The Dutch government is said to have started slowing the issuance of licenses for ASML to provide maintenance services to certain lithography machines in China.
Alan Estavez, US undersecretary of commerce for industry and security, will meet with officials and ASML executives in the Netherlands on Monday and raise the servicing contract matter with them, according to a Reuters report.
The report also says the Biden administration may ask ASML to stop selling equipment to a new list of Chinese chip-making factories.
Since last year Washington has been pushing the Dutch government to restrict the maintenance services that are provided by ASML to Chinese customers.
Recent public statements made by Prime Minister Mark Rutte’s administration suggest that the Netherlands will be slow to approve Chinese maintenance requests in the future and quick to deny them, Reuters reported.
Some Chinese commentators said if ASML really stops fixing some of its lithography machines in China, that equipment will become useless once it has any minor problem. They said Chinese chip-makers will have to return the machines to ASML or sell them overseas, resulting in a situation that the Dutch government and ASML do not want to see.
“If ASML cuts its maintenance services in China, will the lithography machines in the country become trash one day? It seems that things have not reached this level yet, because the Netherlands may not satisfy the United States’ request,” a Sichuan-based technology writer using the pen name “Tiaotiao” says in an article.
“A lot of state-owned chipmakers have already said that if they are not allowed to use the lithography equipment they acquired before the US chip export ban took effect, they will send them back to ASML for a refund,” he says.
In an extreme case, if China has to send all the existing 1,500 lithography and testing machines in the country back to the Netherlands, ASML will not be able to pay the costs, he says. This is why the Netherlands is reluctant to meet the United States’ demand, he says.
Some other commentators said if ASML is going to stop fixing some equipment in China, it should only affect a few advanced deep-ultraviolet (DUV) lithography machines, instead of hundreds of low-end ones.
From January 1 this year, the Dutch government stopped granting licenses for the shipment to China of ASML’s most advanced DUV immersion lithography systems (NXT: 2000i, NXT:2050i and NXT:2100i and subsequent systems).
Caijing.com reported last November that there were fewer than five ASML systems in China as advanced as NXT:2000i. The report said the total number of units of the NXT:1980Di, which is not subject to the US export ban, should be below 80 in China.
In an export control conference on March 27, Estevez told Reuters that the US is asking allies to stop domestic companies from servicing certain chip-making tools for Chinese customers.
“We are working with our allies to determine what is important to service and what is not important to service,” he said, hinting that the US will not target the non-core components that Chinese firms can repair themselves.
The Chinese Embassy in Washington complained that the US is overstretching the concept of national security and using pretexts to coerce other countries into joining its technological blockade against China.
China-Russia tie
Beijing’s call for ending the US chip export ban and Washington’s request for cutting off Chinese supply to Russia are now the two most important topics in the meetings between US and Chinese officials.
After meeting with Chinese Vice Premier He Lifeng in Guangzhou on April 5-6 and Premier Li Qiang in Beijing on Sunday, US Treasury Secretary Janet Yellen held a press conference on Monday.
Yellen said she had difficult conversations about national security with her Chinese counterparts.
“President Biden and I are determined to do all that we can to stem the flow of material that is supporting Russia’s defense-industrial base and helping it to wage war against Ukraine,” she said. “We continue to be concerned about the role that any firms, including those in the People’s Republic of China, are playing in Russia’s military procurement.”
She said Chinese companies must not provide material support for Russia’s war, or they will face significant consequences. She also said any banks facilitating significant transactions that channel military or dual-use goods to Russia’s defense industrial base expose themselves to the risk of US sanctions.
In a two-hour phone call on April 2, Chinese President Xi Jinping told US President Joe Biden that China is “not going to sit back and watch” if the US continues to suppress China’s trade and technology development and add more and more Chinese entities to its sanctions lists.
At the same time, Biden raised concerns over China’s support for Russia’s defense industrial base and its impact on European and transatlantic security.
Media reports said that Chinese firms have shipped heavy trucks, dual-use products and electronic parts to Russia for its use in the Ukraine war. They said China may have also provided geospatial intelligence to Moscow.
Rutte’s preference
Until now, Rutte is reported not to have decided on whether his government will put pressure on ASML to cut its maintenance services in China.
In a Beijing meeting on March 27, Xi told Rutte that the Netherlands should provide a fair and transparent business environment for Chinese enterprises.
Rutte said the Dutch government will try to disrupt business as little as possible. But he added that China’s support for Russia is a top national security threat for the Netherlands and also a major impediment to Sino-Dutch relations.
Rutte is a top candidate to become NATO’s next secretary general.
“China regulates the export of dual-use articles in accordance with laws and regulations,” Mao Ning, a spokesperson of the Chinese Foreign Ministry, said in a regular media briefing on Monday. “Relevant countries should not smear or attack the normal relations between China and Russia, and should not harm the legitimate rights and interests of China and Chinese companies.”
Read: Xi tells Biden not to curb China’s tech sector
Follow Jeff Pao on Twitter at @jeffpao3
Eventually, European leaders will discover that destroying their own industries to please the fool across the pond is not a great idea.
Well, if ASML has contractual service agreements or warranties it would either have to repurchase its machines or open itself to litigation. China can in turn state that such a breach of contract necessitates a damages claim of non-adherence to ASML patents.