Dutch Minister Queries Compliance Over US Chinese Export Controls

ASML's TWINSCAN NXE:3400B semiconductor lithography tool. ASML chip

The Netherlands will not summarily accept new US restrictions on exporting chip-making technology to China, minister warns

A government minister from the Netherlands has issued a blunt warning to US officials about their export stance regarding China.

A top Dutch trade official warned the Netherlands would not summarily accept new US restrictions on exporting chip-making technology to China, and is consulting with European and Asian allies, Reuters reported.

The US government continued to tighten export restrictions to China last year, after first issuing a number of warnings about the new restrictions.

America US China - Shutterstock © Aquir

Export restrictions

In early October 2022 the US then implemented a raft of export controls that block chip manufacturers from sending high-end chips to Chinese firms.

The new restrictions covered exports to China of advanced chipmaking tools and artificial intelligence chips often found in data centres.

US trade officials at the time said they expected the Netherlands and Japan to implement similar rules soon.

The intent of the US restrictions is to prevent Chinese mainland companies from being able to produce processors with processes smaller than 14 nanometres, which would include the most advanced microprocessors, while allowing Chinese companies to continue to supply the world market with lower-end chips.

The restrictions affect companies outside the US, such as Taiwan Semiconductor Manufacturing Co. (TSMC), because virtually all of them use US-made technology.

It also impacts Dutch chip equipment maker ASML Holding.

The Biden administration is also reportedly planning sanctions against Chinese memory chip makers.

In November it was reported that semiconductor imports in China declined more than 13 percent in the year through October, as the effects of dramatic US chip export controls and a slowing global economy made themselves felt.

It comes after the heads of the FBI and UK’s MI5 warned last year about the ‘immense’ threat posed by Chinese government’s espionage operations.

The warning came during a July 2022 meeting with business leaders, and the two heads warned that the Chinese government was set on stealing their technology for competitive gain.

Dutch warning

But now the Netherlands are warning they may not obey the US restrictions.

The surprise intervention came from Trade Minister Liesje Schreinemacher, who spoke on Sunday on the television show Buitenhof ahead of a visit to the US by Dutch Prime Minister Mark Rutte on Tuesday.

Prime Minister Mark Rutte is expected to discuss export policy with President Joe Biden.

The Dutch issue relates to ASML Holding, the largest company in the Netherlands, and which is also supplier to semiconductor equipment makers.

According to Reuters, the Dutch government has denied ASML permission to ship its most advanced machines to China since 2019 following a pressure campaign by the Trump administration, but ASML did sell 2 billion euros worth of older machines to China in 2021.

ASML has said that the US rules could impact roughly 5 percent of its group sales.

Trade Minister Schreinemacher was quoted by Reuters as saying that the US had “justified worries” about over-reliance on Asia, where 80 percent of advanced chips are made, and the threat that they could wind up in a military application or being used against the Netherlands.

“We’ve been talking with the Americans for a long time, but they came up with new rules in October, so that changes the playing field,” said Schreinemacher. “So you can’t say that they’ve been pressuring us for two years and now we have to sign on the dotted line. And we won’t.”

She reportedly said the Netherlands is also talking with Japan, South Korea, Taiwan, Germany and France.

She underlined that Germany has an economic interest as it is a key supplier to ASML and to “ensure that if we put a certain technology on a list of products that can’t be easily exported, that other countries do too.”