After years of lobbying from Washington, Japan and the Netherlands agreed on Friday to tighten restrictions on the export of chip manufacturing technology to Chinese companies. The news of the agreement was reported bj Bloombergthe Financial timesand The New York Times.
The controls are designed to limit China’s ability to ramp up its own domestic chip production and come after the Biden administration announced similar restrictions in October 2022. The fear is that easier access to advanced semiconductors will allow China to bolster its military and artificial intelligence capabilities. .
There are no plans for a public announcement of the agreement and it could take “months” for Japan and the Netherlands to “finalize the legal arrangements”, according to Bloomberg.
“This is such a sensitive subject that the Dutch government chooses to communicate carefully, and that means we communicate very little,” Prime Minister Mark Rutte said at a press conference on Friday when asked about the deal.
ASML is the most critical company affected by the Dutch restrictions. It is the only company in the world that produces so-called ultraviolet lithography machines, which are essential for the production of advanced semiconductors. CNBC previously reported that the company was already unable to ship its advanced extreme ultraviolet lithography (EUV) machine to China, but it was still able to ship older deep ultraviolet lithography (DUV) machines.
“If they can’t get those machines, they will develop them themselves”
The new restrictions are expected to prevent the sale of “at least some” of these DUV machines, Bloomberg noted earlier, which will further limit the ability of Chinese companies to produce advanced chips and set up production lines. ASML CEO Peter Wennink previously told CNBC that China will account for about 15 percent of the company’s revenue by 2022.
Wennink has said any restrictions likely won’t stop China from eventually building its own versions of the machines. “If they can’t get those machines, they will develop them themselves,” says Wennink Bloomberg. “It takes time, but eventually they will get there.”
On the Japanese side, the restrictions are expected to affect companies like Nikon and Tokyo Electron.
In addition to halting exports to China, the White House has used its influence to boost domestic chip production. President Joe Biden signed the $280 billion CHIPS and Science Act last August, which includes $52 billion in subsidies for semiconductor manufacturing. Intel, TSMC and Samsung have all announced or are actively building new semiconductor manufacturing facilities in the US.