U.S. ramps up pressure on Netherlands to fall in line with China chip policy

Netherlands President Mark Rutte talks with US President Joe Biden. The US has been putting pressure on the Netherlands to block exports to China of advanced semiconductor equipment. The Netherlands is home to ASML, one of the most important companies in the global semiconductor supply chain.

Susan Walsh | AFP | Getty Images

Washington has its eyes on the Netherlands, an important small country in Europe that could hold the key to China’s future in short-term semiconductor manufacturing.

The Netherlands has more than 17 million people – but it’s also home ASML, the star of the global semiconductor supply chain. It produces high-quality explosives that China is eager to acquire.

The US seems to have convinced the Netherlands to restrict exports to China for now, but relations as the Dutch are considering their economic prospects if they are cut off from the world’s second largest economy.

ASML’s critical explosive activity

ASML, based in the capital Veldhoven, does not make chips. Instead, it makes and sells $200 million ultraviolet (EUV) lithography machines to semiconductor manufacturers like Taiwan’s TSMC.

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These machines are required to produce the highest quality chips in the world, and ASML has a de-facto monopoly on them, as they are the only company in the world that makes them.

This makes ASML one of the most important chip companies in the world.

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US-Netherlands issue

US pressure on the Netherlands seems to have started in 2018 under the administration of former President Donald Trump. According to a Reuters report from 2020, the Dutch government revoked ASML’s license to export its EUV machines to China after a major complaint from the US government.

Under Trump, the US has launched a trade war with China that has plunged it into a battle for technological supremacy, with Washington attempting to cut off vital technological resources to Chinese companies.

Huawei, the Chinese telecommunications company, faces export restrictions that starve it for the chips it needs to make smartphones and other products, hurting its mobile phone business. Trump also targeted China’s largest explosives producer with an export blacklist. SMICfrom the US technology sector.

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President Joe Biden’s administration has taken the attack on China’s mining industry one step further.

In October, the U.S. Department of Commerce introduced a sweeping rule requiring companies to apply for a license if they want to sell certain computer semiconductors or manufacturing equipment. something related to China.

ASML asked US workers to stop serving Chinese customers after the rules were introduced.

Pressure on the Netherlands to comply with US law continues. Alan Estevez, under secretary of commerce for industry and security at the US Department of Commerce, and Tarun Chhabra, director of technology and national security at the National Security Council, spoke to Dutch officials this month.

Pranay Kotasthane, CEO of Advanced Technology, “Now that the US government has imposed end-to-end controls on US companies, these controls will not be lost in their view if China can get these machines from ASML and it is Tokyo Electron (Japan). geopolitics program at Takshashila Institution, told CNBC.

“As a result, the US government will want to change the control of these groups to be more diverse by joining countries like the Netherlands, South Korea and Japan.”

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The National Security Council declined to comment when contacted by CNBC, while the Commerce Department did not respond to requests for comment.

A spokesman for the Netherlands Ministry of Foreign Affairs said it was not commenting on official visits. The news did not respond to further inquiries from CNBC.

Conflict

Last week, US Secretary of State Antony Blinken praised “a growing consensus on the way forward for the challenges posed by China,” particularly in the European Union.

But the picture from the Netherlands does not appear as rosy.

“It is clear that we consider our own interests, our national security interests are very important, it is clear that we have economic interests as you can understand and geopolitical factors are always at work,” Liesje Schreinemacher , Minister of Foreign Trade and Development of the Netherlands, said last week.

He added that Beijing is an “important trading partner.”

CNBC’s Silvia Amaro contributed to this report

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