The Dutch firm has a monopoly on making the lithography machines that help the world’s largest semiconductor foundries produce advanced chips
US Pressure Mounts for Export Controls on Semiconductor Technology
ASML Holding CEO Christophe Fouquet anticipates increasing pressure from the United States on its allies, including the Netherlands, to further restrict semiconductor technology sales to China. Speaking at the Bloomberg Tech Summit in London, Fouquet highlighted that the geopolitical divide has intensified, with Washington aiming to limit China’s advancement in semiconductor production through stringent export controls, especially on advanced AI chips and chip-making technology. Although the Dutch government is navigating a delicate balance between its economic ties with China and its alliance with the US, ASML’s business with China predominantly involves mainstream semiconductor technology—products Fouquet noted as less critical to national security concerns.
ASML’s Role in China’s Chip-Making and Export Licenses
ASML has a virtual monopoly on cutting-edge lithography equipment crucial for producing advanced chips, such as those powering AI applications and smartphones. Although ASML has never sold its top-tier extreme ultraviolet (EUV) machines to China, the country has relied on ASML’s slightly older immersion deep ultraviolet (DUV) systems. Recent Dutch regulations now require ASML to apply for export licenses to continue selling even these DUV machines. While China has been ASML’s largest market in recent quarters, accounting for nearly half of its sales, the company expects Chinese demand to return to around 20% of its total revenue by next year—a more sustainable level following a backlog from the pandemic.
My Take
As global power shifts reshape the semiconductor sector, stakeholders must balance economic interdependence with national security. This balance will require thoughtful export controls and innovation within domestic markets to reduce reliance on foreign technology sources. This scenario underscores the importance of diversified supply chains to mitigate risks associated with geopolitical tensions. For ASML and similar companies, managing these pressures will likely mean exploring new markets and technological advancements to maintain a competitive edge while adhering to evolving export restrictions.
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Credit: Bloomberg, South China Morning Post