Netherlands to ban semiconductor device exports after US pressure

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A worker stands next to cables inside an ASML Twinscan XT1000 lithography machine, during manufacturing at the ASML factory in Veldhoven, the Netherlands.

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“Given the technological developments and the geopolitical context, the government has come to the conclusion that the current export control framework for certain equipment used for the manufacture of semiconductors needs to be expanded, for national and international security,” said the country. Trade Minister Liesje Schreinemacher said in a letter to parliament on Wednesday.

Although the letter does not mention China, it comes after pressure from the White House, which in 2022 imposed export controls that would prevent Beijing from accessing certain semiconductor chips. At the time, American officials recognized that if other countries did not impose similar bans, the export controls would lose their effectiveness over time.

Since 2018, the US has reportedly been asking the Dutch government to stop ASML from shipping its real ultraviolet lithography machines to China. ASML has not shipped the equipment to China so far.

As a result of the announcement from the Dutch government, ASML said in a statement, “it will take time to translate these controls into legislation and implement them.”

“Based on today’s announcement, our expectations of the Dutch government’s licensing policy, and current market conditions, we do not expect these measures to have a material impact on our financial outlook,” said the company on Wednesday, saying “the additional export controls. do not apply to all immersion lithography equipment but only to the so-called ‘most advanced’.”

Why a globally vital chip company is caught in the middle of the US-China tech battle

ASML said it is not clear what the Dutch government means by the “most advanced” devices.

However, they said the rules mean it has to apply for a license to export the so-called deep-immersion ultraviolet (DUV) lithography machine, which is used to make memory chips. These chips are used in a wide range of devices, from smartphones to laptops and servers, and could eventually be used for artificial intelligence applications.

Last month, ASML said a former employee in China had misused data related to its proprietary technology.

China has been working to strengthen its domestic semiconductor industry, but it still lags behind the likes of Taiwan, South Korea and the US

China’s Ministry of Foreign Affairs said on Thursday that it opposes the politics of economic and trade cooperation and hopes that the Netherlands will maintain a fair stance, according to Reuters.

Speaking to CNBC’s Street Signs on Thursday, Anna Rosenberg, head of geopolitics at the Amundi Institute, said the latest news from the Netherlands is “a big problem” for President Joe Biden.

“The US has been trying to bring the EU within its policies towards China for some time, and it has a lot more leverage with the EU now than before. [Ukraine] war, precisely because the EU is now largely dependent on the US for its security,” she said.

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