The Netherlands has had enough of U.S. pressure not to sell advanced chipmaking machines to China

During the administration of Donald Trump, the US imposed sanctions on many Chinese companies, with the most famous of them – Huawei. They accused this company of espionage, without offering any evidence, and there were also cases of fake news being released through influential media. One good example is Bloomberg with the alleged discovery of a backdoor in Huawei’s infrastructure in Italy’s Vodafone, which was denied by Vodafone itself).

Over the past few years, we have witnessed many attempts by the US to curb China’s technological progress, and the most recent episode concerns the ban on the export of advanced American technology for the production of semiconductors to Chinese companies. Otherwise, this would not be disputed if the US administration did not use pressure (often blackmail) on other countries that participate in this complex and intertwined ecosystem, that is, the technologically globalized world.

Now, when the very basis of the industry on which it depends, not only the production of mobile phones but also the entire sophisticated technological sector, has come to the fore, The Netherlands came into the spotlight.

Namely, this country and its company ASML is the world’s key manufacturer of EUV (Extreme Ultraviolet) lithography machines, necessary for the production of semiconductors, which the creation of microchips, i.e. processors, directly depends on.

Before we get to the core of the problem, let’s recall that SMIC, China’s largest chip manufacturing company, is currently at a technological level sufficient for the 7-nanometer process, which means that it is still years behind Taiwan’s TSMC and Korea’s Samsung, which have already reached the level of 3 nanometers. In addition, the most sophisticated SMIC’s 7-nanometer chips were not suitable for smartphones, whose popularity is the main reason for such high demand for precision chips, but more for cryptocurrency mining, while their 14-nanometer technology is still far from serious competition to Taiwanese and Koreans. Given the current score, analysts predict that it will take years for SMIC to even come close to TSMC and Samsung.

It should also be noted that the US has been trying to return the production of advanced chips under its control, so it has been subsidizing the construction of Samsung and TSMC factories on its soil for some time. It remains to be seen how profitable the whole business will be in the end, given the fact that the supporting industry and supply chains are mostly located in Asia, and cannot be simply reoriented to the West. What is important, is the intention of the US to distance itself from China, which it clearly considers an enemy. This is a completely legitimate decision, but we are now wondering where Europe is in the whole story.

But let’s return to the Netherlands, namely its company ASML, the key global manufacturer of the aforementioned EUV lithographic machines, which are necessary for the production of the most advanced chips. These are machines the size of buses, weighing 200 tons and costing over 150 million dollars per piece, and it takes a long time from order to delivery.

Given its power and influence, the US has long been pressuring the Dutch government to prevent the delivery of such machines to Chinese companies, especially SMIC, at all costs, because in this way the latter would come into possession of highly sophisticated technology, necessary for the production of the most modern chips with production processes of 3 nanometers, which would directly compete with Samsung and TSMC. Of course, we assume that Taiwan and Korea, at least politically, are in the American sphere of interest, which could not be said for the economic side as well, given that so many resources, especially financial ones, are rightly shared with China.

For some time, the Dutch suffered these pressures and refrained from arranging business with the Chinese, but if the latest reports carried by the English-language Hong Kong newspaper South China Morning Post are to be believed, the Dutch are slowly starting to seethe, since their appeasement of the American side is quite suffocating their economy and development in general. Moreover, American dictation acts as a kind of humiliation. According to the same source, the Dutch Minister of Trade Liesje Schreinemacher announced that he will propose to the Government to make its own decision about who it will deliver its products to and who it will not, i.e. that it will not necessarily ask the Americans for the selection of business partners.

If the Dutch succeed in their intentions, the US will probably have to give up in the end, just as it was quickly forgotten that a large part of the European telecommunications infrastructure is signed by Huawei, regardless of years of pressure on European operators to change suppliers. Many European 5G networks still use Huawei technology, since “replacement” for another (Ericsson, Nokia Networks…) cannot be done in a short period of time.

This is now a big step, or some kind of sign that this European country has had enough of the dictates of how and with whom it may do business, although one should not ignore the power of American pressure and the power of persuasion. That is precisely why the outcome of this story is still uncertain, but it is clearly good to see that things have started to move in the direction of the EU, that is, the member states taking more care of their own interests.