US and EU Join Forces to Suppress China's Chip Industry: ASML Caught in the Middle, Global Chip Market in Turmoil

US and EU Join Forces to Suppress China's Chip Industry: ASML Caught in the Middle, Global Chip Market in TurmoilIn recent years, the rivalry between China and the US over the chip industry has intensified, with Europe gradually joining the fray, seeking to play a more significant role in this critical field. The focal point of this competition lies in lithography machines, a core equipment for chip manufacturing

US and EU Join Forces to Suppress China's Chip Industry: ASML Caught in the Middle, Global Chip Market in Turmoil

In recent years, the rivalry between China and the US over the chip industry has intensified, with Europe gradually joining the fray, seeking to play a more significant role in this critical field. The focal point of this competition lies in lithography machines, a core equipment for chip manufacturing.

In 2023, under US pressure, ASML, a Dutch company, announced that it would cease exporting extreme ultraviolet (EUV) and deep ultraviolet (DUV) lithography machines to China and limit the models exported to China to 1980di or below. This move effectively amounts to banning all high-end lithography machines from sale to China, sparking concern across the global chip industry.

Although ASML CEO Peter Wennink repeatedly emphasized that this move was "meaningless and would accelerate China's research and development," the US did not relent. In December last year, US President Joe Biden even requested ASML to stop providing maintenance services for existing lithography machines in China. However, ASML refused, citing "breach of customer agreements."

US suppression of China's chip industry extends beyond high-end lithography machines. The US Department of Commerce believes that China's exports in traditional chip sectors, such as automotive parts, household appliances, and mobile devices, are "replenishing" its own chip industry's research and development, and therefore must be restricted.

EU Intervention: The Trap of "Overcapacity" in Traditional Chips

Under pressure from the US, the EU has also begun intervening in China's chip industry. Earlier this month, the European Commission launched an investigation into Chinese companies' investments in traditional chips, attempting to portray China's traditional chip industry as having "overcapacity."

This EU move is believed to be orchestrated by the US, aiming to hinder ASML's export of ordinary lithography machines to China and ultimately stifle the development of China's traditional chip industry.

In response, Wennink stated that the robust growth of China's traditional chip industry is a normal phenomenon. These chip products are in high demand by buyers globally, but due to insufficient investment, they cannot meet their own needs. Further restricting ASML's export of advanced equipment to China is "unwise," and "stopping others from producing what they need is meaningless."

ASML's Dilemma: Caught in the Middle, Technology Patents Become a Constraint

Faced with dual pressure from the US and EU, ASML finds itself in a predicament. While Wennink has publicly expressed dissatisfaction with US and EU actions, ASML cannot fully escape US control.

The US possesses numerous technology and materials patents for lithography machines. If the US prohibits ASML from selling machines containing US-manufactured components to specific Chinese chipmakers, ASML will find it difficult to defy, even if it is dissatisfied.

When asked whether he believes ASML is a "victim" of the US-China chip war, Wennink declined to answer, instead emphasizing that ASML is "crucial" in global competition and a signal of Europe's ability to play a vital role in this key industry.

China's Chip Industry Response: Independent Research and Development, Enhancing Supply Chain Resilience

In the face of US and EU suppression, China's chip industry is accelerating independent research and development and enhancing supply chain resilience. While China still has a gap in high-end chip technology, it already has a strong self-production capacity in traditional chips.

Some commentators believe that the US effort to restrict China's manufacture of traditional chip technology is actually dragging down the Western economy because ultimately, the West itself will suffer the losses.

The Future of the Global Chip Market: Competition and Cooperation, Seeking Balanced Development

How will this competition over the chip industry ultimately play out?

On the one hand, the rivalry between China and the US will continue, with both sides striving to protect their interests. However, cooperation is also essential. The global chip supply chain is highly complex, with countries interdependent on each other. A complete decoupling would lead to enormous losses.

In the future, the global chip market will face a more complex landscape, with competition and cooperation intertwined. China's chip industry needs to continue increasing research and development investment, enhancing independent innovation capabilities, while actively participating in international cooperation and seeking balanced development.

Conclusion

This competition over lithography machines is actually a reflection of the profound transformation of the global chip industry landscape. China's chip industry faces enormous pressure but also has tremendous potential for growth. How China's chip industry will meet these challenges and achieve breakthroughs in the future remains to be seen.

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