In a move echoing geopolitical tensions, the Netherlands has begun enforcing new export controls on the production equipment for advanced microchips, siding with the United States in the ongoing struggle over control of critical technology. These export controls, part of a trilateral agreement involving the United States, Netherlands, and Japan, primarily impact advanced microchip printing machinery.
The Dutch regulations express concerns about the potential risks to public security associated with the uncontrolled export of such equipment. They align with a broader U.S.-led strategy to restrict China’s access to key components of the supply chain essential for manufacturing high-end microchips used in various sectors, including consumer electronics, computing, and military applications.
The regulations emphasize the importance of verifying the end user and the intended use of production equipment. However, these measures have also drawn attention to the Dutch semiconductor giant, ASML—Europe’s most valuable tech company, valued at approximately €240 billion—placing it in a precarious position.
ASML was already subject to export restrictions on its most advanced machines, which employ extreme ultraviolet light (EUV) technology. The new rules now require ASML to seek permits for at least three types of machines utilizing less advanced deep ultraviolet (DUV) technology. It is expected that around 20 annual permit applications will be submitted, given these additional DUV restrictions.
While these restrictions may not have immediate financial implications for ASML, as the company retained necessary licenses until year-end, they do raise questions about the potential long-term consequences. It is conceivable that these security-driven restrictions could threaten ASML’s unique position within the highly efficient global supply chain for microchips.
ASML’s leadership has emphasized the difficulty and expense of achieving complete decoupling between the West and China. Restricting the global chip ecosystem could lead to significant repercussions. It may also incentivize China to accelerate its efforts to build an autonomous production ecosystem for advanced chips.
The Netherlands’ decision to align its export controls with Washington and Tokyo has sparked discussions within the European Union about coordinating export controls and managing risks associated with trade with China. The European Commission has presented an economic security package, which includes a review of the bloc’s export control framework, aiming to identify technologies critical to economic security.
Diplomats and officials in the EU are wrestling with the challenge of balancing the need for trade defenses to enhance security with the broader goal of promoting free trade and ensuring competitiveness. This issue has gained increased attention in light of recent Dutch regulatory moves.
While Dutch politicians generally welcome greater European coordination on technology regulations, they emphasize the need for Europe to chart its course independently and strategically rather than blindly following the lead of the United States.
The Netherlands and Europe, as a whole, are increasingly determined to define their own technology policies and strategic choices, reducing dependencies on China and the United States alike. This complex balancing act will likely shape the future of technology trade in the region.
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