ASML chief calls for ‘sensible’ chip export controls from Dutch government

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ASML chief calls for ‘sensible’ chip export controls from Dutch government

25 January 2023 Technology & Digitalization 0

The head of ASML, Europe’s largest chip company, has called on the Dutch government to opt for “sensible” controls on exports to China that do not have a “major impact” on key global industries, as lengthy negotiations between Washington and The Hague are poised to close.

Japan and the Netherlands, two of the most important countries in the global chip supply chain, are expected to tighten restrictions on exports of chips and chipmaking tools in the coming weeks after years of lobbying from Washington.

Last year, the US introduced increasingly tough restrictions preventing its companies from supplying tools, equipment and personnel that could support the development of China’s advanced chipmaking. It has been pushing its main allies to implement similar measures to ensure its controls are effective.

“It’s my hope that they’re going to be sensible and do something that doesn’t have a major impact . . . and fallout in industries that are completely dependent on those semiconductors,” said Peter Wennink, chief executive of ASML, in an interview with the Financial Times, pointing to the automotive, energy transition and medical technology industries.

Wennink also warned that growing bifurcation in the global chip industry — in part because of huge waves of government investment as well as escalating trade tensions — was creating more “hurdles” and “friction” for the wider chip industry.

“You create more friction, and with friction things are . . . going to become more difficult,” he said. “Chip availability could be reduced.”

His comments came as ASML on Wednesday reported a record order backlog of more than €40bn and forecast that sales would increase by 25 per cent this year. It posted net sales of €21.2bn in 2022, slightly above consensus estimates.

Wennink said ASML’s leading customers were preparing for a recovery in the second half of this year and into 2024.

Demand for chips used in smartphones, computers and data centres fell last year driven by fears of a recession, high inflation, soaring interest rates and the Covid-19 crisis in China, one of the biggest markets for semiconductors.

ASML, the largest tech company in Europe with a market capitalisation of €248bn, has been entangled in the trade war between Washington and Beijing since 2019 when a shipment of one of its extreme (EUV) lithography machines to China was blocked.

The Dutch chip tool supplier plays a critical role in the global semiconductor industry. It is the only company in the world capable of producing the complex EUV machines that are essential for manufacturing advanced semiconductors used in electronics.

Taiwan Semiconductor Manufacturing Co, Intel and Samsung all rely on ASML’s machines and services for the EUV tools to build cutting-edge chips.

In October, Wennink said the US sanctions could affect up to 5 per cent of ASML’s order backlog, though he noted that the company’s main business in China depended on less advanced technologies that did not fall under the remit of the latest restrictions.

However, on Wednesday he said the impact appeared to be less than initially forecast as Chinese customers have simply opted to make older chips that fall outside of the export controls, using other ASML products.

The Veldhoven-headquartered company also makes deep (DUV) lithography machines to etch circuits into silicon wafers, in a process that is usually used for simpler chips, which it is still able to ship to China.

ASML expects to make 60 EUV machines and 375 DUV machines in the current financial year.