The US would also cut off China from less modern lighting technologies

The United States is not satisfied with the current sanctions, they want to achieve even more restrictions.

The Dutch ASML is perhaps the most important cornerstone of chip production today, as no company would be able to produce modern chips without the exposure equipment they offer. Of course, modern here covers quite a wide spectrum, but basically ASML makes it possible to make any type of chip that is even a little bit performance-focused.

Because of the above, ASML is a very serious strategic weapon in relation to sanctions against individual countries, and the Bloomberg reports that the United States is negotiating with the Dutch government to ban all exports of ASML’s assets to China.

In relation to the Dutch company, it is important to note that China does not have access to their equipment that offers EUV, i.e. extreme ultraviolet radiation lithography, so the Eastern superpower is already blocked from the most modern production possibilities. At the same time, systems using so-called DUV, i.e. deep ultraviolet radiation lithography, can be used and are being used, since roughly one-seventh of the Dutch company’s revenue came from Chinese orders during the previous year. Even today, these DUV devices are perfect for China to manufacture less advanced chips, and the chips made with older manufacturing technology are good enough to be used practically anywhere, they just don’t keep up with Western alternatives in terms of performance and energy efficiency.

The former factor would be a problem in many places, but China operates as a closed enough market to overcome it, and they have now developed a short-term strategy to somehow manage the problems generated by the sanctions. At the same time, this strategy would not work if ASML did not supply DUV equipment to China, from which country Applied Materials and Lam Research, which provide other important components of chip production, have already blocked their technologies.

The big question here is what the USA can offer ASML in exchange for extending the export ban, since China is a relatively large customer. Although its elimination would not be a disaster for the Dutch company, they would feel the lack of orders, so presumably they would not simply give up on it.

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