US Seeks To Limit Chinese Chip Production Through Ally Pressure

The United States (US) government has requested that its allies restrict maintenance services provided by chip-making equipment manufacturers to China. This move is part of a broader effort to hinder China's development of advanced computer chips.

The focus of this strategy lies with ASML, a Dutch company and the world's leading manufacturer of lithography equipment.  Lithography machines are vital components in the chip-making process, etching intricate circuitry onto silicon wafers. Without regular maintenance, these machines would eventually become inoperable, significantly impacting Chinese chip production.

Additionally, the US government hopes to convince the Dutch government, a close ally, to deny export licenses for maintenance services on specific ASML equipment sold to China. However, the Dutch government faces a balancing act. While acknowledging potential security risks, they are hesitant to impose a blanket ban. This hesitation stems from the importance of China as a trading partner and the desire to protect ASML, a critical Dutch corporation.

In addition, not all ASML equipment in China requires a Dutch license. Much of it caters to less advanced chip-making processes.  However, the exact amount of equipment requiring licensing remains undisclosed by ASML. This lack of transparency adds another layer of complexity to the situation.

The outcome of this situation remains to be seen. The US is pressuring its allies to constrain China's technological progress, while the Dutch government seeks a solution that addresses security concerns without jeopardising its economic and industrial interests.