Coercive intent of 'chip alliance' laid bare: China Daily editorial

About three weeks after talks with the United States on new measures to restrict exports of semiconductor equipment to China, Dutch Prime Minister Dick Schoof told the media on Friday his government will "watch out very specifically for the economic interests of ASML" when deciding whether to further tighten the rules governing exports to China.

ASML's economic interests "are extremely important" and "need to be weighed against other risks", Schoof said. "ASML is for the Netherlands an extremely important, innovative industry that should not suffer under any circumstances, because that would damage ASML's global position." His remarks came one day after Bloomberg News reported that the Netherlands would impose more curbs on ASML's China chip business. Schoof expressed a balanced stance similar to that adopted by the previous Dutch government under Mark Rutte after the Joe Biden administration started trying to press the Netherlands to join its united front against China in its "chip war" about two years ago.

Just like Japan and the Republic of Korea, the other two major chipmaking equipment suppliers, the Netherlands also held a wait-and-see attitude when the US first unveiled its initiative to erect a "chip iron curtain" against China, although they were well aware of the long-arm jurisdiction nature of the politically motivated trade restriction measures. Yet, they soon realized that the US would not compensate them for any losses that would be incurred by their support for it, except a pat-on-the-back comfort, after the US made public its "chip war" plan. And none of the "friendly shores" the US has been fostering for its allies have shown the potential to replace China in manufacturing, trade and investment in the near future.

After that the united front the US had sought to form against China only existed in name. Not only ASML but also Japanese and ROK companies, such as Tokyo Electron, Samsung and SK hynix, as well as some leading US chip companies, including Qualcomm and Nvidia, are figuring out how to steer clear of the Biden administration's ban, as no party wants to lose their share of the Chinese market to others.

Following US pressure, the Dutch government has already restricted ASML from exporting its most advanced lithography machines to China since 2019. "Maybe they think we should come across the table, but ASML has already sacrificed," former ASML CEO Peter Wennink said in a recent interview with the media. ASML CEO Christophe Fouquet said that although China is still a decade behind the US in chip technology, the world still needs the mature chips it is manufacturing. That has benefited US companies; 25 to 30 percent of the US companies' overseas sales go to China.

By demanding the Dutch government prohibit ASML from offering after-sales services to some of the equipment it has already sold to Chinese customers, which is against the contract spirit and will unavoidably hurt the company's credit, Washington has laid bare the coercive and bullying intent behind its move.

As such, the Schoof government has not found enough reasons since it took office in early July to change the proved effective policy that protects the ASML's basic economic interests and legal rights while ensuring the Netherlands' cooperation with the US, despite the haste with which the US came to talk with it on the issue.

In effect, Rutte used his last Beijing trip as the Dutch prime minister to lay a solid foundation for the Schoof government to carry on the Netherlands' win-win cooperation with the world's second-largest economy. Rutte correctly pointed out that "decoupling and breaking industrial and supply chains" should not be a policy choice of the Dutch government, as any act harming China's development interests will only boomerang.