Export restriction of ASML’s equipment to China has little impact on Samsung, SK
By Kim Bo-eun
Samsung Electronics and SK hynix are on the alert over possible effects of further steps by the U.S. to contain the growth of China’s chip technology.
The Joe Biden administration is known to be seeking to maintain an export restriction on Dutch firm ASML’s key equipment used in producing advanced chips to China. China has been focusing resources on making its chip-manufacturing technology more competitive, and has sought to import ASML’s extreme ultraviolet (EUV) lithography equipment as part of such efforts.
Lobbied by the Donald Trump administration, the Netherlands imposed export restrictions on ASML’s EUV equipment to China in 2019. ASML is the dominant player in the field of EUV lithography, which enables more precise and efficient production of semiconductors at small transistor scales of around the 5-nanometer node size and below. The Netherlands has yet to lift the imposed restriction.
Korea’s major chipmakers use ASML’s equipment in producing advanced microprocessors, as do giants such as TSMC and Intel. ASML is the only firm producing the EUV equipment needed to produce cutting-edge chips.
According to Samsung and SK hynix, the existing export restriction on ASML’s equipment to China has not affected the operation of their plants in China so far, given the restricted equipment is not used there.
But the ongoing power struggle between the world’s two largest economies is keeping the chipmakers on their toes, as any possible additional restrictions could cause a spillover effect for them.
The companies may see their operations affected if the U.S. expands the export restrictions to a greater range of ASML equipment, as was proposed by the U.S. National Commission on Artificial Intelligence to Biden’s office earlier this year.
“Samsung and SK have not been affected so far. Further export restrictions on other equipment will not immediately weigh in either, given the companies have machines currently in use,” an industry official said. “But they are closely observing developments given the conflict is expected to continue. Bringing new equipment to China may become more difficult.”
The Biden administration was expected to take a toned-down approach to China compared to the blatantly hostile policy of the preceding Trump administration.
But Biden is seen to have inherited his predecessor’s China policy for the most part. Containing China’s technological rise has become a pressing task for the U.S. at a time when cutting-edge technology is considered parallel to national security.
The U.S. continues to lobby allies with weighty ties to China to join its moves to contain the latter’s growing power.
China in the meantime is also seeking to reduce dependency on imported equipment and develop its own. ASML’s EUV equipment that has been restricted from export to China is known to cost $150 million per machine. Experts believe it will take China more than a decade to develop technology to manufacture its own EUV equipment for making advanced chips, which is why such restrictions are detrimental to the country.
The U.S. is seeking to set up supply chains of strategically important products such as semiconductors and batteries in its own territory, after experiencing disruptions triggered by the COVID-19 pandemic and as geopolitical risks continue to linger. Movements are ongoing to develop homegrown technology and secure local supply. The world’s No. 1 economy is also pressuring major companies in allied nations to invest in building manufacturing plants of the key products on its soil.