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ASML says 'rules are being finalized' on chip export controls to China

Sep 10, 2023

ASML, a Dutch maker of semiconductor equipment, says "rules are being finalized" on export controls, amid reports that the Netherlands and Japan have joined the United States in restricting sales of some computer chip machinery to China.

"It is our understanding that steps have been made towards an agreement between governments which, to our understanding, will be focused on advanced chip manufacturing technology, including but not limited to advanced lithography tools," the company told CNN late Friday in response to questions about export controls to China.

"Before it will come into effect it has to be detailed out and implemented into legislation which will take time."

ASML is known for its prowess in making lithography machines, which uses light to print patterns on silicon. The firm says that step is crucial in the mass production of microchips.

The company's response came as Bloomberg, the Wall Street Journal and the Financial Times reported over the weekend that the United States had persuaded the Netherlands and Japan to agree to curb exports of certain chipmaking equipment to China, citing anonymous sources.

A deal was reached at the White House on Friday, though it was not officially announced, partly due to "concerns by Japan and Netherlands about potential retaliation by China," according to the Journal, which cited a person familiar with the matter.

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Bloomberg reported that the deal "would extend some export controls the US adopted in October" to Dutch and Japanese companies, including ASML (ASML), Nikon (NINOY) and Tokyo Electron.

The Biden administration had banned Chinese companies from buying advanced chips and chipmaking equipment without a license. It also restricted the ability of American citizens to provide support for the development or production of chips at certain manufacturing facilities in China.

The White House did not immediately respond to a request for comment outside US business hours. Nikon and Tokyo Electron declined to comment.

On Saturday, Japan's Economy and Trade Minister Yasutoshi Nishimura told reporters that he would "refrain from commenting on diplomatic negotiations."

Asked about the three-way talks in Washington, Nishimura said "we would like to respond appropriately while taking into consideration the regulatory trends in each country."

Because of its dominance in the market, ASML has been cited by experts as a bellwether of the growing rift between China and the West over access to advanced technology.

In recent months, the Dutch government has faced pressure from the United States to limit chip-related exports to China, particularly from ASML, according to Xiaomeng Lu, director of geo-technology at the Eurasia Group.

In its Friday statement, the company said that based on what has been said by government officials and current market conditions, it did not expect any material impact on its financial projections for 2023.

But ASML said its knowledge of the new rules was still limited, making it difficult to map out "the medium and long-term financial, organizational and global industry-wide impact of new export control rules."

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"While these rules are being finalized, ASML will continue to engage with the authorities to inform them about the potential impact of any proposed rule in order to assess the impact on the global semiconductor supply chain," it said.

It noted that it mainly sold "mature" products to China, and its most advanced lithography technology had already been restricted since 2019.

Those machines had been prohibited from being sent to China because the Dutch government had "refused to grant it a license under US pressure," Lu previously told CNN.

— CNN's Emiko Jozuka contributed to this report.