Dutch to restrict semiconductor technology exports to China, joining US effort | CNN Business

Amsterdam/Washington
Reuters
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The Dutch government said on Wednesday it plans new restrictions on semiconductor technology exports to protect national security, joining a U.S. effort to curb chip exports to China.

The announcement marked the first concrete step by the Dutch, who oversee essential chipmaking technology, toward adopting rules urged by Washington to hamper China’s chipmaking industry and slow its military advances.

The US in October imposed broad export restrictions on shipments of US chip-making tools to China, but for the restrictions to be effective they need the agreement of other key suppliers from the Netherlands and Japan, which produce key chip manufacturing technology. Allied countries have been in talks on the issue for months.

Dutch Trade Minister Liesje Schreinemacher announced the decision in a letter to parliament, saying the restrictions will be introduced before the summer.

His letter did not name China, a key Dutch trading partner, nor ASML Holding ( ASML ), Europe’s largest technology company and a major supplier to semiconductor manufacturers, but both will be affected. He specified that one technology that will be affected is “DUV” lithography systems, the second most advanced machines that ASML sells to computer chip makers.

“As the Netherlands considers it necessary for national security reasons to control this technology as quickly as possible, the cabinet will introduce a national control list,” the letter said.

A White House representative did not immediately respond to a request for comment.

ASML said in a response that it expects to have to apply for licenses to export the most advanced segment among its DUV machines, but this would not affect its financial guidance for 2023.

ASML dominates the market for lithography systems, multimillion-dollar machines that use powerful lasers to create the tiny circuits on computer chips.

The company expects sales in China to remain around €2.2 billion in 2023, which represents a relative reduction as the company expects global sales to grow by 25%. Major ASML customers such as TSMC and Intel (INTC) are engaged in capacity expansions.

ASML has never sold its more advanced “EUV” machines to customers in China, and most of its “DUV” sales in China are to relatively less advanced chip makers. Its main South Korean customers, Samsung ( SSNLF ) and SK Hynix, have significant manufacturing capacity in China.

The Dutch announcement leaves important questions unanswered, such as whether ASML will be able to service the more than €8 billion of DUV machines it has sold to customers in China since 2014.

Schreinemacher said the Dutch government had decided on measures “as careful and precise as possible … to avoid unnecessary disruption of value chains”.

“It’s so big companies know what they’re up against and have time to adapt to the new rules,” he wrote.

Japan is expected to issue an update on its chip equipment export policies as early as this week.