Netherlands to restrict export of ‘advanced’ chip-making tech to China

Following similar moves by the US, the Netherlands government is moving forward with plans for new restrictions on exports of advanced chip-making technology to China, which are expected to affect the manufacture of advanced logic and DRAM modules.

The Netherlands export restrictions have been in the works for some time, and on Wednesday the Dutch government posted more information on its plans.

 “These new export controls focus on advanced chip manufacturing technology, including the most advanced deposition and immersion lithography tools,” according to an announcement by Netherlands-based ASML, a leading global manufacturer of semiconductor manufacturing equipment.

As US-China geopolitical tensions escalate, the administration of US President Joe Biden has implemented controls on exports of semiconductor technology to its chief superpower rival, in order to blunt the development of advanced tech that could be used for military modernization and human rights abuses. The US also has put pressure on its global allies to do the same.

Export controls threaten global supply chain

The US-China chip war puts global enterprises in the crosshairs, since disruption of the  supply chain for semiconductors can affect a wide range of technology and consumer goods.

In a statement issued on Wednesday, Netherlands’ Trade Minister Liesje Schreinemacher said that new Dutch export restrictions would impact, “very specific technologies in the semiconductor production cycle,” according to a BBC report.

“The Netherlands considers it necessary on national and international security grounds that this technology is brought under control as soon as possible,” Schreinemacher said, according to the report.

Without naming China or ASML, Schreinemacher mentioned that the Dutch government had considered “the technological developments and geopolitical context,” when developing the restrictions, the report added.

ASML said that the export controls will require the company to apply for export licenses for advanced immersion DUV (Deep Ultraviolet) used to manufacture semiconductors.

“In this regard, it is important to consider that the additional export controls do not pertain to all immersion lithography tools but only to what is called ‘most advanced’. Although ASML has not received any additional information about the exact definition of ‘most advanced’, ASML interprets this as ‘critical immersion’ which ASML defined in our Capital Markets Day as the Twinscan NXT:2000i and subsequent immersion systems,” the ASML statement said.

Twinscan NXT:2000i delivers superior features for high-volume manufacturing of advanced logic modules and DRAM, according to ASML. Advanced logic modules are particularly for servers, since they are designed to handle large volumes of data and perform complex operations.

The company said it “does not expect these measures to have a material effect on our financial outlook that we have published for 2023 or for our longer-term scenarios as announced during our Investor Day in November last year.”

US pressures allies on chip export restrictions

As part of a broader trade war with China, the US had some months ago convinced the Netherlands and Japan join it in banning transfers of some DUV equipment. While ASML is a major manufacturer of the technology, Japan is home to DUV equipment makers such as Canon, Nikon, and Tokyo Electron — making the two countries key to the US plan to nibble away at China’s dominance in the broader microchip market.

Meanwhile, in an attempt to reduce its reliance on other countries, China is making investments to boost its domestic semiconductor industry.

China will invest an additional $1.9 billion in Yangtze Memory Technologies (YMTC), the country’s biggest memory chip producer, to spur the growth of its domestic semiconductor industry, which is currently being cramped by US sanctions.

The magnitude of the investment shows China’s effort to boost its struggling home-grown chip industry, which is currently facing constraints on its manufacturing capabilities from the US and other countries.