Washington is still trying to plug holes in its efforts to stop China from getting advanced chips and chipmaking equipment. The Biden administration is revising not only its own regulations to make it more difficult to sell semiconductors and related equipment to China, but it’s also pushing U.S. allies to tighten their controls as well.
The U.S. is sending a delegation next week to the Netherlands, which includes Alan Estevez, undersecretary of commerce for industry and security, according to Bloomberg and Reuters. Estevez is responsible for implementing export controls.
The Biden administration is reportedly urging the Netherlands to order companies to stop servicing sensitive chipmaking equipment owned by Chinese companies and sold before Dutch export controls went into effect in January.
The Netherlands is home to ASML, manufacturer of the lithography machines used to make the chips that go into electronic devices. ASML currently holds a monopoly in extreme ultraviolet (EUV) lithography, used by companies like Taiwan Semiconductor Manufacturing Co., to make the smallest and most advanced chips.
U.S. rules imposed in 2019 have stopped ASML from selling its EUV machinery to China. Yet the company also sells less sophisticated deep ultraviolet (DUV) lithography machinery. DUV machines are used to make legacy chips, though some industry analysts speculated that one such machine was used to produce the relatively more advanced China-made processor found in Huawei’s Mate 60 smartphone released last year.
China is a major source of revenue for ASML. The country was the second-largest market by sales for ASML in 2023, and third-largest in 2022 and 2021.
An expanded Dutch ban on cooperation with China could be painful to Chinese companies that rely on foreign equipment. Lithography machines are large, expensive, and require constant maintenance.
China holds a significant share in the market for less-advanced legacy chips. Mainland China accounted for 31% of mature processes last year, putting it in second place worldwide, according to research from TrendForce. (The island of Taiwan is in first place, with a 44% market share.)
The Netherlands isn’t the only country getting asked by Washington to expand export controls. In early March, the U.S. reportedly asked Japan to expand its curbs on chipmaking equipment. Japanese firms like Tokyo Electron and Nikon sell advanced lithography tools, though not EUV machines.
The U.S. is also pressuring South Korea, another hub for the semiconductor industry, to curb sales of chipmaking tools to China, Bloomberg reported earlier this week.
China has fiercely criticized the West’s expanding tech controls.
“Artificially creating technological barriers and cutting off industrial and supply chains will only lead to division and confrontation,” Chinese President Xi Jinping said in late March, as Dutch Prime Minister Mark Rutte visited Beijing. “The Chinese people also have the right to legitimate development,” Xi continued.
Xi repeated the same messaging on a call with U.S. President Joe Biden earlier this week and said China would not “sit back and watch” if the U.S. tries to constrain the country’s “legitimate right to development.”
Chinese companies are trying to fill the technology void, with companies like Naura Technology Group and Shanghai Micro Electronics Equipment reportedly working on domestically made equivalents of chipmaking technologies.