Export curbs on China are more about US economics than security

Reports that the Netherlands plans to implement (under US pressure) new export restrictions of ASML equipment to China are increasing.

In the name of national security, the US chip war against China has been escalating since 2022, when Washington took the first decisive steps to curb the Asian country’s semiconductor ambitions.

Part of the US strategy has been applying pressure to ally countries such as the Netherlands — home to ASML. The Dutch tech company is the sole manufacturer of the world’s most advanced chipmaking machines.

The Netherlands has curbed exports of ASML’s most sophisticated machines for high-end chips since 2019. In alignment with Washington, it has also implemented several other export restrictions.

Since April, the Dutch government has been resisting a new set of US-requested curbs, seeking to block the servicing and maintenance of ASML’s already sold equipment to Chinese customers.

Last Friday, Dutch Prime Minister Dick Schoof said that the government would take into account ASML’s “economic interests” before making a decision.

“Most probably there will be more pressure for restrictions, but I also think there will be more push-back,” said Christophe Fouquet, ASML’s CEO, speaking at a Citi conference in New York yesterday.

“To make the case that this is about national security is getting harder and harder,” Fouquet added. Instead, the US’ continuous push for further restrictions has become more “economically motivated” over time.

Retaliation

For its part, China is threatening to cut ties with ASML altogether if tensions continue, Chinese state-run newspaper Global Times reported on Sunday. The paper is considered a mouthpiece for the Chinese government.

“If the Netherlands follows this strategy, it will exacerbate the widening rift in China-US and China-Netherlands relations,” Global Times said in an editorial.

“If ASML loses the Chinese market, it will suffer significant economic losses.” This could lead to a reduction of the company’s global market share and “a shift in the balance of power in the semiconductor industry,” the article continued.

The blow could be heavy indeed. So far this year, China has been ASML’s biggest market.

Beijing has already taken retaliatory measures against US-based chipmakers, phasing out the use of Intel and AMD chips in government computers and servers.