A few weeks ago, ASML still assumed that, thanks to existing exceptions, it could continue to sell and repair lithography systems from the Netherlands to China despite the trade embargo. But a re-run of sanctions could bring additional trade restrictions for semiconductor equipment, pushed by the US.
ASML thought it could keep China as a market
Just under three weeks ago, the opposite was sold as a success story. The Minister responsible for foreign trade and development cooperation, Liesje Schreinemacher, explained that the Netherlands will not simply bow to US restrictions on China. The subject was later even brought up in The Hague, ultimately bringing the EU on board:
It is important that we defend our own interests — our national security, but also our economic interests. If we put that in an EU basket and negotiate with the US and in the end it turns out we give away deep ultraviolet lithography machines to the US, we are worse off.
Liesje Schreinemacher on November 22nd
The Netherlands were well aware of their position. Because without ASML technology, not only would nothing work in China's semiconductor factories, but also with allies in the western world who rely on these chips.
But the US delegation did not want to accept the renewed setback in their efforts in the Netherlands, after all the issue had been brewing behind the scenes for months. So negotiations were renegotiated again, apparently with more success: Already at the beginning of the new year, the regulations for the export of semiconductor technology could be further tightened. And then it would also hit ASML, according to media reports.
At EUV, sanctions have not hurt ASML to date
The exact details are still unclear, but now it could hit the second best systems. So far, ASML has only bowed to the latest technology and no longer supplies EUV exposure machines to China. However, the demand for these expensive machines for the very best production is already higher than anything ASML can still produce in the coming years from the industry giants such as TSMC, Samsung, Intel, Micron, SK Hynix and others, so this cut will not be a financial disadvantage for the Group.
Soon DUV could also be affected
However, ASML has recently done business with China with classic immersion scanners (DUV). They are also used for chips from 14 nm technology, for example – and this is exactly what Chinese semiconductor manufacturers are now increasingly needing. Because that's what they're counting on. Huawei, among others, is planning to return to business with some partners.
For ASML, it's also an economic question. Although so far only around 15 percent of sales have come from China and other semiconductor manufacturers have been hit much harder by the trade restrictions, it is precisely on these points that the Dutch government is likely to demand certain commitments and guarantees. The USA now called the negotiations well advanced with a “very positive result”.
I don' Don't expect any other country to say 'Hey, we're going to come in and let the United States dictate our policies and our plans.' However, these countries, our allies, share our values. They share the same threats that we see.
Alan Estevez, Under Secretary of Commerce for Industry and Security