ASML Holding NV, the world’s leading manufacturer of lithography systems, is currently grappling with significant export challenges in its dealings with China. These hurdles stem from new export control regulations imposed by the Dutch government, which came into effect on September 1. The ramifications of these regulations extend far beyond ASML and have profound implications for the semiconductor industry and global technological competition.
The License Requirement
Under these newly enacted regulations, ASML is now obligated to obtain a government license from the Netherlands to export equipment capable of producing chips with a feature size below 5 nanometers (sub-5nm). This stipulation poses a substantial challenge for ASML, as its cutting-edge deep ultraviolet lithography (DUV) tools, essential for manufacturing the latest generation of microchips, fall under the scope of these restrictions.
The Countdown Begins
Among ASML’s most advanced DUV systems, the Twinscan NXT:2000i stands out. It possesses the capability to create chips using the 5-nanometer process or even more advanced processes. However, this system now faces an imminent export deadline. Chinese chip manufacturers have been keenly aware of the impending restrictions and have been working tirelessly to import these critical ASML tools before the close of 2023.
Global Alignment on Export Control
The Dutch government’s decision to tighten export controls on ASML’s equipment aligns with the stances of the United States and Japan. While the regulations do not explicitly mention China, they effectively bar ASML from shipping its DUV systems to the country without obtaining a government license.
Continuation of Export Challenges
ASML’s export challenges to China date back to 2019 when it was initially prohibited from selling extreme ultraviolet (EUV) lithography machines. However, the company was still able to export DUV systems until this year, largely due to pressure from the United States.
A Fast-Approaching Deadline
Effective January 1, 2024, ASML will no longer have the authorization to export its most advanced immersion DUV lithography system, the Twinscan 2000 series, to China. This development has prompted Chinese chip foundries to expedite their ASML tool imports, with approvals granted by The Hague, within the remaining four months.
ASML’s Resilience and Market Outlook
Despite these formidable export control challenges, ASML, which stands as Europe’s largest technology firm by valuation, maintains a cautiously optimistic outlook regarding its annual sales. The company aims to fulfill existing orders until the close of this year, seeking to minimize any potential impact on its financial performance.
Global Technological Competition
The semiconductor industry is in a state of rapid evolution, with these export restrictions amplifying the technological competition among nations. China’s determined efforts to secure advanced chip-making tools underscore the pivotal role ASML plays in the semiconductor supply chain. The implications of these developments on global technology dynamics will undoubtedly be keenly observed in the months ahead.
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