ASML’s Struggle to Sell Chip Manufacturing Equipment to China
ASML, a Dutch company known for producing advanced chip manufacturing equipment, is currently facing a delicate situation. It is unable to sell its cutting-edge extreme ultraviolet (EUV) lithography machines to its Chinese customers. Additionally, since September 1, it has been unable to deliver its more sophisticated equipment that incorporates a source of deep ultraviolet (UVP) radiation.
The US and Netherlands governments have recently imposed sanctions on China to prevent its acquisition of the necessary infrastructure for manufacturing state-of-the-art integrated circuits. The US argues that these semiconductors play a crucial role in the development of new weapons, and the Biden administration is determined to prevent China from obtaining highly integrated chips.
In this tense geopolitical climate, ASML plays a significant role. On November 16, a new set of sanctions will take effect, further prohibiting the company from selling other UVP lithography equipment to its Chinese clients. This ban poses a significant threat to ASML’s business, considering that China is its third-largest market, surpassed only by Taiwan and South Korea.
Diverging Opinions in the Netherlands
In late March, ASML’s CEO, Peter Wennink, traveled to China to meet with Wang Wentao, the Minister of Commerce, in an attempt to ease tensions. He has also given interviews to prominent media outlets, expressing his disagreement with the prohibitions imposed by the US and Dutch governments. However, he faces significant challenges as the geostrategic interests of major powers take precedence.
The president of ASML’s Chinese subsidiary, Shen Bo, asserts that the demand for mature lithography equipment within China remains strong. Interestingly, it surpasses the demand from other countries. ASML still has pending orders for 2021 and 2022, worth a total of 35 billion euros, with a significant portion coming from China. In the third quarter of 2023, 46% of ASML’s revenue came from this Asian giant.
Meanwhile, the situation in the Netherlands is causing a stir. Several legislators have expressed their disagreement with the US-imposed prohibitions to Liesje Schreinemacher, the Minister of Foreign Trade. However, Dilan Yeşilgöz-Zegerius, the Minister of Justice and Security and a frontrunner in the upcoming general elections on November 22, strongly supports the US sanctions. The election outcome will undoubtedly shape the Netherlands’ stance on chip-related matters in the future.
Cover image: ASML
More information: SCMP
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