On Tuesday, China requested that the Netherlands adhere to market principles, following ASML’s announcement that the Dutch government had withdrawn an export license for the transfer of certain equipment to China.

On Monday, the company based in Veldhoven, Netherlands, stated that the affected shipments included specific lithography systems.

The Dutch government has recently revoked part of the license for shipping NXT:2050i and NXT:2100i lithography systems in 2023. This will affect a small number of customers in China, according to the company’s statement.

ASML is the leading player in the worldwide market for lithography systems, which utilize lasers to facilitate the production of chip circuitry.

The company’s stocks experienced a decline at the start of trading on Tuesday.

When questioned about the decision made by the Dutch government, Wang Wenbin, a spokesperson for the Chinese foreign ministry, advised the Netherlands to remain unbiased and abide by market principles and laws. He also urged them to take tangible steps to safeguard the shared interests of both nations and their businesses, as well as uphold the stability of global supply chains.

According to company disclosures, ASML did not mention the specific customers who were scheduled to receive the machines. However, its customers in China include Semiconductor Manufacturing International Corporation (SMIC) and others.

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In the past few years, China has become the third-largest market for ASML, following Taiwan and South Korea. However, in the third quarter of 2023, it surpassed both countries and accounted for 46% of the company’s total sales.

In 2023, the United States declared regulations granting Washington the authority to limit the export of ASML’s “Twinscan NXT1930Di” machine if it includes any components from the U.S.

Shortly after, a number of legislators from the Netherlands questioned the country’s Trade Minister about the legitimacy of the United States’ decision to unilaterally impose regulations on the export of an ASML chipmaking machine to China.

“According to a statement from the semiconductor equipment manufacturer ASML, they have received additional clarification from the US government regarding the extent and consequences of US export control regulations in recent conversations.”

ASML is dedicated to adhering to all relevant laws and regulations, including export control laws, in the countries where we conduct business.

The Chinese government has made a significant effort to develop a self-sufficient semiconductor supply chain, including efforts to improve their lithography capabilities. Shanghai Micro Electronics Equipment (SMEE) is currently the only known producer of lithography machines in China, but it is considered to be far behind ASML and Japanese competitors.

In the previous month, Zhangjiang Group, a shareholder of SMEE, declared via their WeChat account that the company had achieved a significant milestone by developing a 28nm lithography machine. This was seen as a notable accomplishment for both SMEE and China. However, the post was later removed without any explanation.