According to the Wall Street Journal, the U.S. government is working to ensure that Dutch ASML EUV lithography machines do not end up in China.
Beijing has been pressuring the Dutch government to allow Chinese companies to buy an extreme ultraviolet lithography system made by ASML Holding N.V (ASML) that is critical for making advanced microprocessors.
Companies such as Intel, Samsung Electronics, and TSMC use the unique, 180-ton machine for everything from cutting-edge smartphones and 5G cellular equipment to computers used for artificial intelligence.
The Wall Street Journal reports that China wants to provide the $150 million machine to local chipmakers like Huawei, thus reducing its reliance on foreign suppliers. However, ASML hasn't shipped the machine. The reason is that the Netherlands is withholding an export license to China under pressure from the United States.
The report quoted U.S. officials as saying the Biden administration had asked the government to restrict sales of the machine for national security reasons. They first determined the machine's strategic value and contacted Dutch officials.
Peter Wennink, chief executive of ASML, has said the export restrictions could backfire. "Export controls are an effective tool when it comes to targeted, specific national security issues," Wennink said in a statement. However, he said the widespread use of export controls in the short to medium term "could reduce global chip manufacturing capacity and exacerbate supply chain issues."
The Wall Street Journal reported that the U.S. lobbying has strained Sino-Dutch relations. According to people familiar with the matter, the report cited Chinese officials as frequently asking Dutch officials why they would not grant ASML a license to ship machines to China.
The report also mentions that less than a month after Biden's inauguration, White House national security adviser Jack Sullivan had a conversation with his Dutch counterpart about what the White House described as "close cooperation" between the two countries on advanced technology. U.S. officials have said that continuing to limit ASML's business with China is Sullivan's top priority.
The report said the U.S. pressure began in the Trump administration. When then-Deputy National Security Adviser Charles Kupperman invited Dutch diplomats to the White House in 2019, he said, "Good allies do not sell this type of equipment to China." Kupperman said ASML's machines would not work without the U.S. components, which the White House has the authority to restrict from exporting to the Netherlands.
But the report states that people familiar with the matter said it is not a primary issue for President Biden at this time. The sources said the U.S. is trying to unite a coalition of Western countries in a joint effort on export controls. The move could also impact ASML, further disrupting the already strained semiconductor supply chain worldwide.
ASML has a unique photolithography technology, which is key to chip manufacturing. The more transistors on a piece of silicon, the more powerful the chip will be. And one of the best ways to pack more transistors into silicon is to draw thinner lines. That's what ASML specializes in: Its photolithography machine can print the world's thinnest lines. It uses lasers and mirrors to plot lines 5 nanometers wide, and within a few years, it expects to shrink to less than a nanometer wide. By comparison, a strand of human hair is 75,000 nanometers wide.
Without ASML's cutting-edge machine, Chinese chipmakers won't be able to make leading-edge chips until domestic tools catch up, the Wall Street Journal quoted analysts as saying. It is estimated that it will take at least ten years for China to match ASML's technology.
Source: China Wants a Chip Machine From the Dutch. The U.S. Said No.
