(Oct 22): ASML Holding NV CEO Christophe Fouquet expects pressure will grow from the US to further restrict sales of semiconductor technology to China, the biggest market for the Dutch producer of chipmaking machines.

“If you look at the geopolitical landscape, I think it’s clear that the US will continue to apply pressure on their allies for more restrictions,” Fouquet said in an interview during the Bloomberg Tech Summit in London on Tuesday. “The question is what is right for the Netherlands? What is right for Europe?”

Washington has been aiming for years to limit China’s rise in the semiconductor sector through repeated rounds of export controls that have targeted the sale of advanced artificial intelligence chips and chipmaking equipment. The Dutch government has struggled to find a middle ground between its US ally and the biggest market for its biggest company.

Fouquet said much of ASML’s business with China is focused on mature technology that is less relevant to national security concerns.

“A lot of the focus in China today is on mainstream semiconductors,” he said. “This is very different from AI.”

ASML has a monopoly on making the lithography machines that help the world’s largest semiconductor companies produce the most advanced chips that power everything from Apple Inc’s smartphones to Nvidia Corp’s AI accelerators. China has never been able to buy ASML’s most advanced machines, which use extreme ultraviolet or EUV technology.

The Netherlands has also restricted ASML from selling most of its second-most-advanced immersion DUV lithography systems to China and last month published new export control rules that made ASML apply for export licenses in The Hague.

China relies on ASML’s systems to advance its chip-making technology, as the country has not yet been able to develop similar equipment capable of producing cutting-edge semiconductors.

China was ASML’s biggest market for the last five quarters, accounting for €2.79 billion (RM13.05 billion) of sales in the third quarter, nearly half of ASML’s total.

Fouquet said that Chinese demand had been elevated due to a backlog that dated to orders placed during the Covid-19 pandemic. ASML expects sales to China to shrink to about 20% of total revenue next year, a level that it considers more normal.

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