Netherlands and the US agree on export restriction of ASML chip machines

The Netherlands, the United States and Japan have reached an agreement on restrictions on chip technology exports to China. The countries agreed in Washington to restrict the sale of certain semiconductor manufacturing equipment to the Asian country, Bloomberg news agency reported, based on insiders.

The U.S. government has long wanted to restrict the sale of high-end chip technology to China to prevent the country from using its advanced chips to make increasingly sophisticated weapons. In this regard, President Joe Biden's administration is specifically targeting the Netherlands, because the Dutch town Veldhoven is home to chip maker ASML. The Netherlands-based company has become a world leader in the development of machines for manufacturing chips. Japan also has an important company in the chip production chain with Nikon.

However, it could take months to implement the agreements. And the countries need that time to legalize the agreement, insiders told Bloomberg.

Under pressure from the United States, the Netherlands has blocked the sale of ASML's state-of-the-art machines, known as EUV machines, to China for years. But the U.S. also wants the "older generation", the DUV machines, to stop going to Chinese companies. That’s because there are already plenty of these in China.

The Netherlands has now reportedly agreed to block the sale of some of the latest versions of DUV machines, which use so-called immersion lithography. In that process, a layer of liquid refracts ultraviolet light rays to etch lines on a chip even closer together, making the chips more powerful.

A White House spokesman declined to comment directly on Bloomberg's questions. The Dutch Ministry of Foreign Affairs also did not want to comment on the reports.

Minister Liesje Schreinemacher (Foreign Trade) previously stated the talks were about maintaining Western technological leadership. The negotiating countries also want to avoid too much dependence on China for chips. In addition, the U.S. and the Netherlands want to prevent advanced chips from being used in weapons by countries such as China. But the Netherlands would not simply meet all of the Americans' demands, the minister stressed.

However, The Cabinet is hesitant to announce the details of the agreement with the Americans and Japanese, Prime Minister Mark Rutte said after the Council of Ministers. "The question is whether something will come out of it, whether it will be very visible," he said at his weekly press conference.

ASML is holding off on commenting for now. Earlier this week, Chief Executive Peter Wennink warned that overly strict export restrictions could make chips more expensive and scarce. In addition, he expressed less concern about ASML losing the Chinese market, saying demand for ASML machines in other parts of the world could make up for it.