China is reportedly struggling to produce advanced chips for AI and 5G amid back-to-back US export sanctions in association with its allies.
Semiconductor geopolitical scuffles have escalated as ASML Holdings plans to limit its export of semiconductor manufacturing equipment to China to a greater extent as directed by the Dutch government. China, which accounted for almost half of ASML’s revenue in Q2 24, has slammed ASML for disobeying market principles.
The governments in the West have been continuously lambasting China’s manufacturing policies, arguing that the nation is manufacturing more than it consumes. Although various strategies were formed among the US, European nations, and a few Asian countries to shatter China’s dream of leading the technology industry, legacy chips continue to be a key strength of China. As the demands for these components are escalating, chip manufacturers are hesitant to increase production owing to the lower margins.
When requested to comment on ASML’s export curbs, the minister of the Dutch Ministry of Foreign Affairs and Development declined. The sophisticated lithography machines, also called DUV, cannot operate after a certain time if ASML does not provide maintenance service.
In an effort to threaten China, the Joe Biden government has declared strict measures, which allow every US company to curb sales of products in China furnished with US technology. The situation is similar to that of ASML machines. In September 2023, the export operation came into operation, and in January 2024, the Dutch government imposed severe restrictions on selling some top-notch equipment to China.
Extreme Ultraviolet Lithography (EUV) machines, which are used in manufacturing integrated circuits, are the monopoly of ASML. The question remains: Will China, which is aiming to manufacture high-end advanced chips for AI and 5G, become a reality amid these harsh US regulations?
