U.S. Pushed Dutch Maker Of Chip Equipment To Block Chinese Sales Before Deadline

(Bloomberg) -- ASML Holding NV canceled shipments of some of its machines to China at the request of US President Joe Biden’s administration, weeks before export bans on the high-end chipmaking equipment came into effect, people familiar with the matter said.

The Dutch manufacturer had licenses to ship three top-of-the-line deep ultraviolet lithography machines to Chinese firms until January when new Dutch restrictions take full effect. However, US officials reached out to ASML to ask them to immediately halt pre-scheduled shipments of some of the machines to Chinese customers, according to people familiar with the matter, who asked not to be identified because the discussions were confidential.

Biden is cracking down on Beijing’s attempts to create its own advanced semiconductor industry, and the US and its allies are blocking access to imported technology. China’s Huawei Technologies Co. produced a smartphone to rival Apple Inc.’s iPhone last year using top-of-the-line chips made with ASML’s immersion lithography machines, Bloomberg News has reported. 

Read More: China Secretly Transforms Huawei Into Powerful Chip War Weapon

ASML confirmed that the Dutch government partially revoked licenses recently for the shipment of certain lithography systems to China, affecting a small number of customers there. In a statement issued after Bloomberg’s report, the company said it’s held recent discussions with the US about the scope and impact of its export control regulations, without elaborating. 

US National Security Adviser Jake Sullivan called the Dutch government about the matter late last year, the people said, and Dutch officials asked the US to contact ASML directly about shipments of the equipment, called immersion deep ultraviolet lithography machines.

Shipments of a limited number of machines were canceled following the US request, the people said, though it wasn’t immediately clear how many of the devices, which can cost tens of millions of dollars apiece, were involved.

Spokespeople for the White House National Security Council and the Dutch Ministry of Foreign Affairs declined to comment.

US pressure on the Veldhoven-based company started in 2019, when President Donald Trump’s administration pushed the Dutch government to ban sales of ASML’s top-of-the-line extreme ultraviolet lithography machines to China. ASML is the only company that makes this technology, which is used to create semiconductors that power everything from smartphones to sophisticated military gear.

Then, pushed by Biden’s administration, the Dutch government tightened export controls on China further last year, restricting the DUV machines, the second most advanced product line the company offers from Jan. 1. China has been rushing to stockpile them since. 

Between July and November, China’s imports of lithography machines surged more than five times to $3.7 billion, according to Chinese customs data. China accounted for nearly half of ASML’s sales in the third quarter — compared with 24% in the previous quarter and 8% in the three months ending in March — as companies there rushed to import its machines before export controls take effect.

ASML’s outgoing Chief Executive Officer Peter Wennink told investors in October that the new curbs will affect as much as 15% of the firm’s sales in China.

Wennink has publicly opposed the measures and warned they might encourage China to develop competing technology. “The more you put them under pressure, the more likely it is that they will double up their efforts,” he said last year in an interview with Bloomberg News.

(Updates with ASML’s statement in the fourth paragraph)

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