Netherlands to limit ASML chipmaking tools for Huawei and other Chinese firms

The Netherlands is planning to restrict ASML from supplying chipmaking tools to Huawei and others in China. According to a new report, this step will eventually become a huge obstacle for Chinese companies in making a high-end processor.

Bloomberg noted that most of the ASML trade licenses will expire later this year. These licenses are an official approval of shipping certain chipmaking tools like DUV lithography machines to China. Many Chinese firms depend on this equipment.

ASML can request license renewal but the Netherlands government might reject it. This could be a follow-up of the U.S. trade export controls that have been limiting foreign suppliers to deliver advanced tools or chipmaking machines in China.

Biden administration has said to increase the security measures for its partner countries as well. This will ultimately prohibit the other regions from doing business with the Chinese companies, creating an absence of advanced tech products.

Inputs reveal that ASML ships the chip-producing tools with maintenance agreements that help to keep the equipment alive. However, a limitation on selling these machines could soon make them inoperable.

Netherlands to limit ASML chipmaking tools for Huawei and other Chinese firms (Image Credits: ASML)

Neither ASML nor the Dutch government has commented on this matter so far. If correct, such a step will increase problems for Huawei and other chipmakers in China. For now, ASML is the main supplier of chip equipment for Chinese firms.

However, blocking ASML from supplying chipmaking tools will affect Huawei and the Chinese chipset industry. It will also impact the chipmaker and its overall growth in the Chinese market. As per reports, China is already 2-3 years behind in the chip race.

The decision to restrict ASML from shipping chipmaking equipment to China is still under consideration and hasn’t been confirmed. How Huawei and Chinese companies will react on this matter would be worth looking forward to.

[Source – Bloomberg]