Netherlands unveils chip tool export curbs in fresh blow to China

News follows similar moves by U.S. and Japan as tech tensions ramp up

Following Japan and the U.S., the Netherlands has announced further export controls on chip tools that will restrain China's semiconductor ambitions. (Source photos by Getty and AP)

CHENG TING-FANG, LAULY LI and RHYANNON IMADEGAWA-BARTLETTJune 30, 2023 20:00 JST

 

TAIPEI/LONDON -- The Netherlands, home to the world's most valuable chip tool maker ASML, on Friday followed Japan and the U.S. in unveiling details of new export control rules that could deal a further blow to China's semiconductor ambitions.

The new regulation, which the Dutch government first announced it would introduce on March 8, would prevent ASML from exporting its advanced chip production tools without licenses.

ASML is the world's biggest provider of machines used in lithography -- a key part of chipmaking in which chip designs are printed on wafers. The machines are crucial for making everything from processors to memory chips.

ASML said two types of its machines fall under the scope of the export control rules and would thus need licenses for export, namely its advanced immersive deep ultraviolet lithography systems (DUV). The machines are part of the TWINSCAN NXT:2000i and later immersion systems, ASML said.

The advanced immersive DUV systems are capable of building chips that are on the 16 nanometer level or more advanced, according to industry executives. The U.S. export control regulations cover a similar level of production capabilities but in regard to different steps in the chipmaking processes.

"Shipments of other ASML systems are not controlled by the Dutch government," ASML said in a statement. The company will continue to comply with applicable export regulations, including Dutch, EU and U.S. regulations, ASML said.

The export controls will take effect on Sept. 1 -- later than Japan's rules, which are set to become effective in late July.

ASML's advanced immersive DUV systems are widely used by global chipmakers, including China's chipmaking champion Semiconductor Manufacturing International Co., memory chipmaker YMTC, and top Chinese DRAM memory chipmaker ChangXin Memory Technologies.

ASML's smaller peers in the lithography machine segment are Nikon and Canon of Japan, and China's homegrown Shanghai Micro Electronics Equipment (Group). The U.S. has no domestic lithography chip gear maker.

The Dutch government's new regulation also involves atomic layer deposition production tools -- known as ALD -- another key process in advanced chipmaking, in which Dutch company ASM International has the highest market share. ASM said it is still looking into the latest export control regulations.

The Dutch government has blocked shipments of ASML's most cutting-edge chip production tool, the extreme ultraviolet system (EUV), to China since 2019 due to U.S. pressure, Nikkei Asia first reported. The immersive DUV systems covered in the latest regulations are less advanced than EUV, but the Dutch government considers immersive DUV to be "dual-use" technology, meaning it can be used for both commercial and military purposes.

"We've taken this step on national security grounds," Liesje Schreinemacher, the Dutch minister for foreign trade and development cooperation, said of the latest move. The government said these specific technologies can be used in certain advanced military applications, and their uncontrolled export poses possible national security risks.

"We confirm that we do not expect these measures to have a material impact on our financial outlook that we published for 2023 or for our longer-term scenarios," ASML said in a press statement.

The U.S. last October launched sweeping export controls to curb all aspects of China's advanced chip ambitions. 

U.S.-based chip equipment makers Applied Materials, Lam Research and KLA are blocked from shipping tools for advanced chipmaking and engaging with clients without a license. The rules also restrict U.S. nationals from working with Chinese chipmakers.

Japan and the Netherlands joined forces in March with the U.S. in announcing export controls regarding production equipment for advanced chipmaking, though neither mentioned China in the details they unveiled.

Japan, the Netherlands and the U.S. are the three most important countries in the supply of chip production tools. Japan's Nikon and ASML are the leading suppliers of lithography machines, and are not easily replaced.

https://asia.nikkei.com/Business/Tech/Semiconductors/Netherlands-unveils-chip-tool-export-curbs-in-fresh-blow-to-China