Dutch trade minister reveals that export restrictions on ASML tools are driven by concerns about China's potential use of the technology for military purposes.

The Dutch trade minister stated that recent decisions to deny export licences to a computer chip equipment company are based on fears that the equipment may be used for Chinese military purposes.

ASML, a leading tech company based in the Netherlands, holds a dominant position in the global market for lithography systems, which are essential for computer chip makers to create intricate circuitry.

Geoffrey van Leeuwen, the Trade Minister, wrote in a Feb. 5 note that China is concentrating on acquiring foreign expertise, specifically Dutch expertise in lithography, to enhance its self-sufficiency in military-technical advancement.

ASML tools are used to create advanced semiconductors that can be used in "high-value weapons systems and weapons of mass destruction," and the Dutch government takes into account the "risk of undesirable end use" when making export licensing decisions.

The Dutch government, under pressure from the United States, implemented a licensing requirement for ASML's mid-range DUV machines last year. Despite this, the company's most advanced tools have never been sold in China.

What was the reason for the government to initially grant, then quickly withdraw, a license for ASML to export several tools to undisclosed customers in China? Despite selling hundreds of millions of euros worth of such tools to Chinese customers in recent years, the company has faced criticism for its business practices in the region.

Since the licensing requirement was introduced in September, Van Leeuwen has received several licenses for the export of advanced semiconductor equipment to China. The company expects around 20 such requests in total this year, but did not specify how many would come from China.

SEMI predicts that 18 Chinese chip plants will be launched this year, surpassing any other region. Many Chinese chip manufacturers are concentrating on producing older chip models and utilizing equipment that does not comply with export control regulations.

Some of Zeedijk's inquiries, including whether the Netherlands had rescinded licenses at the behest of the U.S. government, remained unaddressed.

Zeedijk stated that he was not implying that there were no security concerns or that the decision was incorrect, but rather that he desired more information.

Besides the security risk, there are also economic reasons for the perception.

On New Year's Day, ASML confirmed that the Dutch government had revoked a license, based on a report by Bloomberg News.

Despite the cancellations, the Deep Ultraviolet tools, which cost approximately $60 million each, are still an important part of customer plans.

In 2024, ASML anticipates that sales to China will remain stable, following an exceptional 2023. The company stated that it will not ship any of its NXT:2000i or more advanced tools to China under the Dutch licensing regime. Additionally, ASML will not be able to export its NXT:1970 and NXT:1980i product lines to "a handful" of Chinese plants due to U.S. restrictions.