Dutch chip tool maker ASMI warns of escalating trade tensions

Dutch chip tool maker ASMI warns of escalating trade tensions

The head of Europe’s second-biggest semiconductor equipment maker has warned that the United States is mounting pressure on its allies to ensure that the world’s major chip companies comply with Washington’s strict export controls on the China.

Benjamin Loh, managing director of Dutch company ASM International, which develops equipment for the production of semiconductor wafers and chips, said the United States was “putting on a lot of pressure. . . to make sure that the Dutch government and the Japanese government also follow”.

He added: “The US government hopes it will be a multilateral thing in the future because they have to stop everyone [selling high-end tools to China].”

Loh’s comments come as Alan Estevez, the US Commerce Department’s top export controls official, and Tarun Chhabra, the White House National Security Council official who led the process of imposition of unilateral controls on October 7, are preparing to meet with Dutch officials in the Netherlands. this week.

President Joe Biden’s administration has been trying to strike a trilateral deal with its allies for more than a year, as part of its strategy to make it much harder for China to develop advanced semiconductors needed for military purposes. , but failed to secure an agreement in time .

ASMI is one of the two main chip tool manufacturers in Europe, alongside Dutch rival group ASML, which is Europe’s largest and most important chip company.

ASMI this month released the toughest estimate of the hit to US export controls of any major European chip company, warning it would affect around 40% of sales to China, which has increased to represent 16% of group revenues.

“China is not a small part of our business, but at the same time, it’s not something that’s going to kill us,” Loh said, noting that ASMI’s “significant operation” in Arizona in the United States made it more exposed to sanctions from Washington.

The toolmaker, which derives more than half of its revenue from the sale of advanced chip equipment, is still evaluating whether the conservative estimate is accurate, Loh said, but “in hindsight, it may not be. not such a bad thing – being very conservative – because I think we haven’t seen the end of it yet”.

Loh said his Chinese customers are “struggling now, trying to get all the different parts” they need to build their planned manufacturing lines.

Even if they were eventually able to buy more equipment than expected from ASMI, Loh added, the lack of access to crucial U.S. resources would make it “very difficult for advanced Chinese fabs to keep going.” ‘before”.

U.S. export controls, which prevent U.S. companies from exporting critical chip-making tools to China and prevent “US persons” from providing the country with direct or indirect support, immediately hurt the three largest US chip tool companies: Applied Materials, Lam Research and UCK.

But they had much less impact on the other two non-US companies that dominate the global market – Tokyo Electron in Japan and ASML.

Estevez said last month that American companies want “fairness,” which in the case of toolmakers meant “multilateral” export controls. “We intend to give them that as well so it’s fair with their competition around the world,” he added.

In recent comments, Estevez said he was confident the three countries would reach a “short-term” deal, but many industry experts believe the timeline is too optimistic given concerns in Tokyo and, in particular, in The Hague.

Underscoring the less optimistic view, Dutch Foreign Trade Minister Liesje Schreinemacher has suggested in recent days that the United States faces an uphill battle.

Addressing the Dutch parliament last week, Schreinemacher said the Netherlands had to “defend our own interests”, which she said included economic interests.

In an interview with a Dutch newspaper this month, Schreinemacher said the Netherlands would look at the chip market with “a more critical eye”, but warned that he would not just “copy US measures one by one”.

His comments marked the first time the Dutch government even indirectly referred to the negotiations it was conducting with the United States and Japan.

A person familiar with U.S. talks with the Dutch and Japanese said the Biden administration was committed to a trilateral deal. “We obviously saw the [recent] comments from the Dutch. I would just say there are private conversations going on as well,” the person said.

Additional reporting by Javier Espinoza in Brussels and Manuela Saragosa in London

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