Dutch chipmaker ASML Holding NV has extended its deal with Semiconductor Manufacturing International Corp (SMIC), China’s largest chipmaker, until the end of this year.
Yesterday, SMIC announced that it has a contract under which it has already paid ASML $ 1.2 billion. In a clarification posted a few hours later, ASML said the agreement went into effect in 2018 and expired at the end of 2020, but in February the two companies agreed to extend the deal until the end of this year.
In December, SMIC, along with other Chinese manufacturers, was blacklisted by the US Department of Commerce. American companies that want to supply their products with blacklisted companies must obtain appropriate licenses.
The US Department of Commerce said the sanctions against SMIC are caused by “concerns” about the alleged connection between SMIC and the Chinese military and are a consequence of China’s efforts to use civilian technology for military purposes.
ASML is the world’s largest supplier of lithography equipment for the manufacture of microcircuits. In 2019, the Trump administration demanded that the Netherlands cancel the sale of advanced EUV lithography equipment to SMIC, which was slated to ship in late February. The Netherlands is a sovereign country following the principles of the free market, so the local government immediately refused to renew the license for ASML.
The ASML statement clarifies that the renewed contract concerns the older DUV technology.
In January, ASML’s CEO said the company sees “significant growth potential” in selling old chip technology to China, if the government allows it. In 2020, China accounted for 17% of ASML’s € 14 billion revenue.
On Monday, the US National Security Commission on Artificial Intelligence (NSCAI) recommended that the US leadership coordinate with the Netherlands and Japan to exclude the supply of key equipment for the production of microcircuits to China.
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