By Stephen Nellis
(Reuters) – Semiconductor Manufacturing International Corp, China’s largest chipmaker, has agreed to buy $1.2 billion in manufacturing tools from ASML Holding NV, according to a regulatory filing on Wednesday.
In December, SMIC was one of dozens of firms put on a U.S. blacklist that required American semiconductor manufacturing equipment firms such as Applied Materials Inc and Lam Research Corp to obtain a license before exporting products to the chipmaker.
The U.S. Commerce Department said the action against SMIC stemmed from China’s efforts to harness civilian technologies for military purposes and evidence of activities between SMIC and Chinese military industrial companies of concern. The rules would still allow the shipment of tools for making less advanced chips.
ASML, which is based in the Netherlands and is the world’s largest supplier of lithography equipment for making chips, produces a critical tool required to manufacture advanced chips: an extreme ultraviolet lithography, or EUV, machine.
In 2019, the Trump administration pressed Dutch officials to cancel a sale of an EUV machine to SMIC. At that time, Dutch officials declined to renew a license needed to ship the tool. Dutch officials had not approved a license to ship an EUV tool to China as of late February, according to government records.
ASML, which also makes tools for less advanced chips, did not immediately return a request for comment on which tools were included in the most recent sale.
In January, ASML Chief Executive Peter Wennik said the company could see “significant upside” selling older chipmaking technology to China if allowed by government officials to do so. China accounted for 17% of ASML’s 14 billion euros in 2020 sales.
On Monday, the U.S. National Security Commission on Artificial Intelligence, or NSCAI, recommended that the United States coordinate with the Netherlands and Japan to deny export licenses to China for key chipmaking equipment.
“This (sale) is a slap in the face to the NSCAI recommendations and shows how big the gap with allies is on these issue,” a U.S. semiconductor executive said on condition of anonymity.
(Reporting by Stephen Nellis in San Francisco and Toby Sterling in Amsterdam; Editing by Paul Simao and Jonathan Oatis)
