The global tech battle is rapidly escalating as governments worldwide implement export control measures aimed at restricting the flow of microchip technologies with potential military applications. The Dutch government, aligning with the United States and Japan, recently announced an expanded export control regime to curb China’s military advancements. These developments coincide with the European Union’s endorsement of a new strategy to reduce economic dependence on China.
In retaliation, Beijing has imposed its own export control rule on critical minerals used in microchip manufacturing. This article delves into the details of these measures and their implications for the tech industry.
Dutch Government Implements Stricter Export Control Regime:
The Dutch government, led by Mark Rutte, unveiled new details of an extended export control regime targeting microchip technologies. The regulations, announced on Friday, aim to prevent the acceleration of China’s military build-up.
Europe’s largest tech firm, ASML, based in the Netherlands, will now be required to obtain export licenses for some advanced microchip printing machines destined for China starting in September.
Impact on ASML and Other Companies:
Under the expanded rules, ASML faces additional export restrictions beyond those announced in March. The ban now encompasses not only ASML’s lithography machines but also atomic layer deposition and epitaxy procedures, impacting another Dutch company, ASM. ASML, however, expressed minimal expectations of disruption, according to Reuters.
Chilling Effect on Sales to China:
The broader export control measures are expected to have a chilling effect on ASML’s ability to sell its equipment to China. However, experts suggest that ASML may redirect its sales to different customers globally, given the proliferation of chip initiatives worldwide. While these restrictions may redirect ASML’s sales, they are likely to impact China’s ambitions to develop its microchip capabilities and compete with Taiwan and the West.
China Counters with Export Control on Critical Minerals:
In response to the Dutch measures, China announced its own export control rule on two vital minerals used in microchip manufacturing: gallium and germanium.
These minerals are crucial for fiber optics, semiconductors, solar panels, and chipsets used in various devices, including computers, mobile phones, and 5G base stations. The export control measures will be effective from August 1.
Implications for China’s Microchip Ambitions:
China’s desire to enhance its microchip capabilities to rival Taiwan and the West faces a significant setback due to the collective impact of export control measures imposed by the Netherlands, the United States, and Japan.
Experts predict that the restrictions on critical minerals will hinder Beijing’s goal of indigenizing cutting-edge semiconductor fabrication, prompting a diversification of the global supply chain.
Reactions and Potential Retaliation:
The Chinese Ministry of Commerce expressed disappointment with the Dutch measures, urging respect for market principles and the spirit of contracts. While China has yet to retaliate against Dutch businesses, officials warn of the possibility of future retaliation. Observers anticipate further developments as the situation unfolds.
The intensifying tech battle between global powers is shaping the future of microchip technologies. With the Dutch government expanding its export control regime and China responding with its own measures, the industry faces significant disruptions.
These actions will not only impact the sales of companies like ASML but also hinder China’s ambitions to become a dominant player in microchip manufacturing. The global supply chain for microchips is poised for diversification, as tensions between nations continue to rise.