ASML allegedly offered to spy on China for the US — company proposed being 'Washington’s eyes and ears in China' after breaking gentlemen’s agreement on limiting DUV sales to country, says new book

ASML reportedly offered to deliver information to the United States on its Chinese customers. The offer came after it was caught selling more machines that went against an agreement stopping the sales of extreme ultraviolet light (EUV) and deep ultraviolet light (DUV) lithography machines to China. According to NL Times, the Netherlands and the U.S. agreed in January 2023 that the former would stop the sales and export of its DUV lithography machines (with the EUV machines already banned beforehand) to the U.S. rival starting in September 2023, with the ban taking full effect by January 2024. In the meantime, there was a gentleman’s agreement between the two nations that ASML would only ship a limited number of DUV machines that it was contractually obligated to deliver and stop further sales of these devices.

However, the book De belangrijkste machine ter wereld, which translates to “The most important machine in the world” [machine translation] and was written by former Bloomberg journalists Diederik Baazil and Cagan Koc, says that ASML CEO Peter Wennink allegedly sold more machines than agreed in the intervening period, breaking the pact between the two nations. Former Dutch Prime Minister Mark Rutte told Wennink that his company “was venturing into dangerous territory” and that the Netherlands government felt misled and humiliated. He also said that Washington demanded they regain its trust, and that it was in the company’s best interest to do so.

Aside from restricting the sales of its equipment, the U.S. also wanted to block ASML from servicing machines that were already deployed in China. However, instead of an outright ban, the ASML CEO suggested that the company be allowed to continue its services to its Chinese clients while also making its engineers report on the developments within these companies. ASML’s employees have unique opportunities, because its people have regular access to China’s fabs and also frequently work with Chinese engineers, allowing them to have unique insight into what’s actually going on behind the scenes. “ASML could be Washington’s eyes and ears in China,” the book said, quoting a senior U.S. government official. Of course, ASML denied making this offer, with its spokesperson telling NL Times that it was an inaccurate portrayal from the two authors.

Many are often wary of governments, whether it be Eastern or Western, taking advantage of and coercing companies into revealing data and information about their customers. But, if this account is true, this is the other way around and could prove damaging to ASML. After all, even though the company produces some of the most advanced lithography machines in the world, it must still maintain a reputation that it can be trusted — otherwise, its customers might be forced to look for alternatives because of the fear that their secrets will be revealed, whether to public entities or private institutions. Besides, any company offering customer data to anyone, even a state, is likely breaking several data privacy laws and is also betraying public trust.

This is likely one of the reasons why the U.S. government is wary of the dominance of Chinese companies within its borders. Beijing passed its National Intelligence Law in 2017, which requires all institutions and individuals to cooperate with Chinese intelligence agencies. Although there are other reasons, this law is probably one factor that Washington considered leading to the 2019 Huawei ban, with other giants like drone-maker DJI and networking hardware manufacturer TP-Link also facing potential sanctions.

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