Netherlands to restrict chip exports after US pressure over China threat

The Dutch government has said it will impose export restrictions on the “most advanced” semiconductor technology, giving the first public details of the deal that The Hague and Tokyo struck with the US in January to limit sales to China.

Liesje Schreinemacher, Netherlands’ trade minister, wrote to parliament on Wednesday outlining the new measures, which did not specify exactly which chipmaking machines were affected.

Companies will have to apply for licences to export this technology, her letter said. She emphasised that the “surgical” measures would only include very high-specification systems that can make the smallest, most powerful chips, including some of the deep ultraviolet lithography (DUV) tools made by Dutch company ASML.

“Given the technological developments and geopolitical context, the [Dutch] cabinet has concluded that it is necessary for (inter) national security to expand the existing export control of specific semiconductor production equipment,” she wrote.

The US has convinced its Dutch and Japanese allies, which produce critical chipmaking technology, to cut off China from the most advanced chips that could be used in sophisticated weaponry and machines.

ASML said it would only affect certain models. “Although ASML has not received any additional information about the exact definition of ‘most advanced’, ASML interprets this as ‘critical immersion’,” it said in a statement. That includes its TWINSCAN NXT:2000i and later models which make high-capability chips.

ASML said it did not expect the move to have “material effect on our financial outlook that we have published for 2023 or for our longer-term scenario”. 

ASML’s extreme (EUV) tools, which are even more advanced, have been banned from sale to China since 2019.

The new export controls will require legislation which will take some time.

Schreinemacher said she would also push for global controls in forums such as the Wassenaar Group. This body of developed countries restricts exports that can be used in military systems. But because it includes Russia, and works by consensus, the US has bypassed it recently.

Five months ago, the US introduced sweeping export controls designed to prevent China from obtaining advanced semiconductors or from making progress in its ability to manufacture them domestically. The US in January reached a deal with Japan and the Netherlands on a combined approach, but none of the countries had revealed any of the details that had been agreed until Wednesday.

The largely unilateral move in October imposed restrictions on US chip manufacturing toolmakers, including Applied Materials, Lam Research and KLA, from exporting equipment to China.

US officials at the time said it was an effort to show US allies, particularly the Netherlands and Japan, that Washington was willing to put “skin in the game” by introducing regulations that hurt US toolmakers, in the hope that the two countries would follow suit.

The restrictions on semiconductor-related exports are just one strand in a multi-faceted approach by the US to prevent China from developing technologies that have military use ranging from hypersonic missiles to modelling for nuclear weapons.

The White House yesterday supported legislation introduced in the Senate that would give the administration the power to block Chinese technology in the US, including the popular TikTok app.