Topline
ASML—Europe’s most valuable tech company and manufacturer of the world’s most advanced chip-making machines—found itself in the middle of a purported U.S.-led effort to restrict China’s access to advanced semiconductors as the firm’s shares were hit Friday by a new Dutch law restricting the export of advanced chip manufacturing tools on national security grounds.
File Photos: Exports of ASML’s chip machines will no need authorization from the Dutch government.
Key Facts
The Dutch government’s new rules don’t explicitly mention China, but said the “uncontrolled export” of such technology “poses national security risks.”
According to Reuters, the Dutch government’s move follows pressure from the U.S. as ASML’s equipment contains some U.S.-made components.
The new rules, which will go into effect on September 1, will require Dutch companies—primarily ASML—to seek government authorization for exporting “certain types of advanced semiconductor manufacturing equipment.”
The Amsterdam-traded shares of ASML dropped nearly 4% following the announcement, before settling at around 1.2% in the red on Friday afternoon.
The company said it doesn’t expect the move to have a major impact on its financial outlook both in the near and long term as the export of its most advanced machines is already restricted by the Dutch government.
The company noted that the new rules will affect shipments of its second-tier machines that are used to make less advanced chips that rely on an older manufacturing process.
News Peg
ASML is the European Union’s third most valuable company in terms of market cap and its most valuable technology firm. ASML is the only company in the world that makes EUV machines that are used by the likes of TSMC, Samsung and Intel to manufacture the processors for companies like Apple, Nvidia and AMD.
Key Background
The Dutch government’s move comes amid purported efforts by the White House to restrict the export of advanced chips made by U.S. companies to China. Earlier this week, the Wall Street Journal reported that the Biden administration is mulling steps that would restrict companies like Nvidia from exporting their most advanced processors designed for artificial intelligence to China or other adversarial nations. The planned restrictions are driven by concerns that Beijing may use these chips to develop advanced weapons or cyber threats.
News Peg
Advanced semiconductors have emerged as a key diplomatic battleground between Washington and Beijing as tensions between the two remain high. China has attempted to hit back against the restrictions by banning the use of some U.S. chips in key infrastructure projects and labeling them a serious cybersecurity risk. However, the U.S.’ restrictions appear to be having a major impact on China’s tech ambitions, with commentators observing that it could seriously slow down the country’s efforts to build advanced AI technology and its own chips.
Further Reading
Nvidia Leads Premarket Slump In Chipmaker Shares—As White House Reportedly Mulls Fresh Curbs On AI Chips (Forbes)
US, Dutch set to hit China’s chipmakers with one-two punch (Reuters)
Source: https://www.forbes.com/sites/siladityaray/2023/06/30/shares-of-europes-most-valuable-tech-firm-fall-amid-new-us-led-efforts-to-restrict-chip-exports-to-china/