The sweeping new US bans on chip technology exports to China appear likely to soon extend to Dutch high-end equipment firm ASML.

The Dutch government is ready to enforce the tough export controls unveiled by the Biden Administration in October, according to Reuters and Bloomberg reports.

The stringent new rules include a ban on products that include any US technology or IP in the supply chain, aimed at checking China's advances in AI, 6G and high-performance computing as well as potential military uses.

China has denounced the measures as an attempt by the US to maintain hi-tech hegemony, while a number of observers have described them as a declaration of economic war.

Figure 1: The Dutch government is ready to enforce restrictions on sales of advanced manufacturing equipment to China.
(Source: Xinhua/Alamy Stock Photo)

Under the Wassenaar Arrangement, a post-Cold War style agreement among western nations aimed at limiting export of dual-use technologies, the Dutch government has already blocked an order from China's SMIC for ASML's high-end EUV equipment.

Netherlands Trade Minister Liesje Schreinemacher acknowledged last month she was in talks with the US over extending the new US restrictions to ASML gear, one of the world's most advanced semiconductor equipment manufacturers.

One likely reason for the Dutch government's willingness to embrace the new export regime is the view from ASML itself.

Executives told an earnings call last month that they believed further restrictions on China sales would not significantly impact their business.

Reshoring will help drive ASML business

Instead they said US-China decoupling and the reshoring of chip foundry capacity would help drive the business for the next four to five years.

A presentation from CEO Peter Wennink pointed to plans by the three biggest chip manufacturers – TSMC, Samsung and Intel – to invest more than $300 billion in global capacity.

"Strong growth rates across markets, continued innovation, more foundry competition and technological sovereignty drive an increased demand at advanced and mature nodes," he said.

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He said over the next four years ASML expects to hike production of EUV units to 90 systems a year, a three-fold increase, with output of the less advanced DUV units to rise to 600 systems a year, a 2.5x increase.

The buoyant outlook looks to be reflected in the share price.

ASML's Nasdaq stock closed Wednesday at $601.35, 28% higher than prior to the announcement of the new US export controls. The average analyst target price is $680.22.

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— Robert Clark, contributing editor, special to Light Reading