The Dutch government is expected to impose export restrictions on chip equipment giant ASML in another blow to China’s under-pressure tech sector.
ASML, a key supplier to chipmakers worldwide, generates about 15% of its sales in China, an important growth market even after it was restricted from selling its most advanced machines there under US pressure in 2019.
Tensions between Washington and Beijing over semiconductors have since steadily worsened.
Washington in October imposed export restrictions on its own chip equipment companies aimed at hobbling China’s ability to make chips and to blunt its military progress. US officials said they expected the Netherlands to follow suit.
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Dutch Prime Minister Mark Rutte on January 17 said he expected a “good outcome” to discussions with the United States on the matter after meeting with President Joe Biden in Washington.
But Dutch trade minister Liesje Schreinemacher stressed that the Netherlands would not simply adopt US rules.
“I know there’s a lot of pressure internationally but I will be fighting for open trade and against protectionism,” she told a panel in Davos on January 19.
The government source said The Hague has been working to resolve several concerns.
One is making sure Dutch rules are drafted in such a way that they are not actually more restrictive for ASML than for US companies.
Another is that Japan, home to ASML competitor Nikon, have similar rules, and a third is that new restrictions do not upend the global chip market, which is just emerging from Covid-19 era shortages and needs Chinese production, especially for less-advanced chips.
ASML is expected to post fourth-quarter net income of 1.68 billion euros ($1.82 billion) on record revenue of 6.37 billion euros, according to Refinitiv Eikon data.
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In November ASML raised its annual revenue estimates by 25% to at least 30 billion euros by 2025.
The company’s top customers including TSMC, Samsung and Intel are engaged in major expansions, so any loss of Chinese sales could initially be offset elsewhere.
Still, the US restrictions are expected to impact 5% of ASML’s 38-billion-euro order backlog.
There could be further losses from tougher Dutch rules, if for example, limits are re-applied to sales to China of older technology deep ultraviolet lithography (DUV) equipment.
ASML has sold more than 8 billion euros worth of such equipment in China since 2014, when DUV was removed from international lists of goods deemed of possible military use.
The government would need to expand its definition of sensitive technology to include DUV in order to restrict it and may not specify that such a move is targeting China.
- Reuters with additional editing by Sean O’Meara
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