On Tuesday, a source informed Reuters that a U.S. official, after meeting with the Dutch government, traveled to Japan in an attempt to further restrict the Chinese Communist Party’s access to cutting-edge semiconductor technology and equipment. The U.S. Department of Commerce’s export policy chief, Alan Estevez, aims to build upon the agreement reached in 2023 between the United States, Japan, and the Netherlands to prevent the transfer of chip manufacturing equipment that could enhance China’s military modernization efforts. Estevez is expected to urge the Dutch and Japanese governments to impose additional restrictions on the business activities of ASML Holding NV from the Netherlands and Tokyo Electron Ltd. from Japan in China. The focus of the discussions includes Chinese chip companies’ research and development of High Bandwidth Memory (HBM) chips. As the talks are being held privately, the sources chosen to remain anonymous.
According to Bloomberg, the U.S. Department of Commerce’s Deputy Assistant Secretary for Industry and Security, Estevez, will advocate for heightened limitations on the operations of ASML and Tokyo Electron in China. This request forms part of ongoing consultations with allies and will particularly emphasize possible restrictions on the commercial services related to the development and maintenance of HBM chips. The Dutch Ministry of Foreign Affairs confirmed holding a meeting on Monday in the Netherlands, while Japan’s Ministry of Economy, Trade, and Industry indicated various exchanges with the U.S. without elaborate comments.
Gregory Allen, Director at the Center for Artificial Intelligence and Advanced Technology at the Strategic and International Studies Center, stated to Bloomberg, “The U.S. is a crucial player in the global semiconductor equipment industry, but far from the only significant country. Japan and the Netherlands are also major suppliers of semiconductor equipment.” He emphasized that while export restrictions exist in the Netherlands and Japan, a gap remains in terms of limitations on commercial service, which is a critical element within the overall technology blockade framework.
It is anticipated that Estevez will reaffirm the U.S.’s long-standing request for both countries to strengthen restrictions on related equipment maintenance services in China. The U.S. has already subjected American companies in the industry, such as Applied Materials Inc. and Lam Research, to similar restrictions.
Sources mentioned that the U.S. is in discussions with its allies to potentially add another 11 Chinese chip manufacturing facilities to the restriction list. Currently, there are five factories on the list, including China’s largest chipmaker, Semiconductor Manufacturing International Corporation (SMIC).
Estevez’s objectives are to also exert control over more chip manufacturing equipment. Due to the sensitive nature of the discussions, the sources opted not to disclose their identities.
When approached, a spokesman from the U.S. Department of Commerce declined to comment to Reuters.
The Dutch Ministry of Foreign Affairs highlighted that Monday’s meeting was part of the ongoing discussions between the U.S. and the Netherlands regarding export policy and security negotiations. The spokesman emphasized the Netherlands’ continuous communication with their allies.
ASML and Tokyo Electron’s equipment are utilized in the production of Dynamic Random Access Memory (DRAM) chips, which are integral components in creating HBM chips. Chinese enterprises engaged in HBM research include Wuhan Xinxin, a subsidiary of the leading storage chip manufacturer Changjiang Storage. Huawei and Yangtze Memory Technologies (YMTC) are also reportedly involved in HBM chip development.
HBM chips play a crucial role in the AI hardware ecosystem, accelerating the speed of data access in storage chips. Nvidia and Advanced Micro Devices Inc. produce AI accelerators that require bundling with HBM chips to function effectively. According to Bloomberg, U.S. officials are preliminarily discussing the restriction of HBM chip exports.
SK Hynix Inc. from South Korea is a major producer of HBM chips, while Samsung Electronics and Micron Technology Inc. from the U.S. are striving to catch up. SK Hynix relies on ASML and Tokyo Electron equipment, according to supply chain data from Bloomberg.
South Korean equipment manufacturers like Hanmi Semiconductor Co. and Hanwha Precision Machinery Co. play crucial roles in the HBM supply chain. Earlier this year, the U.S. requested South Korea to limit the export of equipment and technology used in manufacturing advanced logic and storage chips to China.
In 2022, the U.S. initially restricted the export of advanced chips and chip manufacturing equipment to China, impacting companies such as Nvidia and Lam Research based in California.
In July 2023, to align with U.S. policies, the Japanese government restricted the export of 23 types of equipment, including machines for depositing films on silicon wafers and etching microcircuits, affecting Nikon Corporation and Tokyo Electron.
Subsequently, the Dutch government began regulating ASML’s exports of Deep Ultraviolet (DUV) semiconductor equipment to China. ASML is recognized as the world’s largest chip equipment manufacturer based on sales revenue and market value.
Chinese firms have been unable to purchase cutting-edge AI chips from Nvidia, but Huawei is developing its AI accelerator Ascend. It remains unclear which companies are supplying advanced storage chips to Huawei. Since the U.S. strengthened sanctions against Huawei in 2020, SK Hynix, Samsung, and Micron have ceased chip production for Huawei.
In April of this year, ASML stated that it expects to provide maintenance services for equipment valued in the billions of euros sold to China, but without employing U.S.-restricted American components. The company did not offer immediate comments on Wednesday.