A Beijing mouthpiece warned on Monday that Dutch chip tools maker ASML risks losing access to the Chinese market ‘permanently’ if it implements the latest US export curbs.
In the latest escalation of US efforts to cut off China’s access to advanced chip technology, the Dutch government reportedly plans to stop ASML from maintaining the DUV (deep ultraviolet) lithography machines it has sold to China so far.
It also plans to stop ASML from selling spare parts for the machines to China, reports last week said, adding the development followed significant pressure from Washington.
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DUV machines are ASML’s second tier lithography systems that are critical to make the circuitry of chips. ASML has never sold its most advanced ‘extreme ultraviolet’ or EUV, machines to Chinese customers due to previous restrictions.
“If the Netherlands follows this strategy, it will exacerbate the widening rift in China-US and China-Netherlands relations,” Chinese state-backed Global Times said on Monday.
“If ASML loses the Chinese market, it will suffer significant economic losses. This loss could potentially lead to a decrease in ASML’s global market share and a shift in the balance of power in the semiconductor industry,” the mouthpiece wrote.
While China has emerged as a significant buyer of ASML’s products — accounting for nearly half of its sales in the first quarter of the year — ASML remains Europe’s most valuable tech firm.
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Its dominance in lithography systems also make ASML the biggest supplier of equipment to computer chip makers. While it has some competitors in the DUV space — Japan’s Canon and Nikon — ASML holds a near-monopoly in the EUV market, with no significant direct competitors.
Its influence on the chip industry, thus, will be hard to shake at present.
But the Global Times also followed up its threats with a vow to out-innovate the competition — something ASML has previously warned in its earlier revenue reports.
The GT threat is noteworthy considering Beijing often hints at policy-related measures through state media. In May, the Global Times hinted China was set to take ‘anti-dumping’ measures against European firms — in retaliation of its EV tariffs. China’s commerce ministry imposed those in June.
Furthermore, China has already announced retaliatory measures against American chipmakers like Intel and AMD over Washington’s chip war. Experts say the chipmakers could lose billions as a result, while bringing windfall gains to Chinese chipmakers like Huawei.
‘Risk of no return’
The Global Times piece said that while China remained a laggard in advanced chip technology, the country “will double its efforts to fully resolve the technical issues of high-end chip production.”
“For those companies that follow the US in containing China, it will be challenging to return once they lose the Chinese market,” it added.
Beijing is pouring tens of billions of dollars into its semiconductor industry as part of its vow to develop ‘new productive forces’ that will carry through its economy in future.
The funding has meant that even though major chip firms like Semiconductor Manufacturing International Corporation (SMIC) and Huawei face low yields and significant costs in producing advanced chips with older DUV machines, they have still been successful at making significant headway.
According to an analysis by a Tokyo-based firm, China’s current chip capabilities are only three years behind Taiwan’s TSMC — the world’s leading contract chipmaker.
Last year, ASML also raised the alarm about risks to its business from new chip curbs due to “new competitors with substantial financial resources, as well as from competitors driven by the ambition of self-sufficiency in the geopolitical context.”
Dutch Prime Minister Dick Schoof said last week he was still assessing the consequences of new China-targeted curbs on ASML.
We are “watching out very specifically for the economic interests of ASML,” he said.
- Vishakha Saxena
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