US pushed Netherlands to block China chip-equipment sale: report

January 06, 2020 16:13
A file picture shows ASML employees working on the final assembly of a semiconductor lithography tool at a plant in Netherlands. The Dutch chip giant is reported to have been blocked from selling some equipment to a Chinese firm. Photo: ASML handout via R

The Trump administration mounted an extensive campaign in the past two years to block the sale of Dutch chip manufacturing technology to China, Reuters reports, citing people familiar with the matter.

As part of the effort, US Secretary of State Mike Pompeo lobbied the Netherlands government and White House officials shared a classified intelligence report with the Dutch prime minister, the report said.

The American campaign began in 2018, after the Dutch government gave semiconductor equipment firm ASML, the global leader in a critical chip-making process known as lithography, a license to sell its most advanced machine to a Chinese customer, sources were quoted as saying.

Over the following months, US officials examined whether they could block the sale outright and held at least four rounds of talks with Dutch officials, according to the report.

The effort was said to have culminated in the White House on July 18 last year when US Deputy National Security Advisor Charles Kupperman raised the issue with Dutch officials during the visit of Netherlands Prime Minister Mark Rutte, who was given an intelligence report on the potential repercussions of China acquiring ASML’s technology.

The pressure appears to have worked. Shortly after the White House visit, the Dutch government decided not to renew ASML’s export license, and the US$150 million machine has not been shipped, Reuters noted.

The delayed shipment was first reported on Nov. 6 by the Nikkei Asian Review, but details of the US pressure campaign have not previously been disclosed.

ASML said it is still awaiting approval of a new license request and declined further comment, Reuters said.

ASML has never publicly disclosed the identity of the Chinese customer, but Nikkei and others have reported that it is Semiconductor Manufacturing International Corp (SMIC), China’s biggest chip-making specialist. 

With no way to block the sale directly, the Trump administration pressed its Dutch ally to consider the security issues, according to the report.

Lithography equipment falls under the purview of an international agreement known as the Wassenaar Arrangement, which coordinates export restrictions of so-called ‘dual-use’ technology that has commercial and military applications.

US Department of Defense officials met their Dutch counterparts several times to discuss the security risks of the sale, sources told Reuters. The meetings are said to have taken place at the Netherlands embassy in Washington in late 2018 and January 2019.

Also, Pompeo himself, during a visit to the Netherlands last June, urged Rutte to block the sale, according to the Reuters sources.

-- Contact us at [email protected]