[News] ASML Might Not Be Able to Provide Advanced Chipmaking Maintenance Services to China as Early as 2025

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Earlier in July, former ASML CEO Peter Wennick stated that the chip war between the U.S. and China may continue for quite a long time, even for decades. Now his prophecy seems to come true, as the Netherlands is said to ban the semiconductor equipment giant from conducting equipment maintenance and providing related backup components in China, according to the latest report by Bloomberg.

As the targets of the measure reportedly includes ASML’s deep ultraviolet (DUV) lithography systems, if implemented, the move would be a heavy blow to China’s semiconductor industry, especially on the development of advanced nodes, the report notes.

On the other hand, regarding ASML’s sales in lithography units in the second quarter of 2024, China emerged as the largest market, as it contributed 49% of the revenue, higher than South Korea’s 28% and Taiwan’s 11%. Therefore, the reported restriction will be a major setback for the company’s financial performance.

The report from Bloomberg, citing sources familiar with the matter, indicates that the government led by Dutch Prime Minister Dick Schoof is unlikely to renew some of ASML’s licenses for maintenance and the provision of backup components in China, which are set to expire at the end of 2024. These licenses include those related to ASML’s sale of DUV lithography equipment.

The report further suggests that ASML’s products are usually sold with maintenance agreements, which are crucial for the equipment to operate properly and continuously. Therefore, if ASML’s licenses for maintenance and the provision of backup components to China are no longer granted, some equipment may be unable to function properly as early as 2025.

In response to the rumors, both ASML and the Dutch Ministry of Foreign Affairs have declined to comment, Bloomberg notes.

In terms of the reason behind the move, the report states that the decision may be made after the Dutch government received pressure from the U.S. Citing a senior official from the Biden administration, if the super power’s allied countries do not agree to align with Washington on semiconductor controls against China, the U.S. government could propose certain unilateral measures against partner countries, including the use of the Foreign Direct Product Rule (FDPR).

The measure allows the U.S. to control transactions involving foreign products that use U.S. technology, thus is considered to be a tactic leveraged to push its allies, including the Netherlands, Japan and South Korea, to impose restrictions on semiconductor equipment exports to China.

According to a previous report by Reuters, since 2019, ASML has been prohibited from selling its most advanced EUV tool line in China as part of a U.S.-led effort to curb Beijing’s technological and military progress. Afterwards, China had to rely on ASML’s DUV lithography machines to advance in its semiconductor manufacturing technology.

As per a report by Wccftech in May, SMIC seems to be able to use ASML’s old DUV lithography machines to manufacture 5nm chips for Huawei. Therefore, if ASML stops servicing and supplying parts for DUV machines in China in the future, companies like Huawei and its foundry partner SMIC will find it increasingly difficult to make breakthroughs with their existing capabilities.

The latest report by Bloomberg emphasized that ASML’s CFO, Roger Dassen, confirmed in a July earnings call that the company still has employees in the fabs of Chinese customers. Therefore, if the maintenance ban is implemented, ASML will have to withdraw the employees who provide equipment services to Chinese semiconductor companies.

Read more

• [News] ASML Claims the World Counts on China for Legacy Chips; So Do Chip Equipment Giants
• [News] SMIC Reportedly to Manufacture 5nm Chips for Huawei Without EUV Machinery

(Photo credit: ASML)