ASML Urges Caution Amid US-Dutch Chip Export Control Talks

ASML, the Netherlands’ flagship semiconductor company, said it saw higher-than-expected fourth quarter revenue and expects a 25% increase in net sales this year despite challenges caused by existing and potential future export controls against China. The company also declined to predict whether the Netherlands will join the U.S. in imposing similar chip export restrictions but warned that broad controls could severely damage the semiconductor industry.

There is a “lot of uncertainty” caused by “geopolitical events and export controls,” CEO Peter Wennink said during a Jan. 25 news conference. But he said demand for ASML products “remains strong” and that he expects the market to rebound during the second half of this year.

The U.S. in recent months has pushed the Dutch government to impose more strict export controls on chip-related sales to China (see 2212050056), including restrictions that align closely with the Commerce Department’s October chip rule (see 2210070049). Dutch officials, including Prime Minister Mark Rutte, continued to say this month that the country isn't yet fully on board with the export controls and won’t be pressured to make a decision quickly (see 2301170015).

Wennink said Rutte made “some good comments,” adding that the ongoing negotiations are complex. He pointed out that the export controls are “an issue between several countries. Not only the Dutch and the Americans, but several countries,” including Japan and South Korea (see 2301180022).

“Of course there have been media articles coming out that are basically speculating on what the potential outcome could be, but we just have to look at the facts,” Wennink said, according to an interview transcript posted on the company’s website. “The facts are that nothing really changed since the October regulations that came out of the United States.” He said that means ASML “will not ship [extreme ultraviolet lithography systems] to China for instance. But we can still ship [deep ultraviolet lithography] and metrology and inspection tools.”

During the news conference, Wennink said ASML shares U.S. concerns about China acquiring certain advanced chip technology for sensitive military applications. But he also suggested export restrictions won’t stop China from improving its military.

“Every time I hear that about the proposed export controls, it’s about advanced technology being able to make advanced semiconductors. But the [Chinese] military applications use rugged, very mature, semiconductors” that are sometimes “10, 15, 20 years old, which are widely available across the globe, also in China,” he said. “It’s a much bigger and more complex situation than just saying, ‘Well, that chip goes into a military application.’ It’s far more complex than that.”

Wennink said ASML is helping to inform the Dutch government about “the consequences of certain scenarios,” including how the export controls could affect “the flow of semiconductors.” Export restrictions are a “legitimate instrument,” he said, but “we need to be careful that instruments that are well-meant don’t have a consequence that we all feel sorry about.” The U.S., the Netherlands and others “need to discuss this amongst themselves what they want to do,” Wennink said. “That’s them, that’s not us.”

He added that “we’re businesspeople. We’re not politicians.” And “any further speculation on what the outcome might be doesn’t help. We just have to wait for the governments and the politicians to keep talking and come to a reasonable solution.”