The Netherlands will restrict ASML’s ability to service advanced wafer manufacturing equipment installed in China, Bloomberg reported, a move that could severely disrupt China ’s chipmaking ambitions . If the report is accurate, China’s semiconductor leader SMIC could also lose its ability to produce 7nm and 5nm chips next year.
The Dutch government plans to let some maintenance licenses expire at the end of the year, notably those related to ASML’s advanced DUV lithography machines. The decision is believed to be due to pressure from the US semiconductor embargo on China.
The US side said that it could apply unilateral measures, such as the Foreign Direct Product Rule (FDPR), if partners (including the Netherlands) do not comply with the US embargo. Under this rule, the US can control the export of foreign products that incorporate its technology.
Previously, the Dutch government imposed import restrictions on ASML’s DUV Twinscan NXT:2000i, 2050i, and 2100i photolithography machines to Chinese entities. Although these photolithography machines require multi-pattern design technology, they have a resolution of ≤38 nm and can be used to manufacture logic chips on 7 nm and even 5 nm processes.
However, these machines have already been installed at many SMIC factories or other memory chip companies. SMIC uses the Twinscan NXT:2000i and other advanced machines to produce 7nm chips, mainly for Huawei , one of the companies that is also under US sanctions. However, despite these sanctions, Huawei developed a 7nm smartphone processor with an integrated 5G modem last year.
But these devices require regular maintenance or they could stop working by 2025, severely disrupting SMIC and Huawei's ability to produce advanced semiconductors.
Indeed, the restrictions could also impact ASML, as nearly half of the company’s sales in the second quarter of this year came from China. Maintenance, meanwhile, is a lucrative part of the company’s business. The extent and impact, as well as the details of the restrictions, are unclear at this time.
