The United States and the Netherlands have reached an agreement to impose export restrictions on chip technology to China, Bloomberg reported. Dutch and US officials are in Washington today to discuss the deal. We still don’t know what that deal will look like. Everyone in The Hague is keeping quiet about it,’ says FD reporter Baz Noob.
According to Bloomberg, Japan, the Netherlands and the United States have agreed to limit exports of semiconductor manufacturing equipment to China. Negotiations in this regard will be completed today. The Netherlands will restrict sales of machinery used to make advanced chips to China, while Japan will impose similar restrictions on Nikon Corp.
Washington wants less chips and equipment to make semiconductors going to China. For example, the US wants to prevent China from developing ever smarter weapons with advanced technology. But it has yet to introduce such restrictions to its key allies, notably the Netherlands and Japan. The Netherlands is home to ASML, a leading chip machine manufacturer, important in the manufacture of semiconductors.
EUV and DUV machines
Until now, ASML has only been fulfilling American preferences without supplying China with its EUV chip machines, the latest and most advanced machines for making ultra-modern chips. CEO Peter Wennink recently pointed out that ASML hasn’t experienced big results with big investments elsewhere.
Also Read | ASML agreement between the Netherlands and the US is imminent
But the US also wants to prevent old DUV machines from going to China. This will have major ramifications for ASML, which still generates a large portion of its revenue from the Asian country. So far, the Dutch government has been reluctant to go along with Washington’s plans, but a compromise is being made – perhaps in Washington today. ‘DUV chips are used in home appliances, but with the right technology they can also be used in weapons systems,’ explains Noob. ‘The Americans are putting pressure not only on the Netherlands, but also on Japan, Taiwan and South Korea to stop exporting those chip machines to China. Fearing that the Chinese will also use those chips in their weapons systems.’
According to Knoop, DUV machines currently do not require an export license. ‘In the past, the technology may have been on the Wassenaar List, an international treaty between 42 countries, in which agreements were made to restrict the export of goods and technologies for military and commercial use. “Since Russia and Belarus are members of that agreement, if the agreement has not been concluded, the DUV could be in it,” says Noob.
He continues: ‘For the Netherlands, the question is, have we not gone a step further? What does this mean for the supply chain? China produces many of the chips used in our home appliances, but we also depend on China for raw materials for our wind turbines and rare earth metals such as batteries for electric cars. What will China do if more export restrictions are imposed? And then they draw their evidence card? All these are interests that play a role in the current negotiations.’
Also Read | Despite the restrictions towards China, ASML expects a record year
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