as stated in response to inquiries from parliament.

Netherlands-based ASML, Europe’s largest tech firm, dominates the world market for lithography systems, needed by computer chip makers to help create circuitry.

“China focuses on foreign expertise, including Dutch expertise in the field of lithography, to promote self-sufficiency in its military-technical development,” Trade Minister Geoffrey van Leeuwen wrote in a report on February 5th .

Van Leeuwen said, ASML tools are used for  making advanced semiconductors that can go into “high-value weapons systems and weapons of mass destruction” and the Dutch government focuses on “the risk of undesirable end use” when reviewing export licensing decisions.

Due to pressure from the United States, the Dutch government last year implemented a licensing mandate last year for ASML’s mid-range DUV machines. The company’s most advanced tools have never been sold in China.

lawmaker Femke Zeedijk of the reformist NSC party asked why the government initially approved and them promptly revoked a license for ASML to export several tools to undisclosed customers in China. Over recent years, the company has generated hundreds of millions of euros in sales from such tools to Chinese customers.

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Van Leeuwen’s answers dodged that question, adding that “several licenses for the export to China of advanced semiconductor equipment have been granted” since the licensing requirement was introduced in September. It said it anticipates around 20 such requests in total this year, without specifying how many will come from China.

According to forecasts by industry group SEMI, around 18 Chinese chip plants will come online this year, more than in any other geographical region. Many Chinese chipmakers are focusing on building older generations of chips and using equipment that does not fall under export control policies.

Some of Zeedijk’s questions, such as whether the Netherlands had revoked the licenses at the request of the U.S. government, went unanswered.

“I’m not saying that there are no security issues or that this decision was wrong, but I would like to be better informed,” Zeedijk told Reuters on Monday.

“The perception is also that besides the security risk, that there are also economic reasons behind it.”

ASML confirmed on New year’s day the Dutch government had revoked a license, following a report by Bloomberg News.

The resulting cancellations did not impact ASML’s fourth quarter earnings, but the Deep Ultraviolet tools in question cost approximately $60 million each and would be an important part of customer plans.

In January, ASML said it expects sales to China will remain “solid” in 2024 after an exceptional 2023. The company said it does not expect to ship any of its NXT:2000i or more advanced tools to China under the Dutch licensing regime, and that it will not be able to export its NXT:1970 and NXT:1980i product lines to “a handful” of Chinese plants, due to U.S. restrictions.