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Under the U.S. export control of semiconductor technology to China, the Netherlands is facing a choice

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For some time, the Netherlands has been in a dilemma under the pressure from the United States: on the one hand, the US allies are trying their best to win the Netherlands to join their team in terms of further export controls on China’s advanced chip technology; Considerable market in China.

A small European country is suddenly placed in such a pivotal situation, because ASML, a semiconductor production equipment manufacturer here, has an absolute global monopoly on the most advanced extreme ultraviolet lithography machine (EUV) . In terms of market value, ASML is the largest technology company in the Netherlands and Europe. In the list of global technology companies, ASML ranks 12th and is the only European company among the top 20.

It is not the first time the Netherlands has faced pressure from the United States. According to Reuters, since 2018, the Trump administration has intensively lobbied the Dutch government on the grounds of national security interests. In 2019, the Dutch government banned ASML from exporting the most advanced EUV machines to China. Now the Biden administration wants to go a step further by extending export controls to more mature technologies. In October 2022, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce issued new stricter regulations on advanced computing and semiconductor manufacturing export controls to China, claiming that China uses such technologies for military and surveillance purposes. According to a Bloomberg report in July last year, the United States has been trying to persuade the Netherlands not to export ASML’s second-advanced equipment, the immersion lithography machine, to China. In the view of the United States, since the United States, Japan and the Netherlands dominate the global semiconductor production equipment market, only with ASML’s blessing can lobbying Japan be easily solved. Only by uniting them can the United States curb China’s advanced developments in semiconductors.

Regarding the trade-offs of the Netherlands and the motives of the United States, researchers at the Center for a New American Security, a think tank, published a blog post titled “The Right Time to Control Chip Exports” last month. According to the blog post, at present, the negotiations between the United States, the Netherlands and Japan have not yet reached an agreement. The Netherlands obviously does not quite agree with the United States setting the threshold for 16nm or 14nm and below process logic chips. From the perspective of the Dutch side, the Dutch government has taken action to prohibit ASML from exporting the EUV equipment to China. EUV has always been subject to the multilateral export control mechanism that controls traditional weapons and military-commercial dual-use goods. It is difficult to understand the further export control of the United States. . Bowen believes that the difference between the Netherlands and the United States lies in the fact that the two sides have different understandings of threats on the one hand, and on the other hand, the Netherlands has its own economic considerations. The Dutch government is indeed willing and able to stop exporting products for military purposes, and the current Chinese threat defined by the Biden administration on semiconductor production equipment is too indirect and unrealistic for the Netherlands. As for economic factors, ASML can use this part of the sales revenue obtained in China to invest in research and development, so as to maintain its dominant position when competing with American competitors.

Indeed, the Netherlands has its own interests, which do not necessarily coincide with those of the United States, and this is especially true for companies. ASML is in the position of an enterprise and needs to weigh whether it will become “cannon fodder”. On the one hand, this position involves economic interests, and on the other hand, it also has a relationship with competitors, especially with the three semiconductor companies in the United States. Competitive relationship among production equipment manufacturers. According to Reuters, by the end of October 2022, ASML estimates that ASML’s sales in China will drop by 40% due to US export controls. According to ASML’s 2021 financial report, mainland China is the third largest sales market after Taiwan and South Korea, accounting for about 15% of total sales revenue. The net sales in China in 2021 will be nearly twice that of 2019. The Chinese market means a broad prospect for ASML.

Last month, ASML CEO Peter Wennink said in an interview with a Dutch newspaper that he mentioned two “contradictory” points: Since 2019, the Dutch government has banned ASML from exporting the most advanced lithography technology to China. 15% of ASML’s sales market is in China, while US semiconductor production equipment products are sold in China. There are 25%, or even more than 30%, which is contradictory. He also pointed out that chips used in weapons have a history of 10 to 15 years, and China has mastered such technology.

According to CNBC reports, in October 2022, after the announcement of new export control regulations for advanced computing and semiconductor manufacturing in the United States to China, ASML asked its American employees to stop providing services to Chinese customers. The new export control rules restrict U.S. companies from exporting key chip-making equipment to China, and also limit the ability of U.S. personnel to support the development or production of integrated circuits at certain semiconductor manufacturing “facilities” located in China without a license.

Compared with American companies, related companies in the Netherlands or Japan are naturally less affected by the new regulations. On the one hand, U.S. companies call for fairness. On the other hand, the U.S. does not dominate the global semiconductor production equipment market alone. The U.S. government certainly realizes that its export control measures will be greatly reduced in effectiveness if it cannot obtain the support and cooperation of its allies. .

So what is the position and interests of the Dutch government? The Dutch Minister of Economic Affairs also said in an interview with the Dutch media last month that the Netherlands hopes to continue economic exchanges with China and should not blindly follow the United States. “We must make our own assessment when making such an important decision.” On January 16, the day before the Dutch Prime Minister’s visit to the United States, the Dutch Minister of Trade stated in the media that the Netherlands will not just accept the new US regulations on semiconductor manufacturing export controls to China, but will cooperate with countries including Germany and Japan. Allies in Europe and Asia hold discussions and say the new U.S. rules have changed the playing field.

However, in the field of semiconductor technology, “national security interests” are increasingly being used as a reason for EU governments to scrutinize and block foreign acquisitions. At the end of last year, the German government blocked two acquisitions of German semiconductor companies by Chinese companies on the grounds of preventing the loss of key technologies. Such incidents are not isolated cases in Europe. However, in the field of semiconductors, the United States is not only an ally, but also a competitor, and the EU as a whole still has no clear line toward China and the United States. The United States defines China as a threat in some areas, but it does not mean that the EU will definitely accept it and follow it. The EU, which has 27 member states, is actually very difficult to reach an agreement on the China issue.

Of course, the United States will not give up its efforts. The blog post “The Right Timing for Chip Export Control” mentioned in the policy recommendations that what the United States can do is to convince the Dutch government from the perspective of national security, and let the other side believe that only by this way can China reduce its share in artificial intelligence and supercomputing. national security risks. The blog post also pointed out that improving the transparency of US intelligence assessments can promote the acceptance of allies. At the same time, the United States should assure ASML that its revenue loss in China can be made up in the new chip manufacturing plant in the United States. Bowen expressed optimism that the United States and Holland could reach an agreement this month. No matter what decision the Dutch government makes, it will have a considerable impact.

On January 17, US President Biden and Dutch Prime Minister Rutte met. After the meeting, the White House press secretary admitted to the reporters that the two sides had indeed discussed the issue of restrictions on the export of semiconductor manufacturing technology. There seems to be no sign that Biden has made substantial progress on this issue this time.

(This article only represents the author’s own point of view, editor in charge: Yan Man man.yan@ftchinese.com)

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