Chips down for China: Sanctions by US, Netherlands most likely to kick in by Jan-end
In a situation that China hadn’t anticipated, officials from the US and the Netherlands will meet in Washington to finalise the details of the sanctions on exporting chipmaking tech and equipment to China. In all likelihood, the sanctions may go into effect by Jan-end.
It seems that the sun is finally going to set in the Chinese chip industry, soon. Officials from the US government and the Netherlands are set to meet on Friday in Washington and finalise the details of the sanctions that would control the exporting of semiconductor manufacturing gear to China. If everything goes as per plan, the deal between US and the Netherlands would go into effect by the end of the month, as per a report by the South China Morning Post.
Quoting a source close to the matter, the report said that the deal could be announced as soon as Friday if the two sides can agree on the details.
The Biden administration published wide-ranging export controls on China back in October. The sanctions included measures which tightly restrict the Chinese access to US chip-making technology, as part of an effort to slow Beijing’s technological and military advances.
However, it wasn’t able to convince some of the key players in the industry, notably from countries like the Netherlands and Japan, to implement similar equipment curbs seen as essential to making the restrictions effective.
The Netherlands is home to ASML Holding, the world’s leading maker of ultraviolet lithography equipment, which is critical for making semiconductors.
One of the central concerns for the negotiators is that a change as significant as this may reignite the global chip shortage. Global supply chains may look robust and steady, but even the smallest of changes may end up becoming a bottleneck that would take months to resolve.
Dutch officials are also adamant the controls be tailored to national security concerns and not give the appearance that the United States is trying to favour its own chip-making industry.
In a press conference with reporters, after ASML reported fourth-quarter earnings on Wednesday, CEO Peter Wennink said an export control deal may be close and that his company does not participate in the political talks. However, he said that while a deal may be announced soon, it is less clear whether the technical details of any regulations have been resolved.
Earlier this month, the Dutch foreign trade minister Liesje Schreinemacher had said that she would fight for free trade during a semiconductor panel discussion on Thursday at the World Economic Forum in Davos.
However, just days later, the Netherlands agreed to abide by US’ restrictions on exporting chip-making technology to China, after consulting with its European and Asian allies, and upon the condition that certain critical issues are kept in consideration.
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