The trade war between the US and China has not shown any sign of stopping. Recently, a report said the US is looking to ease China's ambition in the chip industry.
The United States is scrutinizing lists of major global suppliers, dealing with Chinese companies. The recent example is TSMC, the world's largest chip casting company and is closely related to HiSilicon, Huawei's semiconductor arm. The Taiwanese government and the company still insist that the US is not involved, the business relationship with the Chinese company will continue.
ASML is stuck between the US and China
China's largest computer chip company, SMIC (Semiconductor Manufacturing International Corp.) has ordered a Dutch company with advanced chip-making systems, to create chips that bring hope to the entire technology industry. China, on the path of semiconductor technology autonomy. According to the newspaper Nikkei, three new sources told them orders from April last year were still delayed.
Order "is in processing status, awaiting later notification," a bad sign for SMIC. By the Dutch company ASML, it plays a key role in the semiconductor industry, like ARM or Google of the smartphone industry. They hold the watershed core technology is the EUV systems used to produce chips, each unit sold to TSMC, Samsung or Intel, … all worth more than $ 100 million.
Not many people know it, but ASML has the technology that Samsung, Intel or TSMC all depend on
ASML uses words "delay" (delay) means the order is not canceled (or not canceled), but it is also a blow to Beijing's ambition to master chip technology. "ASML temporarily delayed the completion of orders. They did not want to upset the Trump administration for trying to sell advanced equipment to China.", a source commented.
The truth is that chip casting companies are all dependent on ASML, including Samsung or TSMC. This delay obviously affects customers' itinerary when not getting the right equipment as planned. "But at the same time, ASML doesn't want to disappoint Chinese customers. Because this is an industry that is changing very fast." The implementation of the capital order was set at the end of 2019 to deliver and install in mid 2020.
China wants technology autonomy, but the United States is determined not to let it succeed
It has not been determined whether this unusual delay is due to China being directly or indirectly influenced by the US government. Or maybe, ASML is busy renewing the export license from the Dutch government. The company mentioned a request to renew the EUV system export license to China which is pending.
America is important to ASML. About 16% of their annual revenue comes from the US market, equivalent to 9.2 billion USD. That's money for selling chip casting machines for Mircon, Intel, … And one fifth of their machine components are made in Connecticut. However, the Dutch company is like a piece of meat sandwiched between two slices of bread. The Chinese side also contributes 19% of annual sales, SMIC is just one of many customers here.
In the second quarter of 2019, ASML sold 7 EUV machines, equivalent to 41% of total revenue
Chris Hung, a senior technology analyst at Market Intelligence & Consulting Institute, said: "All businesses working around the chip, whether American or not, will have to be more careful when shipping to China. After all, a lot of intellectual property, materials, basic science and technology originated in the US ". They must carefully review and evaluate before conducting transactions, if not want to be considered deliberately ignored by the US government.
SMIC is China's largest chip-casting company, central to Beijing's ambition to achieve semiconductor technology autonomy. Especially specialized chips in the fields of artificial intelligence, 5G, self-driving cars, advanced robots. SMIC has had a long time trying to make a profit. Without the government backing, they could not even afford an EUV system and related services of ASML. The company's annual profit is only 134 million USD, on par with an order.
This is the only company in the world that can produce EUV optical engraving machines
ASML says it treats all customers equally, regardless of country. The company added that the EUV systems that currently only it can produce (Nikon and Canon have almost abandoned this type), are bound by the Wassenaar Convention. A joint agreement on multinational export control, designed to prevent the spread of advanced technologies that can be used for military purposes.
They were originally exempted by the Dutch government and the European Union to export to China. But it looks like these licenses have now expired. As a rule, the license takes up to 8 weeks to decide whether it is approved or denied. "We only work by law" – Notification company. Many believe that the US government has certain authority over ASML, some of their business activities take place within the United States.