ASML Faces Scrutiny Over Semiconductor Equipment Sales to Chinese Entities

The Dutch semiconductor equipment manufacturer ASML finds itself navigating the complex intersection of global commerce and geopolitical security once again. An investigative report has brought to light sales of critical components to Chinese institutions with military ties, placing the company’s compliance and strategic dependencies under a harsh spotlight. The company’s shares declined by approximately one percent on Tuesday following the revelations.

Investigation Uncovers Sensitive Transactions

A probe conducted by the Dutch television program Nieuwsuur revealed that during 2024, ASML supplied key components for chipmaking machinery to the 24th Research Institute of the China Electronics Technology Group Corporation (CETC). This state-owned conglomerate is officially classified by the Chinese government as a military-industrial enterprise.

The institute does not conceal its connections to China’s defense sector. Its own publications state that it hosts the nation’s sole dedicated laboratory for military-grade semiconductors. Furthermore, the facility has contributed to China’s space program, including work on the Shenzhou spacecraft and the Tiangong space station.

The specific transactions identified include:
* Sales of precision calibration components for chipmaking tools to a CETC subsidiary.
* Delivery of a Deep Ultraviolet (DUV) lithography machine to the Shenzhen International Quantum Academy in February 2024.
* Additional shipments to chip manufacturers SiEn (Qingdao) and SMBC, a subsidiary of SMIC.

According to the report, four independent experts confirmed that the supplied parts are essential for the operation of the advanced machinery.

Company Cites Full Legal Compliance

In response, ASML has emphasized its adherence to all applicable export regulations. The company stated that every piece of equipment sold was either approved with an export license or falls outside the scope of current restrictions. The Dutch Ministry of Foreign Affairs corroborated that not all high-tech goods require licenses.

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ASML described the sold items as older, generic components that do not necessitate specific licensing. The firm asserts that this legacy technology cannot be used to manufacture cutting-edge, advanced semiconductors.

Quantum Technology Raises Security Concerns

A particularly sensitive aspect of the report involves the delivery to the Shenzhen International Quantum Academy. This institution conducts research into quantum sensing—a technology capable of extremely precise measurements with significant military potential. The Dutch Military Intelligence and Security Service (MIVD) has explicitly warned about China’s development in this field. Applications could include radar systems designed to detect submarines.

Rem Korteweg of the Clingendael Institute expressed concern over the transaction, stating, “One must question the considerations behind supplying institutions that are researching technology with serious implications for national security.”

Navigating the China Conundrum

These findings underscore a fundamental challenge for ASML: China represented its largest market in 2024, accounting for 36 percent of its revenue, or approximately ten billion euros. This substantial financial reliance makes the company vulnerable to any escalation or tightening of export controls.

The investigation also uncovered sales to companies listed on U.S. sanctions lists. Nieuwsuur was unable to determine the final end-use products for chips manufactured using ASML’s equipment.

Judith Huismans, a China expert at RAND Europe, suggested a potential policy shift: extending export controls to cover individual components. This approach could grant authorities greater oversight without completely halting ASML’s business operations in China. The Dutch government is currently reviewing whether existing export rules need to be strengthened.