Netherlands softens tone over ASML sales to China

ASML's booth at China International Import Expo on November 4, 2021 Photo: VCG

ASML’s booth at China International Import Expo on November 4, 2021 Photo: VCG

The Dutch government has softened its tone over controls on exports of lithography machines by Dutch companies to China, as the Netherlands seeks to keep ASML in the country and expand cooperation with China, despite pressure from the US government to stymie China’s technology rise.

“Dutch export controls do not target any country, and the decisions are made based on an independent assessment and in a safe and controllable manner to minimize the impact on global semiconductor industrial and supply chains,” Geoffrey van Leeuwen, the visiting Dutch Minister for Foreign Trade and Development Cooperation, said during a meeting with Chinese Commerce Minister Wang Wentao in Beijing on Wednesday.

China is one of the most important trading partners of the Netherlands, and the Netherlands is willing to remain a reliable partner of China, the Dutch official said.

This was a stark contrast with earlier comments made by Van Leeuwen, when he reportedly said that China may use Dutch expertise in the field of lithography for Chinese military ends, discussing the Dutch government’s decision to revoke ASML’s export licenses.

Chinese experts praised the change in the Dutch official’s attitude over chip-making machines export to China. They urged the Netherlands to figure out where its own interests lie in the US’ tech war against China, while stressing that no country will stop China’s scientific and technological advance.

Although semiconductor cooperation between China and the Netherlands faces interference from the US, the two countries’ overall sound economic and trade cooperation over the past decade shows that there’s no benefit for the Netherlands if it simply follows the US, Yang Chengyu, an associate research fellow at the Institute of European Studies of the Chinese Academy of Social Sciences, told the Global Times on Thursday.

ASML declined to comment when reached by the Global Times on Thursday.

According to ASML’s financial results, China rose to become its second largest market in 2023, accounting for 29 percent of its sales, or more than 6.4 billion euros ($6.92 billion), underlining the significance of the Chinese market.

The company warned in January that US export controls would affect its sales in China by 10-15 percent in 2024.

“China’s progress in the development of lithography machines is faster than imagined,” Fu Liang, a Beijing-based tech analyst, told the Global Times on Thursday. He said that both the Netherlands and ASML are concerned that ASML’s global market share in lithography machines may plunge if China makes breakthroughs.

ASML’s dominant position in the area is the result of labor division rather than the technology itself. China’s breakthrough in making lithography machines is simply a matter of time, Fu said.

ASML said on January 1, 2024 that the Dutch government had partially revoked an export license for shipments of some of its lithography systems to China.

This year marks the 10th anniversary of the establishment of the open and pragmatic partnership for comprehensive cooperation between the two countries. Over the past 10 years, China has become the third largest trade partner of the Netherlands, and the Netherlands is an important source of foreign investment and destination for China’s outbound investment, He Yadong, a MOFCOM, spokesperson, said on Thursday.

“Strengthening cooperation in various fields including the semiconductor industry has positive meanings for China-Netherlands and China-EU relations, as well as safeguarding global semiconductor industrial and supply chain stability,” He said.

“The Netherlands should consider China-related policies based on its own interests,” Yang said. He said that there is vast potential for the two countries to deepen cooperation in more areas including agriculture, the silver economy and the green transition.