Dutch chip technology giant ASML could drive a wedge between the US and Netherlands over exports to China, according to new reports,.

ASML plays a critical role in the global semiconductor supply chain as is the only company producing ultraviolet (EUV) lithography chip making machines.

The US is concerned about ASML shipping its machines to China and has lobbied the Netherlands since 2018 not to export to the People’s Republic.

In a statement, the US Bureau of Industry and Security said it was worried China would use ASML machines to produce advanced semiconductors with military and artificial intelligence-based applications.

ASML has not exported lithography machines to China since 2019, due to Dutch export restrictions, a company spokesperson told CNBC. But the firm also said that ASML expects “the direct impact of the new export control measures on ASML’s overall 2023 shipment plan to be limited.

Some, however, wonder how long ASML can avoid exporting to China. David Stone, chief executive at semiconductor recruitment firm MRL Consulting Group, tells Verdict that ASML still needs Chinese exports.

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“Without an alternative customer base for ASML to replace China and the 10% of ASML’s revenue they account for, the company will find itself in a very bad position very quickly,” Stone says.

The US war on Chinese exports has escalated after Washington introduced restrictions on what technology is allowed to be shipped to China.

A Reuters report said the Dutch government took away ASML’s license to export these machines to China due to lobbying from the US government.

“Dutch compliance with the US trade bans may appear a matter of negotiation and agreement at this stage, it should not be forgotten that ASML has US subsidiaries,” Jospeh Bori, research director at research firm GlobalData, tells Verdict. “Therefore, it might be more under the reach of US regulation and enforcement than it appears.”

GlobalData is the parent company of Verdict and its sister publications.