Dutch PM set for high-stakes China talks on chip export policy

BEIJING, March 27 (Reuters) – Dutch Prime Minister Mark Rutte is set to meet with Chinese President Xi Jinping on Wednesday in Beijing for talks expected to be dominated by economics as new Dutch policies on chip exports to China threaten to strain bilateral ties.

Rutte last met with Xi in November 2022 on the sidelines of a Group of 20 summit in Indonesia’s Bali, during which Xi told the Dutch leader that attempts to politicize economic and trade issues should be rejected and stability of industrial supply chains should be maintained.

This year, the Dutch government began denying licenses for ASML, the biggest supplier of lithography equipment to global computer chip makers, to export advanced “DUV” tool lines to China, bowing to demands from the United States.

At the same time, the Netherlands is under pressure to protect its economic interests, which include AMSL. The country’s biggest company counts China as its second-largest market after Taiwan.

The talks in Beijing are expected to center on whether ASML will receive Dutch government licenses to continue maintaining billions of euros worth of advanced equipment it has already sold to Chinese customers that now fall under export restrictions when current licenses expire, many of them by Dec. 31.

The export curbs so far have had only a modest impact on the financial performance of ASML, which dominates the global market for lithography systems – tools vital in helping to create the circuitry of computer chips.

But in the longer term, if the Netherlands is seen as an unreliable business partner, Chinese chipmakers may seek to replace its equipment with that of rivals including Nikon and Canon.

Dutch Trade Minister Geoffrey van Leeuwen, who was also in Beijing as part of Rutte’s delegation, told Dutch business daily FD on Tuesday that defending the interests of ASML was his “number one” priority.

His remarks reflect the diplomatic tightrope on which the Dutch government must walk, with ASML now a focus in the U.S-China “chip war”.

The company itself has become dissatisfied with Dutch government support, with the CEO threatening to “leave” the Netherlands if its growth plans cannot be realized there.

ASML, which says it complies with all export regulations, declined to comment on Friday.