In yet another blow to China as it attempts to maintain a path towards self-reliance, Dutch-based lithography systems manufacturer ASML has revoked shipments of some of its DUV machines thanks to a request brought forward by the Biden administration. The export ban for such equipment was supposed to come into effect after a few weeks, which would have given China a little breathing room to procure sufficient machinery to continue mass producing chips for various applications, but the U.S. had other plans.
China has been ASML’s third-largest market for lithography systems, accounting for 46 percent of the company’s total sales in Q3 2023
Speaking with Reuters, ASML states that ‘a license 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.’ Fortunately for the manufacturer, ASML states that the latest request for export control restrictions is not expected to have a negative impact on its financial outlook for 2023. However, recent data shows that China was slowly becoming the company’s biggest market.
After South Korea and Taiwan, China was ASML’s 3rd-biggest customer, but in the third quarter of 2023, the region became its largest, accounting for 46 percent of total sales. Assuming China continued to ramp up orders, that percentage would climb up, and given the volatile global relations, it was in the country’s best interest to pursue the procurement of specialized DUV equipment.
SMIC, China’s biggest semiconductor manufacturer, proved with the Kirin 9000S that it might be behind the U.S. in chip making, but it is not reliant on its resources. Both Huawei and SMIC also secretly announced a 5nm chipset called the Kirin 9006C, so it is possible that introducing an export ban early was a reaction by the U.S. to prevent China from bridging the technological gap between the two regions.
Following the decision, several Dutch lawmakers challenged the Netherlands’ Trade Minister over whether the U.S. correctly imposed an export ban to China concerning another ASML machine. In response, ASML has stated that it will comply with all applicable laws, and that includes export legislation.
“In recent discussions with the US government, ASML has obtained further clarification of the scope and impact of the US export control regulations. ASML is fully committed to comply with all applicable laws and regulations including export control legislation in the countries in which we operate.”
ASML holds the lion’s share of lithography systems and is banned from supplying China with advanced EUV machinery for mass producing cutting-edge wafers. This sort of equipment is currently owned and operated by TSMC and Samsung, giving them an obvious advantage over SMIC, and they will continue to do so until the export ban remains active.
News Source: Bloomberg
