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How ASML Became A Key Player in the Race to Advanced Computing Between the U.S. and China

In October of 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued novel regulations drastically limiting the export of advanced computing and semiconducting manufacturing to the People’s Republic of China (PRC). A very important key to understanding these new regulations in practice is that ASML, the most advanced supplier of machinery used to add the circuitry to silicon wafers of microchips, was one of the most heavily affected businesses.

ASML is the Netherlands’ largest company and the Dutch government has already placed restrictions on exporting some of their newest and most advanced systems to China. The Dutch government has prohibited ASML from shipping some of their most advanced chip manufacturing systems to China while the U.S. government has steadily pushed the Dutch government to further restrict ASML from also shipping older, less advanced systems. The U.S. and Dutch governments have been struggling with defining fair regulations for months with extra political pressure being applied from the newly implemented Creating Helpful Incentives to Produce Semiconductors and Science (CHIPS) Act.

ASML is intimately connected in what is growing to be a power struggle between the U.S. and China for developing the most advanced microchips and processing systems. The CHIPS act, as mentioned earlier, was signed into law on August 9, 2022. The broad goal of the act is to boost U.S. competitiveness, innovation, and national security through investments in domestic semiconductor manufacturing.

With China being the lead competitor in this space, the U.S. has naturally attempted to block ASML from sending advanced semiconductor equipment to the country through a variety of avenues. The most recent, and seemingly successful effort was the collection of new export controls imposed by BIS on Advanced Computing and Semiconductor Manufacturing Items to the People’s Republic Of China. These regulations are very intricately laced into the supply chain of microchips and advanced computing technology in China but the most important shifting point in these new blocking efforts is that the regulations are meant to hinder the development of surveillance and artificial intelligence technology that is used for military modernization.

The U.S. government’s efforts to block China’s technological development have shifted and taken new forms over the years, but this set of regulations seems to be the most abrasive and confusing thus far. Some manufacturers with factories in China that are not subsidized by the Chinese government have been able to receive export licenses. The grant of these licenses have further confused some exporters as well.

Defining advanced computing and semiconductor manufacturing items is a key component for tracking the direction that the U.S. government is pushing this trade struggle. For more information check out our previous article, Defining Advanced Computing and Semiconductor Manufacturing Items in China.

Are you confused by how ASML is the key to these regulations and the CHIPS act? Are you unsure of how these activities may effect your business? Give our office a call today, we would be happy to speak with you.

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