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U.S. Wants ASML to Stop Selling Chipmaking Tools to China

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The U.S. government officials are working with their counterparts from the Netherlands to ban sales of virtually all lithography tools produced in the country to companies in China. If the American politicians succeed, this will significantly blow Chinese efforts to become a world-class semiconductor producer and will thwart the country's Made in China 2025 plan. 

ASML is the world's largest maker of lithography tools used to make all kinds of chips. However, the company cannot sell its extreme ultraviolet (EUV) lithography equipment to its Chinese clients. Still, U.S. politicians propose restrictions under which ASML will not be able to sell its mainstream deep ultraviolet (DUV) lithography tools to Chinese customers as well, reports Bloomberg (opens in new tab). DUV is used to make the vast majority of widely used chips that power client PCs, servers, mobile electronics, autonomous vehicles, and robots.  

Persuading the Dutch government to ban sales of virtually all lithography scanners to Chinese customers will not be easy. Chinese fabs run by local companies like Hua Hong,  Semiconductor Manufacturing International Co. (SMIC), and YMTC, or global players like TSMC, Samsung, and SK Hynix accounted for about 16% of ASML's revenue in 2021 (opens in new tab) (which reached $18.6 billion), and that is a lot of money. 

ASML argues that it is not the world's only maker of DUV scanners (albeit the largest one), and similar machinery is available from Canon and Nikon. Yet, if the U.S. manages to leave China without ASML's tools, other companies will not be able to replace them soon. Furthermore, American politicians argue that advancements in modern chip packaging technologies allow Chinese companies to design and produce pretty sophisticated chips that can advance Chinese supercomputing and, ultimately, military technologies. 

The U.S. has banned several Chinese companies from accessing technologies developed by USA-based companies, nearly driving Huawei's chip arm HiSilicon out of business. In addition, prohibiting sales of ASML's lithography tools to China will devastate the local semiconductor industry.  

Meanwhile, banning ASML's scanners to Chinese companies is not the only way the U.S. can thwart the local chip industry. Semiconductor fabs use hundreds of tools produced by numerous American companies, such as Applied Materials, KLA, and Lam Research. Forbidding them to work with China will have a devastating effect on Tianxia's semiconductor efforts. Moreover, some of their tools cannot be sold to China due to national security concerns. 

But leaving companies from China without semiconductor fabrication tools will impact the rest of the world. For example, a substantial part of DRAM and 3D NAND memory production is in China. Leaving companies like Samsung, SK Hynix, and YMTC without their Chinese fabs will affect the global chip and electronics supply chain. Furthermore, TSMC, SMIC, and Hua Hong produce loads of chips for their international clients; if they wind down production, this will also affect American chip designers.

Anton Shilov
Anton Shilov

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

  • peachpuff
    World war 3: the quest for more chips
    Reply
  • A Stoner
    Buy it all up and install it all here in the USA and lets get rid of this stupid idea of outsourcing critical production. Then create our own lithography manufacturing in the mean time.
    Reply
  • distortnx
    Right, let's just give them no choice but to take TSMC by force.
    Reply
  • jkhoward
    As an American, this is bull crap. We have no right to do this regardless of our tensions between each other.
    Reply
  • jkflipflop98
    distortnx said:
    Right, let's just give them no choice but to take TSMC by force.

    Works for me. China taking Taiwan and TSMC by force means they've essentially killed TSMC. They'll be so sanctioned and embargo'd that they'll never make another chip again. Engineers don't do their best work with a bunch of guns trained on them, either.
    Reply
  • A Stoner
    jkhoward said:
    As an American, this is bull crap. We have no right to do this regardless of our tensions between each other.
    We might actually have the right to do so. It is highly likely the United States owns the patents that are used in the manufacture of said products. We outsource the production of many of our own technologies.
    Reply
  • LastStanding
    distortnx said:
    Right, let's just give them no choice but to take TSMC by force.

    Don't be fooled to think that would be successful for China if they even dare. Russia's sanctions, etc. would seem like just a spank on the hand compared to how the whole world leading governments would respond to China.
    Reply
  • deesider
    A Stoner said:
    We might actually have the right to do so. It is highly likely the United States owns the patents that are used in the manufacture of said products. We outsource the production of many of our own technologies.
    I think you'll find that the Dutch company ASML owns the patents that are used in the manufacture of the products they design and create.
    Reply
  • TCA_ChinChin
    War's not good. Best thing for everyone involved is status quo at least for now. Keep current sanctions, simply enforce them better. China might be able to get chipmaking equipment, but those are for processes and technologies that haven't been cutting edge for years now. China has less casus belli for invasion and the US/Dutch/Taiwan/Whoever else can still keep their advanced lithographies and processes to themselves.

    But of course nobody will like this. China will always have a chip on their shoulder and be dicks randomly and the US will never allow other countries to challenge their global authority.
    Reply
  • LastStanding
    It would be completely foolish for China, economically and militarily, to act on any of this thinking that TSMC has not been expecting and planning around the possibility of a China invasion for years now.

    If /WHEN China invades, they'll probably find at TSMC a bunch of useless equipment but with none of TSMC trade secret, etc. doctrines that China could use in the future.
    Reply