February 4, 2023

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Premier Rutte bezoekt, net als in 2019, het Witte Huis, nu voor een overleg met president Biden (beeld: ANP).

Rutte talks to Biden about ASML

Chip machine manufacturer ASML in Veldhoven is increasingly looking like a plaything in the geopolitical game between the US and China. Prime Minister Rutte will speak with US President Joe Biden on Tuesday. Commitment to Americans: Export ban on chip machines to China “It would be devastating for ASML,” said Paul Verhagen, a high-tech warfare expert at the Hague Center for Strategic Studies (HCSS).

What problem?
The US wants to control China’s technological and economic development. The US fears that high-speed chips could be used in military weapons. It is feared that it could eventually make China more militarily powerful than the US.

That’s why they want to limit the export of chip machines to China. “It’s kind of Cold War, but high-tech,” says HCSS’s Verhagen.

What does ASML mean?
China is an important sales market for ASML. The country accounts for about fifteen percent of the chip machine manufacturer’s revenue. Verhagen suspects that number is even higher.

“But more relevant: How big is the future stake? China was Valhalla for ASML, an unbounded power. Who would fill the gap if there was an export embargo?”

Now what is fifteen percent?
Fifteen percent turnover may not sound like much, but according to Verhagen, you also have to look at the investments ASML has made for this. “The company has invested billions. Twenty years have been spent developing these machines and ASML has been able to reap the benefits in only five to seven years.”

He continues: “They thought they would be able to export to China until 2030 or 2035. That would be disastrous for ASML. The money coming back from China now is needed to build future machines.”

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What are the chances of an export ban?
The scientist considers the possibility that the route to China will be blocked too much. “ASML is caught in a geopolitical trap. If America wants something, it’s going to happen, for better or for worse. You really should be happy Biden is in power now, not Trump.”

Verhagen: “If they want, they can block ASML in the dollar market, and then international trade is impossible. They are the only ones in the world who can do this, and then it is ready for ASML.”

What’s next for ASML?
A boycott would deal a severe blow to ASML and put brakes on the company’s growth. “Left or right, it will hit ASML.” Veldovan needs to find other ways to raise money for research and development. “Sell stocks or sell government subsidies?”

According to Verhagen, America should pull out its wallet in any case. “They are already building new factories for forty billion euros for TSMC, no doubt for ASML machines too. By comparison: the defense budget of the Netherlands is fifteen billion euros. But they will never be able to absorb the entire market loss.”

What is the cost of my phone?
The high-tech expert expects that we will all feel the new Cold War in our own pockets. “We are used to paying 1,000 euros for a new phone. If there is no production in a cheap country like China, the price will go up. To what extent is the consumer willing to pay 2,000 euros for a new phone? Phone?”

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