First shots were fired last October when the United States passed the CHIPS and Science Act. It aimed directly at Beijing’s ambition to become the world’s preeminent maker of advanced computer chips. The law offers a significant subsidy for semiconductor manufacturers to establish and expand operations domestically. It also limits the ability to export advanced chips and chip-making equipment to China.
The decision by the Netherlands is especially important. It is the only place in the world that produces cutting-edge extreme ultraviolet lithography (EUV) chip-making machines. To be sure, the Netherlands will continue to sell some of the older deep ultraviolet lithography (DUV) machines to China. Still, the decision on EUV is a major blow to Beijing’s ambitions.
Beyond simply increasing the pressure, there is something new in recent developments. In the past, most efforts to limit sales to China aimed at operations with explicit connections to the People’s Liberation Army. This latest effort is more general, though with China, it is always difficult to separate the commercial from the military.
Although all seems ready to advance, Japan and the Netherlands report that it may take months to finalize the legal arrangements needed to implement the restrictions. The firms involved have nonetheless readily pledged compliance. In Japan, Nikon and Tokyo Electron will bear most of the burden. In the Netherlands, most of the burden will fall on ASML. Its CEO, Peter Wennink, admits that some 15 percent of the firm’s sales are involved.
Of course, few expect these actions to stop Beijing’s efforts. Wennink is realistic. He agrees that the sales ban will slow China down, but he is also confident that China will eventually have the technological prowess to make the machines for itself. If past experience indicates, Beijing was preparing to do that anyway.
If Beijing will keep its ambitions despite efforts by the United States, Japan, and the Netherlands to thwart them, the actions among these others should send a more general message, one that China’s leadership ought to heed. Because Beijing has shown stark competitiveness, despite the openness of others; because it has ignored the complaints of the United States and others and insisted on pursuing unfair trade practices, including the outright theft of technology and intellectual property; because it has also pursued bullying diplomacy, especially in Asia, the United States and its allies in Europe and Asia have now entirely abandoned the open attitude that once prevailed in relations with China and in China trade.
That old approach from the rest of the world did much to accelerate Chinese development. Now that it has given way to one of competition, if not open hostility, Chinese development will bear some burdens that did not exist in the past. Beijing will have to live with what are clearly the consequences of its impatience to have everything its own way.
