China expresses concerns with US over chip-making export controls, sanctions

China’s Commerce Minister Wang Wentao on Thursday expressed concern over US restrictions that prevent third countries from exporting lithography machines to China.

In a telephonic conversation with US Commerce Secretary Gina Raimondo on Thursday, Wentao focussed on the United States’ restrictions on third-party exports of lithography machines to China, a (U.S.) investigation into the legacy chip supply chain, and sanctions that suppress Chinese enterprises

Washington has used export controls to restrict China’s access to advanced chips and chip-making tools, aiming to hinder breakthroughs in artificial intelligence and sophisticated computers for its military, the Commerce Ministry said in a statement, adding that the US has also urged key suppliers among its allies to adopt similar restrictions.

The Netherlands, home to the world’s leading chip equipment maker ASML, was one of the countries involved. On Jan. 1, ASML said the Dutch government had revoked an export licence covering the shipment of some of its equipment to China.

ASML’s most sophisticated machines – extreme ultraviolet “EUV” lithography machines – are already restricted and have never been shipped to China.

New U.S. export bans in October then stopped ASML from even sending older models of its DUV semiconductor equipment to China.

China was ASML’s biggest market in the third quarter of 2023, and responsible for 46% of the company’s sales.

“We are deeply concerned by the direct involvement of the United States in interfering with the export of lithography machines by Dutch companies to China,” Shu Jueting, a commerce ministry spokesperson, said at a press conference on Thursday.

“China firmly opposes the U.S. instrumentalising and weaponising export control issues, and even wantonly interfering in normal trade… we urge the Dutch side to respect the spirit of the contract,” she added.

Commerce Minister Wang’s discussion with Raimondo also highlights Beijing’s concern at a U.S. Department of Commerce survey into how U.S. companies are sourcing so-called legacy chips – current-generation and mature-node semiconductors – as the department moves to award nearly $40 billion in subsidies for semiconductor chips manufacturing.

The department said the survey aims to reduce national security risks posed by China and will focus on the use and sourcing of Chinese-manufactured legacy chips in the supply chains of critical U.S. industries.

Wang and Raimondo also discussed the boundary between national security concerns and trade and economic cooperation, China’s commerce ministry said.

With inputs from Reuters.