ASML: Rutte and Xi Jinping to Tackle Licensing Policy

ASML, the leading supplier of lithography systems to semiconductor manufacturers worldwide, faces a pivotal moment as Dutch Prime Minister Mark Rutte and Chinese President Xi Jinping prepare to convene next week. 

The fate of billions of euros worth of computer chip equipment sold to Chinese customers is at stake amidst escalating tensions in the global semiconductor industry.

Discussion Agenda: Bilateral Talks and Licensing Policy:

While Rutte’s visit to China primarily aims to strengthen bilateral and economic ties and address Middle Eastern affairs, the issue of ASML licensing policy will take center stage. 

The Dutch government has indicated that discussions will encompass ASML’s role in semiconductor manufacturing, particularly its licensure agreements, which have become contentious in the ongoing “chip wars” between the United States and China.

ASML’s Dominance and Regulatory Challenges:

ASML’s lithography systems, integral to chip fabrication, have made it a linchpin in the global semiconductor supply chain. However, its dealings with Chinese customers have raised concerns, prompting scrutiny from the U.S. and Dutch governments. 

With Xi Jinping’s strategic focus on bolstering China’s domestic chipmaking capabilities, ASML’s export licenses have come under heightened scrutiny.

Implications for ASML and its Customers:

The uncertainty surrounding ASML’s export licenses casts a shadow over its ability to service existing equipment in China, valued at over 6 billion euros in 2023 alone. 

The company’s failure to secure necessary licenses could have dire consequences for its Chinese customers, including major chipmaker SMIC. Moreover, the looming deadline for license renewals adds further pressure on ASML to navigate the evolving regulatory landscape.

Anticipated Discussions and Economic Cooperation:

During the meeting, Rutte and Xi Jinping are expected to discuss economic cooperation opportunities and the imperative of a level playing field in international trade. 

Dutch Trade Minister Geoffrey van Leeuwen’s attendance underscores the importance of equal market access and fair competition in fostering sustainable economic relations between the Netherlands and China.