The US is pushing the Netherlands to ban ASML Holding NV from selling to China mainstream technology essential in making a large chunk of the world’s chips, expanding its campaign to curb the country’s rise, according to people familiar with the matter.

Washington’s proposed restriction would expand an existing moratorium on the sale of the most advanced systems to China, in an attempt to thwart China’s plans to become a world leader in chip production. If the Netherlands agrees, it would broaden significantly the range and class of chipmaking gear now forbidden from heading to China, potentially dealing a serious blow to Chinese chipmakers from Semiconductor Manufacturing International Corp. to Hua Hong Semiconductor Ltd.

American officials are lobbying their Dutch counterparts to bar ASML from selling some of its older deep ultraviolet lithography, or DUV, systems, the people said. These machines are a generation behind cutting-edge but still the most common method in making certain less-advanced chips required by cars, phones, computers and even robots.

Shares of ASML gained as much as 2.6% in Amsterdam on Wednesday. Its American Depository Receipts closed down 3.9% on Tuesday following Bloomberg’s initial report. Nikon Corp., a smaller rival to the Dutch firm in that sphere of chipmaking gear technology, closed down 5.1% in Tokyo on Wednesday.

The issue arose during US Deputy Commerce Secretary Don Graves’s visit to the Netherlands and Belgium in late May and early June to discuss supply chain issues, said the people, who asked not to be identified because the discussions were private. During that trip, Graves also visited ASML’s headquarters in Veldhoven and met Chief Executive Officer Peter Wennink.

What Bloomberg Intelligence Says

ASML’s sales could narrow by 5-10% if it’s banned from selling deep ultraviolet tools in China. As the chip equipment maker’s revenue already reflects a ban on extreme ultraviolet tool shipments to the country, it may experience less impact vs. peers such as Applied Materials which derives 25-30% of its sales from China.

By: DocMemory
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