US is Harder to Impose Export Curbs on China in the Name of National Securit...

TMTPost -- It is harder for the United States to lead a campaign of export curbs on China in the name of national security, said Christophe Fouquet, CEO of ASML Holding NV, the world’s top lithography machine maker for advanced chip manufacturing.

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Fouquet said at a Citi conference in New York that he expected push-back against U.S.-led restrictions to grow, while China is making slow progress in chipmaking due to the existing curbs.

"I think to make the case that this is about national security is getting harder and harder," Fouquet said. "Most probably there will be more pressure for restrictions, but I also think there will be more push-back and I think we have to hope we reach a certain equilibrium because as a business what we all want is a bit of clarity, a bit of stability."

Fouquet made the remarks days after the Dutch government was said to plans to curb ASML's ability to repair and maintain the semiconductor-making machinery it supplies to chip makers in China. Dutch officials are unlikely to renew certain licenses that ASML needs to service and provide spare parts in China when they expire at the end of this year, and their decision is expected to cover the company’s most advanced deep ultraviolet lithography (DUV) machines, or according to the Bloomberg sources. The news of further curbs suggest ASML’s Chinese customers could lose at least some of post-sales supports as soon as next year. The Netherlands-based ompany sells its equipment with maintenance agreements that are essential to keep them running.

Netherlands will take the economic interests of ASML into account when deciding on further tightening the rules governing the export of ASML computer chip making equipment to China, Dutch Prime Minister Dick Schoof said last Friday. "We are in talks, good talks and we are also watching out very specifically for the economic interests of ASML, those need to be weighed against other risks and the economic interests are extremely important," Schoof responded to questions about possible further restrictions on ASML exports to China.

"ASML is for the Netherlands an extremely important, innovative industry that should not suffer under any circumstances, because that would damage ASML's global position," Schoof said.

Founded in 1984, ASML provides comprehensive lithography solutions encompassing hardware, software, and services, assisting chip manufacturers in large-scale image etching on silicon wafers. Meanwhile, ASML is currently the only manufacturer of EUV lithography systems in the world. As a key for the future lithography technology and advanced process, EUV lithography is the most expensive step in making the advanced microchips that power data centers, cars and iPhones.

ASML has been restricted from selling its high-end machines in China since 2019 due to U.S.-led export controls. The company confirmed at the beginning of this year that a license for the shipment of NXT:2050i and NXT: 2100i has been revoked by the Dutch government, but added the revocation just affected a small number of customers in China.

Earlier July, a Bloomberg report said the Biden administration has told allies that it’s considering using the most severe trade restrictions available if companies such as ASML continue giving the country access to advanced semiconductor technology. The U.S. was reported to consider whether to impose the foreign direct product rule, or FDPR, which allows the country to impose controls on foreign-made products that use even the tiniest amount of American technology. The U.S. government is presenting the idea to officials in Tokyo and the Hague as an increasingly likely outcome if the countries don’t tighten their own China measures, according to the report.

Reuters reported late July that the U.S. government plans to roll out a new rule this month to expand exports of equipment from some foreign countries to Chinese chipmakers. The new rule will impact exports to China from countries and regions including Taiwan, Israel, Singapore and Malaysia, but shipments from allies that export key chipmaking equipments, including Japan, the Netherlands and South Korea, will be excluded, according to Reuters’ sources.

ASML CEO Fouquet said that the world needs the "legacy chips" being produced by China and that they will help fill the supply-demand gap in Europe, according to a statement to the German business outlet Handelsblatt in August. Fouquet believes that if the global powers are to implement further restrictions on China, they must devise a semiconductor production plan in their nations since, without this, it is deemed difficult for the supply chain to fulfill industry demand. “There is no point in stopping someone from producing something you need. With Russian gas, people have understood that alternatives must be found, but not yet with chips," said Fouquet.