On Wednesday, the primary provider of equipment to computer chip manufacturers expressed concerns about business risks stemming from geopolitical tensions and the potential extension of a U.S.-led effort to limit exports to China. ASML, in its annual report released on the same day, highlighted the increasing array of restrictions implemented by the United States, often with the approval of the Dutch government. These restrictions have resulted in the exclusion of certain customers from acquiring ASML’s lithography machines, essential for printing microscopic designs on chip wafers. “The United States has exerted pressure on its allies – including the Netherlands and Japan – to limit the sale of advanced chip-making machinery to China,” ASML wrote in the report.
The company has been blocked from selling its most advanced Deep Ultraviolet lithography (DUV) machines to China since 2019 as part of a US campaign to slow Beijing’s technology development. However, it has been able to sell some older machines there, as well as in Europe and the Americas.
China is a big customer for the mid-level DUV machines. The company forecasts that sales to the country may decline by 10% to 15% this year due to the new restrictions. However, the firm says that Chinese demand for these machines remains solid and that it will continue to pursue the market.
As the world’s most valuable technology company, ASML is a major supplier of the machines used to make chips that power everything from mobile phones to computers to cars. Its lithography systems are vital in creating the tiny circuitry inside those chips, which are increasingly found in every area of life. ASML dominates the global market for lithography systems, with a market share of around 40%.
ASML’s technology is based on American intellectual property, and its equipment requires using chemicals that contain US-made components. For that reason, it has been the main target of a US-led campaign to limit the sale of chip-making equipment to China.
The company has argued that the campaign is hurting its customers, especially in China, as well as its suppliers. It also says that the US is using the campaign to gain leverage over China, which has accused the United States of unfair trade practices.
