Dozens of ASML shipments headed to China face tougher export restrictions

Receive FREE Semiconductors Updates

we will send you one myFT Daily Digest Latest Email Rounding semiconductor News every morning.

Dozens of ASML chip-making machines destined for China will soon need a license to ship, after the Dutch government followed the US and Japan in imposing tighter restrictions on technology exports.

Hague said that, starting September 1, he would bar high-end chip-making machines that could be used for “advanced military applications” from being exported abroad without such a permit.

The Dutch trade minister insisted the controls were “country neutral”, but in practice exporters expect China to be one of the few countries not covered by the licence.

Liege Schreinmacher said on Friday, “We have taken this step in the interest of our national security.”

The US, Japan and the Netherlands are keen to form a united front to deny China the most advanced silicon chips. The move comes after heavy pressure from the US and will primarily affect ASML, which makes the world’s most advanced semiconductor fabrication equipment.

The controls are similar to those recently put in place by Japan, which included capable machines. production of 45nm chips and below. Both countries held long talks with the US and agreed to take steps in January. Washington has been trying to curb China’s access to advanced weapons as it threatens Taiwan and takes a more assertive military stance.

ASML said the Dutch control would cover its most advanced “immersion DUV lithography system”, which uses ultraviolet light.

Three of ASML’s four systems for immersion lithography will be put on hold by the new regulations, leaving Chinese chipmakers unable to manufacture semiconductors on a commercial scale smaller than 28nm. This scale puts the latest processors for smartphones and cutting-edge applications such as artificial intelligence largely out of reach for Chinese manufacturers such as SMIC.

Several dozen machines ordered by Chinese companies from ASML, which had been scheduled for delivery in the coming years, are now unlikely to be delivered, according to two people familiar with the situation.

ASML declined to comment on specific sales figures, but said it “does not expect these measures to have a material impact on our financial outlook that we published for 2023 or our longer-term scenarios as of November.” was told during our Investor Day in 2022″. It added that these scenarios were based on rising global demand.

The most advanced ASML machines have been banned from China since 2019. China is expected to account for about 15 percent of ASML’s sales in 2022.

“We’ve looked at this very carefully and have been as accurate as possible,” Schreinmacher said. “That way we can address the most critical vulnerabilities without unnecessarily disrupting global production of the chips.”

The announcement came as Dutch Prime Minister Mark Rutte attended a summit in Brussels discussing EU policy towards China, which has hardened in recent months. The 27 member states agreed to “de-risk” their links with China and build alternative sources of critical raw materials, green technology and so on.

China’s Foreign Ministry spokesman Mao Ning criticized the export controls on Friday, saying the sanctions impose a “technical blockade against China” and “seriously undermine market rules and the international trade order”.

Mao said, China will stay close to relevant developments and “resolutely defend our legitimate rights and interests”.

Jefferies technology analyst Janardhan Menon said the new rules were broadly in line with expectations after the Dutch government announced its plans for more controls in March.

Menon estimates that ASML ships fewer than 100 immersion systems globally each year, about 20 percent of which have already gone to China.

“Most Chinese companies have already converted all their orders to ASML machines, which are still allowed to be shipped there,” Menon said.