ASML under fire for selling DUV equipment to Chinese firm with military ties, says the machines are not subject to export controls — fears grow that 'old technology' will bolster Beijing's quantum effort

Dutch company ASML — famously the sole producer of the latest photolithography machines for fabricating cutting-edge chips — is under fire for selling hardware to a Chinese defense firm with ties to the ruling party.

Although ASML claims that the technology it sold to Chinese chip manufacturers was old and not able to "produce state-of-the-art chips," as reported by Nos,analysts have still raised concerns over its dealings with a firm developing quantum technologies, which could have implications for military technology development and deployment.

The Dutch government has long been aware of the risks posed by China's access to chip design software and manufacturing hardware. That's partly why there's been such fallout recently around Chinese involvement with Dutch chip firm, Nexperia. But Dutch firm ASML may have had far greater dealings with Chinese businesses, and it's raising more than a few red flags.

Nos claims that the business that purchased the ASML chip manufacturing component was a division of China Electronics Technology Group Corporation (CETC), a Chinese state-owned company that is a key component in the country's military industrial complex, producing key equipment for rocket systems and drones. It has also reportedly worked on the Chinese space program and fabricates chips for military use.

Nos has also accused ASML of supplying a deep lithography system (DUV) in its entirety to the Shenzhen International Quantum Academy. This is arguably more notable, as the Dutch Military Intelligence and Security Service has explicitly warned against China's development of quantum technologies.

Although ASML's DUV machines are older designs that produce chips in resolutions of around 38nm (the latest dual-stage extreme ultraviolet (EUV) systems can manage 8nm), analysts are still concerned about the direct provision of such systems, considering the concerns over Chinese technological development.

ASML has said it won't comment directly on sales to customers, but has suggested that what it has transferred to China is not cutting-edge, describing it as "old technology that can't be used to produce state-of-the-art chips." It added: "It is impossible for suppliers, such as ASML, to assess if a chip manufacturer in China should, or should not, be subject to export controls. National security is the responsibility of governments."

Indeed, it highlights that the designs it has sold to Chinese companies are not subject to export controls. This was confirmed when Nos spoke to the Dutch Ministry of Foreign Affairs.

"Not all high-tech goods are, by definition, sensitive and subject to authorization under the export controls policy," it said in a statement. "This is also the case for parts of lithography machines. Lithography machines contain a great deal of parts, technology, and software. All those parts are needed for a machine to work, but not all parts play a crucial/strategic role."

That said, Nos claims to have spoken to industry experts who suggest the parts sold to Chinese companies were, in fact, essential for the operation of certain fabrication machinery and should be considered for export controls.

"The problem is that the Dutch government does not have any control over this export of parts", says Judith Huismans, China expert for RAND Europa and former head researcher for Datenna. She suggested governments should consider export controls for parts, too: "That way, you are not saying that ASML can no longer export anything to China, but it will give the government more control and tools."

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