ASML agreement between the Netherlands and the US is imminent

A deal to export chip machines from ASML to China is imminent between the US and the Netherlands. Officials from the Netherlands and the United States will discuss an agreement on ASML chip machines in Washington on Friday. It will be about possible new restrictions on the export of equipment for the production of semiconductors, according to Reuters news agency, citing anonymous sources.

As the leading chip machine manufacturer in the Netherlands, ASML is very important for the production of semiconductors. Washington’s preference is for fewer chips and equipment to make semiconductors to go to China. By this, the US wants to prevent China from developing new weapons with new technology. But key allies including the Netherlands and Japan have yet to push for the implementation of these restrictions.

According to Paul Verhagen, an American expert at The Hague Center for Strategic Studies (HCSS), there is a consensus among countries that China is a competitor and should deny the country chip technology. ‘But now the question is: where do you draw the line?’

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ASML has so far only met the Americans without supplying China with its EUV chip machines, state-of-the-art and advanced machines for manufacturing state-of-the-art chips. CEO Peter Wennink recently noted that ASML is not experiencing much of this as it is investing heavily in other areas. But the US also wants old DUV machines to no longer be allowed to go to China. That would have huge consequences for ASML. The company derives a major portion of its revenue from Asian countries.

Compromise

It’s hard for Verhagen to say what a liveable compromise with ASML would be. New factories are currently being built in the US by Taiwan’s TCMS. It seems technically logical to me that the Americans prefer there ASML machines. Verhagen calls this a possible option for a compromise: ‘ASML’s total turnover is decreasing slightly, meaning that a large part of the total revenue goes to research and development. I can imagine that some grant flow could take place to boost research and development spending. But what that looks like, he says, is up to lawyers, judges and policymakers.

So far, the Dutch government has refused to go along with Washington’s plans. But it makes more sense to have a Western technology axis with the Americans than a European technology axis against the Americans. After all, Europe cannot win it.