Netherlands Prime Minister Mark Rutte speaks with U.S. President Joe Biden. The U.S. has been placing strain on the Netherlands to dam exports to China of high-tech semiconductor gear. The Netherlands is residence to ASML, one of the crucial necessary corporations within the world semiconductor provide chain.
Susan Walsh | AFP | Getty Images
Washington has its eyes on the Netherlands, a small however necessary European nation that would maintain the important thing to China’s future in manufacturing cutting-edge semiconductors.
The Netherlands has a inhabitants of simply over 17 million folks — however can also be residence to ASML, a star of the worldwide semiconductor provide chain. It produces a high-tech chip-making machine that China is eager to have entry to.
The U.S. seems to have persuaded the Netherlands to forestall shipments to China for now, however relations look rocky because the Dutch weigh up their financial prospects in the event that they’re reduce off from the world’s second-largest financial system.
ASML’s important chip position
ASML, headquartered within the city of Veldhoven, doesn’t make chips. Instead, it makes and sells $200 million excessive ultraviolet (EUV) lithography machines to semiconductor producers like Taiwan’s TSMC.
These machines are required to take advantage of superior chips on the earth, and ASML has a de-facto monopoly on them, as a result of it is the one firm on the earth to make them.
This makes ASML one of the crucial necessary chip corporations on the earth.
U.S.-Netherlands talks
U.S. strain on the Netherlands seems to have begun in 2018 underneath the administration of former President Donald Trump. According to a Reuters report from 2020, the Dutch authorities withdrew ASML’s license to export its EUV machines to China after intensive lobbying from the U.S. authorities.
Under Trump, the U.S. began a commerce battle with China that morphed right into a battle for tech supremacy, with Washington trying to chop off important know-how provides to Chinese corporations.
Huawei, China’s telecommunications powerhouse, confronted export restrictions that starved it of the chips it required to make smartphones and different merchandise, crippling its cell business. Trump additionally used an export blacklist to chop off China’s largest chipmaker, SMIC, from the U.S. know-how sector.
President Joe Biden’s administration has taken the assault on China’s chip business one step additional.
In October, the U.S. Department of Commerce’s Bureau of Industry and Security launched sweeping guidelines requiring corporations to use for a license in the event that they wish to promote sure superior computing semiconductors or associated manufacturing gear to China.
ASML informed its U.S. workers to cease servicing Chinese purchasers after the introduction of those guidelines.
Pressure on the Netherlands to fall in step with U.S. guidelines continues. Alan Estevez, the underneath secretary of commerce for business and safety on the U.S. Department of Commerce, and Tarun Chhabra, senior director for know-how and nationwide safety on the U.S. National Security Council, reportedly spoke with Dutch officers this month.
“Now that the U.S. government has put unilateral end-use controls on U.S. companies, these controls would be futile from their perspective if China could get these machines from ASML or Tokyo Electron (Japan),” Pranay Kotasthane, chairperson of the high-tech geopolitics program on the Takshashila Institution, informed CNBC.
“Hence the U.S. government would want to convert these unilateral controls into multilateral ones by getting countries such as the Netherlands, South Korea, and Japan on board.”
The National Security Council declined to remark when contacted by CNBC, whereas the Department of Commerce didn’t reply to a request for remark.
A spokesperson for the Netherlands’ Ministry of Foreign Affairs stated it doesn’t touch upon visits by officers. The ministry didn’t reply to further questions from CNBC.
Tensions
Last week, U.S. Secretary of State Antony Blinken hailed the “growing convergence in the approach to the challenges that China poses,” significantly with the European Union.
But the image from the Netherlands doesn’t seem as rosy.
“Obviously we are weighing our own interests, our national security interest is of utmost importance, obviously we have economic interests as you may understand and the geopolitical factor always plays a role as well,” Liesje Schreinemacher, minister for international commerce and growth cooperation of the Netherlands, stated final week.
She added that Beijing is “an important trade partner.”
— CNBC’s Silvia Amaro contributed to this report