Lithography systems for chip production: ASML allowed to continue sales to China

The Dutch government does not fully comply with the American trade restrictions for Chinese companies. ASML – the world market leader in the production of lithography systems for exposing silicon wafers – is currently allowed to continue selling its machines to China.

Only one existing restriction remains: ASML is not allowed to supply China with lithography systems that work with extreme ultraviolet (EUV) exposure technology. These machines are required at the latest for the production generation with 5 nanometer structures. Until now, only ASML produces such systems.

SMIC – China’s largest contract chip manufacturer – has developed a 7nm process based on TSMC’s model, which works with immersion lithography and multiple exposures, but still with low production volumes. In immersion lithography, wafers are exposed at a wavelength of 193 nm; for EUV it is 13.5 nm.

In an interview with the Dutch website NRC, the Dutch Minister for Foreign Trade and Development Cooperation, Liesje Schreinemacher, said they want to maintain their own conditions for new export restrictions.

“[…] The US cannot just force such changes on us. We participate in these discussions with confidence. Because the Americans need us too. We must not make ourselves smaller than we are – we have important companies within our borders and will not just give away this negotiating space.” Schreinemacher explains: “The Netherlands will not copy the American measures one-to-one. We will make our own assessments – and we will do so in consultation with partner countries such as Japan and the US.”

“We want to maintain technological leadership, avoid strategic dependencies and counter unwanted use of technology. As Secretary of Commerce, I know we owe a lot to open trade, but we can’t do this ‘cloudless’. We need to take a more critical look at which countries we exchange which goods.”

Talks between the US and the Netherlands about trade restrictions against China have been going on for two years. The US wants manufacturers of lithography systems to stop selling machines to Chinese customers. American companies such as Applied Materials, LAM Research and KLA must comply. In the case of ASML, the American branches are no longer allowed to provide support to Chinese customers. Tokyo Electron produces lithography systems in Japan – Japan is also a major supplier of chemicals such as photoresists.

Schreinemacher expects that an agreement with the US government can be reached in the coming months. According to the Bloomberg news service, US officials will travel to the Netherlands in November 2022 for further talks. ASML managers have also been involved in previous visits.

In 2021, Chinese customers accounted for almost 15 percent or 2.74 billion euros of ASML’s turnover. At the beginning of 2022, the Chinese share of turnover sometimes shot up to 34 percent – in the first quarter this corresponded to a value of 778 million euros.

The demand for ASML’s lithography systems is so great that the company can fully utilize its production without selling to China. Manufacturers like SMIC are welcome buyers just for the price negotiations.


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