“It probably means you’re veering for Americans and you’re actually being forced into this conflict between China and the United States,” Verhagen said. ‘So we are no longer allowed to sell ASML machines in China. This means less revenue for ASML, less research and development for ASML and much more dependence on the US.’
Crude as that sounds, Verhagen argues that it’s the “harsh reality” from a geopolitical point of view. “In geopolitics you really only have the United States, and they’ve been applying these sanctions since 2018,” he continues. “They are the superpower and if they decide something needs to be done, it can be done for good or for evil. This is still a bit tame, but if they really want to, the Americans can destroy the entire supply chain.”
Cooperation
Verhagen points out that the decision was most likely made jointly with ASML. ASML and the US are not strategic rivals. Together they want to counter the adversary, in this case China,’ says Verhagen. “It’s difficult for ASML not to sell products in China, because a large part of their revenue comes from there. So Americans now have to find a way to fill this gap.”
He also believes that the deal also includes ASML being able to supply more to the US. “For example, there are new TSMC facilities under construction in Arizona, which will no doubt include ASML machines. So that supply chain is now being moved from Asia to the US. ASML machines are needed for that, so they might have gotten something out of it.’
Effect
Looking at the effect of the trade ban, Verhagen can conclude that China is indeed suffering a lot. “China’s economy is largely set up to integrate into the global economy and produce things cheaply,” he continues. ‘If they no longer get advanced Western technology, they have to develop it themselves. It’s not easy, because it requires resources, money and knowledge. And that knowledge is mainly in the West. Of course, there are many PhD students and students in China, but they ultimately go through Western educational institutions. So it’s quite difficult.’