U.S. wants Dutch to ban ASML from selling chip gear to China

In another sign of the shaky state of global chip production and its impact on U.S. companies, a report has surfaced saying Washington officials are pushing the Netherlands to ban ASML Holding NV from selling its expensive chipmaking equipment to China.

ASML is a leading maker of often massive and expensive equipment for producing chips. Based in the Netherlands, ASML sells its products to chip fabs globally. Some of the products are priced more than $100 million apiece.

The report from Bloomberg cites unnamed sources claiming Washington officials are pushing to expand an existing moratorium on the sale of advanced systems to China in hopes of thwarting China from becoming a world leader in chip production.  If the Netherlands agrees, the report says it would broaden the types of equipment China would have access to, hindering Chinese chipmakers like Semiconductor Manufacturing International and Hua Hong Semiconductor.

But the report also indicates that Americans are not pushing to bar sales of advanced ASML systems. Instead, they want the Dutch to bar ASML from selling older deep ultraviolet lithography systems, know simply as DUV. They are not cutting edge but are still commonly used in making less advanced chips for cars, phones, computers and more.

Analysts Masahiro Wakasugi and Brian Moran have previously speculated that ASML sales could drop up to 10% if it is banned from selling DUV systems to China.

Currently, ASML cannot ship its advanced extreme ultraviolet lithography systems (EUV) to China because it cannot obtain an export license from the Dutch government.

China does not hold a large share in the world’s chip production, although other Asian countries together comprise more than half of the world’s chip production. U.S. companies have lobbied to support the CHIPS for America Act & FABS Act in Congress to boost the amount of domestic chip production in coming years.

 Intel CEO Pat Gelsinger in late June urged Congress to pass the CHIPS Act, saying the company might delay its $20 billion plan to build two chip factories in Ohio. “Please don’t dither in Congress over petty partisanship,” he said at the Aspen Ideas Festival. The company recently pulled the plug on a July 23 groundbreaking for the Ohio site, but it isn’t clear how Intel will respond if Congress delays beyond its summer recess and the issue gets pushed far beyond the fall into another congressional two-year term. 

"The scope and pace of our expansion in Ohio will depend heavily on funding from the CHIPS Act," intel said in a statement about the groundbreaking ceremony delay. "Unfortunately, CHIPS Act funding has moved more slowly than we expected and we still don't know when it will get done.  It is time for Congress to act so we can move forward at the speed and scale we have long envisioned for Ohio and other projects to help restore U.S. semiconductor manufacturing leadership and building a more resilient semiconductor supply chain." 

The CHIPS Act calls for chip industry subsidies of $52 billion and has already passed the Senate.  Intel could benefit by up to $6 billion for its two Ohio plants if the bill passes. However, Gelsinger and others have argued that the U.S. incentives are sure to bring chipmakers from abroad to the U.S. in a domino effect.

Also semiconductor officials in the U.S. see technology trade policy with China and other countries as being interconnected with government subsidies because of a push to make the U.S. more independent in producing chips.  “We are relying increasingly on other countries for things we absolutely need for our own economy,” said U.S. Sen. Rob Portman, R-Ohio, at the Aspen Ideas Festival in late June.

Only 12% of high-end chipmaking is done in the U.S., according to the Semiconductor Industry Association and others.

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