China’s Warning to ASML

China has warned that ASML could face permanent exclusion from the Chinese market if it complies with new US export restrictions. The Dutch chip equipment maker is under pressure to halt the maintenance and sale of spare parts for its deep ultraviolet (DUV) lithography machines sold to China.

Impact on ASML’s Business

ASML, a key player in the semiconductor industry, could suffer significant financial losses if it loses its Chinese market, where it accounts for nearly half of its sales. The company has not sold its most advanced extreme ultraviolet (EUV) machines to China due to existing restrictions.

US Pressure and Dutch Government Response

The Dutch government is considering these restrictions as part of a broader US strategy to limit China’s access to advanced chip technologies. The Global Times, a Chinese state-backed media outlet, warned that such actions could deepen the rift between China and both the US and the Netherlands, leading to economic harm for ASML.

China’s Semiconductor Ambitions

China is investing heavily in its semiconductor industry to reduce its dependence on foreign technology. This includes efforts to develop its own capabilities and close the technology gap with leading players like Taiwan’s TSMC.

Potential Retaliatory Measures

China’s response to the US restrictions could involve retaliatory measures against European firms, similar to its recent actions against American chipmakers. The loss of the Chinese market would pose significant risks for ASML and the broader semiconductor industry.

Conclusion: Navigating Geopolitical Tensions

ASML faces a complex situation as it balances compliance with international regulations and the risk of losing a crucial market. The company’s future strategies will be critical in navigating these geopolitical tensions and maintaining its position in the global semiconductor industry.