Dutch cancel ASML chip-equipment sale to China

Reuters reported this week the Trump administration launched a multi-pronged effort that began in late 2018, when Dutch authorities granted a licensing agreement for ASML to sell a chip-making machine to a Chinese customer. The effort included Secretary of State Mike Pompeo lobbying the Dutch government in at least four meetings, and the sharing of an intelligence report with Netherlands Prime Minister Mark Rutte in July, during his visit to Washington. At issue is an ASML machine that is known to make ultra-fast microprocessors, memory chips and other advanced components using a high-tech lithography process. Current U.S. regulations state that the U.S. can require a license for many high-tech products shipped to China from other countries if products are comprised of 25% or more of U.S.-made components. However, a U.S. Dept. of Commerce audit of the machine stated that it did not meet that threshold, which meant the Trump administration could not block the sale outright. Instead, it has relied on mounting a pressure campaign aimed at convincing the Netherland government that it was a bad idea for the technology to end up in China, and therefore, they must reconsider the license. During the July visit, National Security Advisor Charles Kupperman shared the intelligence report with Rutte that outlined potential repercussions of China getting their hands on the advanced microprocessor technology, according to Reuters’ U.S. government sources. A short time after the visit concluded, the Dutch government elected not to renew ASML’s export license, effectively stopping the sale of the USD 150 million machine. Reuters said in its story that the U.S. Government, Rutte’s office, and Kupperman’s office have all declined to comment on the situation. ASML said only that it is still waiting on approval on a new license request. The Nikkei Asian Review, which was the first to report the delayed shipment back in November of 2019, speculated that the China customer was Semiconductor Manufacturing International Corp (SMIC). SMIC did not respond to Reuters request for comment on the story.