China has condemned what it describes as U.S. attempts to maintain global influence following the Netherlands' move to update its export licensing requirements for certain lithography machines, further restricting China's access to older chipmaking processes.
Dutch company ASML Holding NV, a leader in lithography technology, must now apply for export licenses from the Dutch government for deep ultraviolet immersion lithography systems. Such tools are vital for producing less advanced semiconductors than those made with extreme ultraviolet (EUV) lithography, which is used for more cutting-edge processes and which China also cannot effectively import.
"The Dutch side has further expanded the scope of control on lithography machines, which China is not satisfied with," a spokesperson for China's Commerce Ministry said on Sunday.
Newsweek has contacted the Chinese Foreign Ministry via written request for comment.
The new regulation, effective September 7, applies to immersion deep ultraviolet (DUV) semiconductor machinery, essential for producing smaller, more powerful semiconductor circuits. It specifically concerns ASML's TWINSCAN NXT:1980i and NXT:1970i systems.
ASML is at the center of the U.S.-China tech rivalry as the only firm currently capable of manufacturing the extreme ultraviolet (EUV) lithography machines that produce advanced microchips essential for a wide range of technologies, from electric cars to guided missiles.
The Chinese Commerce Ministry criticized Washington for "coercing" allied nations like the Netherlands into tightening export controls, framing it as a U.S. strategy "to maintain its global hegemony." The spokesperson added that these measures pose a serious threat to the stability of global semiconductor supply chains and harm businesses' "legitimate rights and interests."
ASML downplayed the regulatory impact, calling it a "technical change" in a statement on Thursday. "This announcement is not expected to have any impact on our financial outlook for 2024," the company added.
Reached for comment, the Dutch Foreign Ministry referred Newsweek to the statement announcing the expanded controls.
"I've made this decision for reasons of security. We see that technological advances have given rise to increased security risks associated with the export of this specific manufacturing equipment, especially in the current geopolitical context, the Dutch trade minister said. She said the Netherlands' "unique, leading position in this area" comes with "certain responsibilities, which we take seriously."
The U.S. has increasingly been focused on curbing China's rapid advances in strategic technologies like supercomputing and artificial intelligence, which pose national security concerns. Washington has pressured key partners in the semiconductor supply chain, including the Netherlands and Taiwan, to limit China's access to advanced chipmaking equipment.
"The United States and other countries, including the Netherlands, are in discussions to protect cutting-edge, dual-use technology from diversion for military use. The Netherlands government makes its own export control decisions based on its national security risk assessment," a U.S. State Department spokesperson told Newsweek.
Many of the components in ASML's lithography systems rely on U.S. technology, requiring companies like ASML to seek U.S. export licenses for products that include significant American content. Under U.S. regulations, even foreign companies using U.S. technology in their equipment must comply with export control requirements when dealing with restricted nations.
With the Netherlands assuming responsibility for its own controls, ASML must apply directly to its home government for permission to ship DUV machines to China.
China accounted for 29 percent of ASML's total revenue in 2023, up from 14 percent in 2022, according to company reports.
ASML previously canceled shipments of certain proprietary machines to China earlier this year alignment with U.S. export controls.
China has accused the U.S. of a technological blockade and threatened to restrict American access to rare earth elements and other critical minerals needed for emerging technologies.
Semiconductor professional and SemiWiki.com founder Daniel Nenni pointed out that despite the trade restrictions, China has been rapidly closing the chip gap in recent years.
"China is very resourceful and capable in a brute force manner. They are in production at 7 nanometers and developing 5nm chips, and I do not see anything stopping them from continuing," Nenni said. "China is outspending the rest of the world on semiconductor capital equipment on the open market, and there is also an active grey market for parts and services."
The 7 nm and 5 nm semiconductor manufacturing processes indicate transistor size, with smaller numbers being more advanced chips.
Industry leaders like Taiwan's TSMC and South Korea's Samsung are already putting out 3-nm nodes, while China is primarily working with chips 14 nm or larger and producing limited quantities using the 7nm process.
Update 9/13/24, 2:47 p.m. ET: This article has been updated with extra context and comments from Daniel Nenni and the State Department.
About the writer
Micah McCartney is a reporter for Newsweek based in Taipei, Taiwan. He covers U.S.-China relations, East Asian and Southeast Asian ... Read more