In the geopolitical conflict between the United States and China, Veldovan was given a new lease of life via South Korea. Preventing the use of ASML’s Dutch chip machines in China was a major blow to South Korea’s SK Hynix, a major manufacturer of memory chips, which sought to modernize its Chinese factory in Wuxi.
Prohibition can have all kinds of consequences. For SK Hynix, we now need to create a new product line. For the distribution of already deficient memory chips: South Koreans are responsible for about 15 percent of world production, half of which takes place in China. For ASML who may lose customers this way. For chip production worldwide, it can be transferred to other countries.
ASML has long been the target of US sanctions. The chips are made of baked ‘wafer’ so precisely that no competitor can match them. The wavelength of light engraved with the shapes on the chips is small, more circuits (hence zeros and one) fit on one chip, and can become smaller or faster, for example, a chip-carrying smartphone. . With a wavelength of about 13 nanometers ASML has now reached extreme UV (EUV). The devices will cost around 150 150 million each.
The Americans fear that the Chinese will use the chips for military purposes – and generally fear Chinese competition – and they will try to prevent the export of machinery. The Trump administration pressured the Dutch government not to grant ASML an export license to supply an EUV machine to the Chinese SMIC. President Biden continues that policy. The export license was placed in a drawer and ASML sold the machine to another party. ASML sells some more rugged (DUV) machines to SMIC.
The pressure will increase
But the pressure is mounting. Earlier this year, a group advised the U.S. government to block some of those DUV devices. It turns out now that Americans do not like modern machines in China anyway, even if they are owned by a foreign company. ASML will account for 17 percent of 14 14 billion in sales in China by 2020, with or without foreign companies.
According to an ASML spokesperson, the blocked location of its EUV engines was initially a problem for SK Hynix. She expects South Koreans to now place the equipment in a factory outside China.
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