Beijing criticises Netherlands’ move to block ASML exports to China

China on Tuesday urged the Netherlands to “respect market principles” a day after chip machine maker ASML said the Dutch government had revoked an export licence covering the shipment of some of its equipment to China.

The Veldhoven, Netherlands-based company said on Monday that the shipments affected included certain lithography systems.

“A licence for the shipment of NXT:2050i and NXT:2100i lithography systems in 2023 has recently been partially revoked by the Dutch government, impacting a small number of customers in China,” the company said.

ASML dominates the global market for lithography systems, which use lasers to help create chip circuitry.

Its shares dipped in early trade on Tuesday.

Asked about the Dutch government’s move, Chinese foreign ministry spokesman Wang Wenbin on Tuesday urged the Netherlands “to be impartial, respect market principles and the law, take practical actions to protect the common interests of both countries and their companies and maintain the stability of international supply chains”.

ASML did not specify which customers were due to receive the machines, but its customers in China include Semiconductor Manufacturing International Corporation (SMIC) and others, according to company disclosures. SMIC and foundry peers Hua Hong, Nexchip Semiconductor, Wuhan Xinxin Integration Dianlu Manufacture and United Nova Technology did not respond to requests for comment.

In recent years, China has been ASML’s third-largest market after Taiwan and South Korea, but it was the biggest in the third quarter of 2023, with 46% of the company’s sales.

In 2023, the United States announced rules giving Washington the right to restrict the export of ASML’s “Twinscan NXT1930Di” machine if it contains any U.S. parts.

Soon after, several Dutch lawmakers challenged the Netherlands’ Trade Minister over whether the United States had acted correctly in unilaterally imposing rules regulating the export to China of another ASML chipmaking machine.

“In recent discussions with the US government, ASML has obtained further clarification of the scope and impact of the US export control regulations,” the semiconductor equipment maker said in a statement.

“ASML is fully committed to comply with all applicable laws and regulations including export control legislation in the countries in which we operate.”

China has been striving to catch up in lithography as part of a massive government-directed effort to create a self-reliant semiconductor supply chain. Shanghai Micro Electronics Equipment (SMEE) is the country’s only known maker of lithography machines, though it is seen as well behind ASML and Japanese peers.

Last month, one of SMEE’s shareholders, Zhangjiang Group, announced that the company had successfully developed a 28nm lithography machine on its WeChat account in what would mark a breakthrough for the company and China. However it later retracted the post without specifying why.