U.S. Sanctions Push China to Create Own Chip Tech: ASML

(Bloomberg) -- ASML Holding NV Chief Executive Officer Peter Wennink said US-led export control measures against China could eventually push Beijing to successfully develop its own technology in advanced chipmaking machines. 

Semiconductor companies in China “have to compete” against global rivals so they want to buy non-Chinese machines, Wennink said Wednesday in an interview with Bloomberg News at the company’s headquarters in Veldhoven, Netherlands. “If they cannot get those machines, they will develop them themselves. That will take time, but ultimately they will get there.”

Semiconductors have become a key battleground for the growing rivalry between the world’s two largest economies, as Washington’s bid to curb exports of leading-edge technology to China has hit the chip sector. 

The Netherlands and Japan, home to key suppliers of semiconductor manufacturing equipment, are close to joining a Biden administration-led effort to curb exports of the technology to China, Bloomberg News has reported. ASML potentially faces more limitations on its sales to Chinese customers as the US seeks to undermine Beijing’s ambition to build a self-sufficient supply chain.

“The laws of physics in China are the same as here,” Wennink said. “The more you put them under pressure, the more likely it is that they will double up their efforts” in building lithography machines that can rival those of ASML, he said.

Last month, China filed a complaint over the US export controls with the World Trade Organization. Beijing said the restrictions threaten the stability of the global supply chain and that America’s national-security justification is dubious. Meanwhile, the country is pausing costly subsidies aimed at building a chip industry to compete with the US. 

Even as The Hague and Tokyo are soon expected to reach an agreement, they likely won’t go as far as Washington’s restrictions, which not only limit exports of American-made machinery but also impede US citizens from working with Chinese chipmakers, people familiar with the matter told Bloomberg.

The personnel restrictions that are part of the October measures announced by the US pose “all kinds of issues for people and for companies,” Wennink said. “That’s never something that you could cheer about.” 

Earlier Wednesday, ASML forecast better-than-expected first-quarter sales due to strong demand for its advanced chip-making machines.

Overall, export controls will “create levels of disruption” and “that will affect the efficiency and innovation,” Wennink said. “It will affect all of us.”