ASML’s sale of machines to China does not fall under the export laws of so-called dual-use products. Although microchips made with ASML devices have military applications, ASML should not detail sales.
ASML’s sale of lithography machines to China does not fall under the export regime for dual-use products in the Netherlands. This is not new, but only now became known, according to Reuters. The dual-use rules basically apply to products that have both commercial and military applications. Microchips fall into this category: you can use them to make PCs, but also to control rockets, build (autonomous) drones or simulate nuclear explosions. ASML’s lithography machines are an essential component for anyone who wants to build modern microchips.
Exception
However, the Dutch government believes that billion-dollar contracts with Chinese companies do not fall under the dual-use export rules. ASML did $7 billion worth of business with China in the first nine months of 2024, but does not have to share further details about the exports.
This is nevertheless important for those who want to assess China’s capabilities. The machines ASML sells are directly related to what chips China can make. Deep UV and Extreme UV machines do require an export license. EUV machines are considered sensitive by Europe, and ASML does have to share details in that context. DUV licenses, however, are a Dutch matter. ASML should not share details about those, as they would be too business sensitive.
Thin line
The Netherlands is trying to walk a fine line. On the one hand, the country must take European but also American interests to heart. The US is waging a technology trade war with China in an effort to keep it from acquiring AI accelerators and emulating the Americans. Stringent export restrictions on Nvidia chips are therefore in place. The U.S. would prefer that the Chinese no longer have access to ASML machines, as ASML is a monopolist in essential and extremely complex chip-making equipment.
On the other hand, ASML is a Dutch national economic pride, and China is a distinguished customer. An export ban was not seen by the Netherlands. The Dutch do not want to be so restrictive that measures would cause unnecessary economic damage.