Netherlands to restrict ASML’s repairs in China

The Dutch government’s potential decision to restrict ASML’s ability to repair its machines in China could have significant repercussions for the global semiconductor industry. These machines are critical for Chinese companies such as Huawei and Semiconductor Manufacturing International Corp. (SMIC). Access to necessary repairs and spare parts is required to avoid operational failures or reduced efficiency, potentially disrupting semiconductor manufacturing in China.

China’s dependence on ASML is particularly acute because the country cannot produce comparable equipment domestically and cannot purchase ASML’s more advanced extreme ultraviolet (EUV) machines. The restriction on repair services could force Chinese chipmakers to seek less advanced alternatives or face significant production challenges, impacting their ability to manufacture high-performance chips.

The potential policy shift also highlights a broader alignment with US strategies to limit China’s access to cutting-edge technology. Under previous Prime Minister Mark Rutte, the Netherlands had less complied with US trade restrictions on China. However, the current administration’s willingness to collaborate with US and Japanese efforts marks a significant policy change. This evolving stance underscores the increasing geopolitical complexities surrounding technology transfer and trade, with the US also contemplating stricter controls, such as the foreign direct product rule, to tighten restrictions on China further.