The U.S. administration has successfully persuaded Dutch chip equipment producer ASML Holding NV ASML to halt some of its pre-planned exports to China.
What Happened: The intervention took place weeks prior to the enforcement of more stringent Dutch regulations on high-end chipmaking equipment exports in January, as per a Bloomberg report. The U.S. President Joe Biden‘s administration sought ASML’s cooperation in stopping the shipments of certain machines to Chinese clients as a strategy to impede Beijing’s progression in its own advanced semiconductor industry.
ASML, the sole manufacturer of this specific technology, held licenses to export three top-of-the-line deep ultraviolet (DUV) lithography machines to China until the new regulations were implemented. These machines are crucial for the production of semiconductors, which are essential components in a wide variety of devices, from smartphones to advanced military equipment.
Upon the U.S. request, a number of shipments were called off, but the exact number of the affected units, which are worth tens of millions of dollars each, remains undisclosed.
Peter Wennink, ASML’s CEO, has expressed concern that these measures might incite China to develop a competing technology. He pointed out that these new restrictions could affect up to 15% of ASML’s sales in China.
Why It Matters: The move comes in the backdrop of a significant year for Huawei Technologies Co., which saw its revenue skyrocket by 9% in 2023 in spite of US sanctions. The Chinese tech giant’s revenue was boosted by a thriving smartphone sector and robust 5G equipment sales.
Meanwhile, NVIDIA Corp NVDA, the world’s leading chipmaker, was forced to market a stripped-down version of its premier gaming chip in China due to US export controls.
The US administration’s latest action against ASML seems to be a part of its strategy to limit China’s growing technological prowess. However, this move could also inadvertently spur China to develop its own competing technologies.