Europe joins the US in its chip war with China | CNN Business

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CNN
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Europe’s largest producer of advanced chip manufacturing technology has joined the United States in its growing confrontation with China.

The Netherlands announced Wednesday, in a letter from its trade minister to parliament, that new restrictions on foreign sales of semiconductor technology were needed to protect national security.

While the letter did not name ASML Holdings, Europe’s largest technology company, the restrictions will affect the Dutch company, which is a key supplier to global chipmakers, including those in China.

The announcement is the Dutch government’s first public move toward adopting rules, he argued by Washington, to restrict The Chinese chip manufacturing industry.

Japan has also been involved in trilateral talks with the Netherlands and the United States, a source familiar with the talks said. he told CNN. Reuters reported that Tokyo is expected to issue an update on its policies on chip equipment exports as early as this week.

China said Thursday it “strongly opposes” the upcoming restrictions from the Netherlands, which come just months after the United States restricted sales of some semiconductor machinery to Beijing. For these measures to really bite, Washington needs other major suppliers, located in the Netherlands and Japan, to join.

Chinese Foreign Ministry spokesman Mao Ning accused “certain countries” of “coercing and inducing other countries to take export restriction measures against China at the expense of the interests of its allies.”

He did not name the United States, but Chinese officials often use the term “certain countries” or “some countries” when making critical comments about Washington.

“We hope the Netherlands will not follow some countries in abusing export control measures,” Mao said. “China will take all necessary countermeasures to protect our legitimate rights and interests.”

This week, Chinese leader Xi Jinping attacked the United States with unusually direct comments as he called on China’s private companies to “fight” alongside the Communist Party at a time of mounting challenges. He accused Western countries led by the United States of trying to “contain” and “suppress” China.

Beijing has set its sights on China becoming a world leader in a wide range of industries, including artificial intelligence, 5G wireless technology and quantum computing.

In October, those plans clashed a major hurdle when the Biden administration banned Chinese companies from buying advanced chips and chip-making equipment without a license. It also restricted the ability of US citizens to provide support for the development or production of chips at certain manufacturing facilities in China.

Chips are vital to everything from smartphones and self-driving cars to advanced computing and weapons manufacturing.

ASML, based in Veldhoven, is a world leader in the production of lithography machines, which use light to print patterns on silicon. Customers like China’s TSMC, Samsung ( SSNLF ) and SMIC use the Dutch company’s equipment to mass-produce microchips.

“These new export controls focus on advanced chip manufacturing technology, including the most advanced deposition and immersion lithography tools,” ASML said in a statement. “Due to these upcoming regulations, ASML will need to apply for export licenses to ship the most advanced immersion systems…”.

He added that did not expect the upcoming measures to have a material effect on its financial outlook for 2023. The company has primarily sold “mature” products in China.

The announcement of export restrictions from the Netherlands, the details of which are expected to be confirmed before the summer, it is not the first time that the technological rivalry between the US and China has spilled over into Europe.

Two European semiconductor deals ran into trouble last year over ties to Beijing, in a sign of concern spreading to the West over potential Chinese control of critical infrastructure.

In November, the new owner of Britain’s biggest chip maker was ordered to reverse its takeover, just days after another sale of chip factories in Germany was blocked. Both transactions were affected by national security concerns and had involved acquisitions by Chinese-owned companies.

In the UK, the government told Nexperia, a Dutch subsidiary of Shanghai-listed semiconductor maker Wingtech, to sell at least 86% of its stake in Newport Wafer Fab, more than a year after taking control from the factory Staff have since protested the decision, saying it puts nearly 600 jobs at risk.

In Germany, the economy ministry banned Elmos Semiconductor, an automotive chipmaker, from selling its factory in the city of Dortmund to Silex, a Swedish subsidiary of China’s Sai Microelectronics.

The failed deals illustrate how, at a time of escalating tensions between the U.S. and China, Europe is also under increasing pressure to act, especially as officials face U.S. calls for key sectors remain outside Chinese control.

— CNN’s Laura He and Michelle Toh contributed to this report