The Netherlands has become engaged in political conflicts between the United States and China, with the former seeking to ensure that Beijing does not employ the most modern chip technology.

Key Facts about this update:

• The Netherlands has become engaged in political conflicts between the United States and China, with the former seeking to ensure that Beijing does not employ the most modern chip technology.
• “The present export control system for certain equipment used in the fabrication of semiconductors has to be enlarged, in the interests of national and international security,” stated Dutch Foreign Trade Minister Liesje Schreinemacher.
• China has been attempting to improve its domestic semiconductor sector, but it still lags far behind Taiwan, South Korea, and the United States.

Under political pressure from the United States, the Netherlands government is pushing ahead with export restrictions on “advanced” semiconductor production equipment.

The small European country of the Netherlands is home to ASML, one of the world’s leading makers of semiconductor manufacturing machinery.

The United States is concerned that if ASML transfers its high-tech machinery to China, Chinese chipmakers would begin producing the world’s most powerful semiconductors, which have vast military and advanced artificial intelligence applications.

“Given the technological developments and the geopolitical context, the government has concluded that the existing export control framework for specific equipment used in the manufacture of semiconductors needs to be expanded, in the interests of national and international security,” Foreign Trade Minister Liesje Schreinemacher wrote to parliament on Wednesday.

Although the letter makes no mention of China, it comes in response to White House pressure, which in 2022 enacted export rules that prevent Beijing from acquiring certain semiconductor components. Officials in the United States knew at the time that if other nations did not enact similar restrictions, the export bans would lose effectiveness over time.

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The United States passed extensive new export restrictions on China in October.
Gaining support for the United States has not been as simple as some in Washington had anticipated.

The US has reportedly asked the Netherlands government to halt ASML from selling extreme UV lithography tools to China since 2018. ASML has yet to ship the equipment to China.

After the announcement by the Dutch government, ASML stated in a statement that “it will take time for these measures to be translated into legislation and take effect.”

“Based on today’s announcement, our expectations of the Dutch government’s licencing policy, and the current market situation, we do not expect these measures to have a material effect on our financial outlook,” the company said Wednesday, adding that “the additional export controls do not pertain to all immersion lithography tools, but only to the’most advanced.'”

According to ASML, the Dutch government’s definition of “most advanced” equipment is unclear.

However, it stated that the requirements require it to obtain a licence in order to export its so-called immersion deep ultraviolet (DUV) lithography machine, which is used to create memory chips. These chips are found in a wide range of devices, from smartphones to laptops and servers, and could one day be employed in artificial intelligence applications.

United State imposed semiconductor export controls on China [Updated]

ASML announced last month that a former employee in China had misappropriated valuable technology data.

China has been attempting to improve its domestic semiconductor sector, but it still lags far behind Taiwan, South Korea, and the United States.

According to Reuters, the Chinese Ministry of Foreign Affairs stated on Thursday that it opposes the politicization of economic and trade cooperation and wishes that the Netherlands maintains an objective attitude.

Anna Rosenberg, head of geopolitics at Amundi Asset Management, told CNBC’s Street Signs on Thursday that the latest declaration from the Netherlands is “a major deal” for President Joe Biden.

“The US has been trying to persuade the EU to support its policies towards China for a long time, and it has substantially more leverage with the EU today than it did before to the [Ukraine] war, simply because the EU is now pretty much fully dependent on the US for its security,” she noted.

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