Semiconductor supply chain players plot to flee China after ASML exit

US efforts to stop China’s semiconductor industry have reached a tipping point when the Netherlands joined.

However, the consequences of the new restrictions may affect not only Chinese companies. Reuters reports that officials from a dozen companies that supply ASML components are now weighing the possibility of a mass exodus from China to avoid the impact of export restrictions.

Representatives of Neways, NTS Group, Bestronics, AAE, BV, BKB Precision, KMWE Group, Sempro, Sioux technologies and VDL ETC will visit Vietnam, Malaysia and Singapore to discuss potential expansion in those countries, according to a Dutch public authority report received by Reuters agency.

The news comes after the Dutch government announced it would join the US in restricting exports of sensitive semiconductor equipment to countries or organizations that pose a threat to the national security of the country and its allies.

ASML is a leading supplier of lithography equipment used to etch microscopic features into silicon wafers. While the company’s most advanced extreme ultraviolet (EUV) machines have never been sold to China, the company has supplied it with a steady supply of older deep ultraviolet (DUV) lithography machines.

According to US export controls, ASML is required to obtain special licenses before selling deep ultraviolet lithography equipment to China. This licensing requirement could mean either an actual ban on the sale of deep ultraviolet lithography equipment to China, or simply a delay in supplying such equipment to the country.

The US position also has implications for companies that supply parts for ASML machines, which are incredibly complex and rely on a variety of components sourced from around the world, including China itself. This puts ASML suppliers at risk, so they have to find a way out of this situation.