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In a meeting with Dutch Prime Minister Mark Rutte, Chinese leader Xi Jinping emphasized that no force can hinder China’s scientific and technological progress. This assertion was made amidst a chip war between China and Western countries, including the Netherlands, where ASML is based. ASML is the world’s only producer of extreme ultraviolet lithography machines essential for creating advanced semiconductors. Xi stated that imposing technological barriers and disrupting supply chains will only create division and conflict, urging the Netherlands to contribute to mutual understanding and positive relations between China and Europe.

There was no direct mention of ASML in the readout of the meeting, but the company previously disclosed that the Dutch government had prohibited the shipment of some lithography machines to China. This restriction came after the United States increased limitations on semiconductor sales to China and urged its allies to follow suit. ASML’s dominance in the market has made it a major indicator of the widening gap between China and the West regarding access to advanced technology. Xi stressed that the Chinese people have the right to develop technologically and hoped for continued cooperation with the Netherlands in bridging understanding between China and Europe.

On the same day of Xi’s meeting with Rutte, Chinese commerce minister Wang Wentao met with Dutch Trade Minister Geoffrey van Leeuwen to advocate for normal trade of lithography machines, without specifically mentioning ASML. Wang urged the Dutch government to support companies in fulfilling their contractual obligations, implying a desire for the lifting of restrictions on ASML’s exports to China. Despite the Dutch ban on some shipments, there was a significant increase in sales of ASML’s chipmaking tools to China in 2023, with China’s share of ASML’s revenue growing substantially throughout the year.

Jefferies analysts emphasized the importance of China’s access to high-end chipmaking machines, particularly for commercializing 7-nanometer logic chips. They noted that China has been aggressively acquiring semiconductor equipment to establish production lines for advanced and mature nodes. Last year, Chinese manufacturer Huawei surprised industry experts by introducing a phone powered by a 7-nanometer processor from China’s Semiconductor Manufacturing International Corporation (SMIC). SMIC, a partially state-owned company, has faced export restrictions imposed by the US government in recent years, raising questions about how Huawei obtained the technology to produce such a chip.

With the ongoing chip war and escalating restrictions on semiconductor sales, the competition between China and Western countries, particularly the United States, for technological supremacy continues to intensify. China’s efforts to secure access to advanced chipmaking equipment and develop domestic production capabilities highlight its determination to reduce reliance on foreign technology. ASML’s role as a pivotal player in this technological battleground underscores the strategic importance of controlling access to cutting-edge semiconductor manufacturing technology. The outcome of this competition will not only impact global technological advancements but also have significant geopolitical implications in the ongoing tech rivalry between China and the West.

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