China's Netherlands Ambassador Slams Chip Curbs

Chinese ambassador to the Netherlands, Tan Jian (Chinese Embassy in the Netherlands)

The Lede: In an interview published on Sunday, China’s ambassador to the Netherlands expressed Beijing’s frustration with Europe’s complicity in Washington’s pressure campaign on the semiconductor rivalry. This comes after China dramatically ramped up its imports of Dutch chip-making equipment last month ahead of curbs coordinated by the U.S. and the Netherlands.

What We Know:

Chinese ambassador to the Netherlands Tan Jian told interviewers at the Dutch newspaper NRC Handelsblad that he was pessimistic about the direction of widening export controls and that things are not improving. He defended Chinese companies, saying that they are ‘not using these machines to produce something detrimental’ and that they are ‘producing memory chips, not logic chips’ so there should not be a security concern. Tan placed the impetus for these export curbs directly on U.S. pressure over the geopolitical competition between the superpowers. He noted that the Chinese and Dutch governments have to improve dialogue if they want to avoid a deteriorating situation.
According to calculations from Bloomberg, China’s imports of chip-making machinery rose 14 percent in 2023 to almost $40 billion, despite a 5.5 percent drop in overall imports. Shipments of chip-making machinery to China from the Netherlands rose significantly in December, ahead of new export restrictions. China’s imports of lithography equipment from the Netherlands rose almost 1,000 percent from a year prior to $1.1 billion as companies scrambled to buy available gear ahead of the start of Dutch restrictions in January.

The Background: The Netherlands-based ASML Holding NV makes the world’s most advanced chip-making machinery. As part of the U.S.-led efforts to curb China’s access to the most advanced chip technology, the company implemented an expanded ban on the sale of certain high-end equipment to China this month. ASML had already revoked export licenses and cancelled shipments of some of its chip-making machines to China at the request of the U.S. government before the official implementation. In June, the Dutch government confirmed that it was considering a screening process to assess possible security risks of inbound foreign students and researchers involved in sensitive subjects such as technology fields that presumably would target Chinese students.

Likely Outcomes:

If China wants to secure its access to chip-manufacturing or if the goal is to develop more advanced chips on its own, companies there may use the machinery they have been able to import as the basis for making their own chips without having to rely on imports. However, this could be a much lengthier process given the competition with the West. The U.S. and Western-aligned countries will likely continue to constrict China’s access to the chip-making machinery that it seeks to push to the more advanced stages.
In September, Huawei surprised the U.S. with the inclusion of an advanced 7-nanometer (nm) chip produced by China’s top contract chip-maker, Semiconductor Manufacturing International Corp. (SMIC), in the company’s Mate 60 Pro smartphone. SMIC capacity to produce chips of that caliber at scale was questioned, but this may be the starting line for Chinese domestic chip manufacturing. Yet, further development in China’s chip industry may not come to fruition due to the difficulty of overcoming subsequent challenges in the development of needed hardware.

Quotables:

“If the Americans treat us in a hegemonic manner, we will of course respond. But our relationship with the E.U. should not be affected…The U.S. has stretched its idea of security far, too far, even to matters that have nothing to do with military risks and they are putting pressure on their allies to do the same…European China policy is confusing. China is referred to as a cooperation partner, an economic competitor and a systemic rival.” – Tan Jian, Chinese ambassador to the Netherlands

Good Reads:

China Says It May Retaliate Against U.S.’s ‘Hegemonic’ Chip War (Bloomberg)

China Buys Near-Record $40 Billion of Chip Gear to Beat US Curbs (Bloomberg)

Transcription of Ambassador Tan Jian’s Interview with NRC Handelsblad (Chinese Embassy in the Netherlands)