China criticizes Netherlands’ actions to curb some ASML’s exports

China has asked the Netherlands to “respect market principles” a day after ASML (NASDAQ:ASML) said the Dutch government recently partially revoked an export license of some lithography systems to China, Reuters reported.

The Netherlands-based company said on Monday that a license for the shipment of NXT:2050i and NXT:2100i lithography systems in 2023 was recently partially revoked by the Dutch government, impacting a small number of customers in China.

However, ASML noted that it does not expect the current revocation of the export license or the latest U.S. export control curbs to have a material impact on its financial outlook for 2023.

On the Dutch government’s actions, Chinese foreign ministry spokesman Wang Wenbin urged the Netherlands “to be impartial, respect market principles and the law, take practical actions to protect the common interests of both countries and their companies and maintain the stability of international supply chains,” the report added.

ASML did not say which customers were expected to receive the machines, but its customers in China include Semiconductor Manufacturing International Corporation (OTCQX:SIUIF) and others, the report noted as per company disclosures.

China has been ASML’s third-largest market after Taiwan and South Korea, however it was the largest in the third quarter of 2023, with 46% of sales, the report added.

ASML said in October that the export control measures would likely have an impact on the regional split of its systems sales in the medium to long term. However, it does not expect these curbs to have a material impact on its outlook for 2023 and for our longer-term scenarios for 2025 and 2030.

In 2023, the U.S. announced rules giving it the right to curb the export of ASML’s “Twinscan NXT1930Di” machine if it contained any U.S. parts. But soon after, several Dutch lawmakers challenged the Netherlands’ Trade Minister over if the U.S. had acted correctly in unilaterally imposing rules regulating the export to China of another ASML chipmaking system, according to the report.

ASML said on Monday that in recent discussions with the U.S. government, it obtained further clarification of the scope and impact of the U.S. export control regulations. The latest US export rules impose restrictions on certain mid critical DUV immersion lithography systems for a limited number of advanced production facilities.

China has been aiming to catch up in lithography as part of its efforts to develop a self-sufficient semiconductor supply chain. Shanghai Micro Electronics Equipment is the country’s only known maker of lithography machines, though it is seen behind ASML and Japanese peers.

Last week, Nvidia (NVDA) unveiled its GeForce RTX 4090D GPU for China. In October 2023, the U.S. brought in new updates to its export restrictions which curbed the sale of chips that Nvidia (NVDA) made for the Chinese market, such as the A800 and H800 chips, as part of Washington’s efforts aimed at hindering China’s access to advanced semiconductor technology. In 2022, the U.S. imposed rules restricting Nvidia from selling its A100 and H100 chips to China, after which the company had come up with A800 and H800 chips as alternatives for the Chinese market.