Netherlands tightens export restrictions on microchip machines, mainly targeting ASML

The Dutch government is tightening its export restrictions on microchip-making machines, specifically deep ultraviolet (DUV) lithographic machines. A licensing requirement will apply to the export of older types of DUV machinery beginning on Saturday, a decision which primarily impacts Dutch business ASML. Foreign Trade Minister Reinett Klever cited national security concerns when announcing the measure on Friday.

According to ASML, the licensing requirement update is a technical change that mainly means that the company will apply for export licenses from the government of the Netherlands, not the United States, for two older types of DUV immersion lithography systems (1970i and 1980i). The Dutch government already implemented a licensing requirement for the newer generations of DUV machines (2000i and later) in September last year.

DUV lithography machines are the second-most advanced microchip-making machines, after extreme ultraviolet (EUV) lithography machines. Dutch company ASML is the world’s only manufacturer of EUV lithography machines and is also a global leader in the production, refurbishment, and repair of DUV lithography machines. DUV machines can still be used to make highly sophisticated microchips, and some of China’s leading tech companies, like Huawei, are actively pushing the limits of the older technology.

According to the ministry, DUV lithographic equipment can be used in combination with technologies from other countries to produce advanced semiconductors, which, in turn, play an important role in advanced military applications. Uncontrolled export, therefore, “has consequences for Dutch security interests,” the ministry said.

Only ASML and the Japanese firm Nikon still produce deep ultraviolet machinery and replacement parts. Another Japanese business, Canon, stopped producing DUV machines, but still manufactures spare parts. Canon is also expected to compete with ASML with its own range of efficient, cost-effective EUV machinery that could hit the market in 2025.

The United States has been pressuring the Netherlands and Japan to take more measures to keep advanced chip-making technology out of suspicious hands, mainly Chinese businesses. Last week, Bloomberg reported that the Dutch government would not likely enew ASML’s license for exporting DUV machine maintenance and reserve parts to China. Earlier this week, ASML CEO Christophe Fouquet criticized the US-led campaign to restrict its exports to China, saying it has become “economically motivated” over time. “I think it is becoming increasingly difficult to claim that this is about national security,” Fouquet said.

“I am making this decision for our security. We see that technological developments are creating more safety risks when exporting this specific production equipment. Especially in the current geopolitical climate,” Klever said. “The Netherlands has a unique and leading position. That comes with a responsibility that we must take seriously.”

“The extension of the licensing requirement concerns specific equipment that is only made by a very limited number of companies in the Netherlands. The licensing requirement concerns a small part of the total product portfolio of the companies that fall under this scheme,” Klever wrote in the Staatscourant, the Dutch government’s gazette.

From Saturday, September 7, any company that wants to export this advanced production equipment to countries outside the European Union will first have to apply for an export license. The government will determine, per application, whether the license is granted. “Therefore, there is not an export ban,” the ministry said.

The Minister said that with this measure, the Dutch chip machine industry will know where it stands. “We have proceeded carefully and purposefully to disrupt global trade flows and value chains as little as possible.”