Recent moves by the United States to stop the flow of advanced chip technology to China are ‘economically motivated’, according to the chief of Dutch semiconductor equipment giant ASML.
Washington has maintained that its curbs on exports of artificial intelligence chips and latest chipmaking tools to China are aimed at protecting national security interests, and to stop Beijing from arming its military with the latest technology.
But Christophe Fouquet, who took the helm at ASML in April, believes Washington’s push to stop the company from selling top chipmaking equipment to China has become more “economically motivated” over time.
“I think to make the case that this is about national security is getting harder and harder,” Fouquet said, speaking at a Citi conference in New York.
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ASML has been caught in the crosshairs of US export curbs that began in 2022. The Dutch government has blocked the company from shipping some of its top lithography systems since the start of the year.
The Netherlands is now reportedly planning to also stop the company from servicing some of the second-tier DUV (deep ultraviolet) lithography systems it has already sold to China. ASML’s top-tier EUV (extreme ultraviolet) lithography systems have never been sold in China due to earlier restrictions.
Lithography systems are critical to printing the circuitry of chips and require regular maintenance, software updates and spare parts to continue to operate.
ASML machines are somewhere between difficult and impossible to replace. If an owner is denied spare parts and maintenance, at some point the machine would stop working and the chip fab would be unable to produce chips.
ASML — Europe’s most valuable tech firm — makes about 25% of its earnings from servicing, maintenance and upgrades of its installed base of equipment.
Meanwhile, China forms a significant chunk of that earning base considering customers from the country bought $7 billion worth of equipment last year alone. In the first half of this year too, China accounted for 49% of ASML’s sales.
‘Pushback against US curbs will grow’
With everything at stake, ASML and even US-based customers have voiced growing concern against Washington escalating curbs targeting China — one of the world’s biggest semiconductor markets.
Fouquet expects that push-back to grow.
“Most probably there will be more pressure for restrictions, but I also think there will be more push-back and I think we have to hope we reach a certain equilibrium because as a business what we all want is a bit of clarity, a bit of stability.”
At the same time, he argued Chinese advances in chip making are slowing due to restrictions that are already in place.
Desperation to stop the chip curbs from escalating further has also led China to threaten retaliation against ASML and Japan — another US ally that has implemented some measures targeting China.
Meanwhile, the Netherlands’ Prime Minister Dick Schoof has said he would carefully weigh the economic interests of ASML, the country’s largest company, in implementing fresh export curbs.
“ASML is for the Netherlands an extremely important, innovative industry that should not suffer under any circumstances,” Schoof said last week.
Concerns about the looming escalation of US export curbs has weighed heavily on ASML’s stock this week. Shares of the company were down 2.4% on Thursday (as of 1248 GMT) following a steep plunge on Wednesday.
Shares of the company are down nearly 13% for the week so far.
- Reuters, with additional editing by Vishakha Saxena
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