What are the implications for EuroHPC of the USA and China fight over Dutch chip manufacturing technology?

A modern ASML chip manufacturing machine. Picture: ASML.
20 Jan 2020 Almere - To produce computer chips, you need a specialized machine. One of the leaders in chip manufacturing machines is the Dutch company ASML. Its newest technology is a latest-generation lithography system, supporting EUV (UV light etching) volume production at the 7 and 5 nm nodes. It is the only machine of its type in the world, costing about 120 million euro. The technology of this machine is almost completely ASML developed technology.

Because it is sensitive technology, ASML needs an export license from the Dutch government. One machine ordered by a Chinese manufacturer is already waiting for half a year to be shipped. As Reuters revealed some weeks ago, the American president Trump has put pressure on the Dutch Prime Minister Rutte to not export this system to China, thus putting the Dutch country in the middle of the American-Chinese export battle. A few days ago, the Chinese ambassador in the Netherlands, Xu Hong, told the Dutch NewspaperHet Financieele Dagblad: "We are concerned that the Netherlands is politicising our trade relationship under American pressure. If this movement continues it will of course negatively affect bilateral relations."

In a response, the American Ambassador in the Netherlands, Pete Hoekstra, also gave an interview to the same newspaper and on BNR news radio. On BNR radio he said that it is not a "pressure campaign" by the USA, its just "discussions amongst friends", asking the Dutch to keep to the 'Wassenaar Arrangement', claiming this arrangement restricts exporting this type of technology to the Chinese.

However, reading the 'Wassenaar Agreement', the statement of Ambassador Pete Hoekstra does not seem to be entirely correct. First, the 'Wassenaar Arrangement' is not a treaty, it is not legally binding, but only morally binding. It is an understanding between 42 countries. Amongst them are the US and most European countries, including the Russian Federation. But more importantly, the arrangement is explicitly states: "This Arrangement will not be directed against any state or group of states and will not impede bona fide civil transactions."

Its intention is "to prevent the acquisition of conventional arms and dual-use goods and technologies by terrorist groups and organisations, as well as by individual terrorists". So clearly, talking about restrictions to China or the 'Chinese' is not in scope of the arrangement. According to the arrangement it is the sole responsibility of the exporting country - in this case the Netherlands, to take a decision: "The decision to transfer or deny transfer of any item will be the sole responsibility of each Participating State." The arrangement asks for the exporting country to inform the other countries about any export of goods on the arrangement list.

So it seems the US ambassador is interpreting the 'Wassenaar Arrangement' as a treaty, which it is not. It is not strange that the Dutch perceive this as pressure.

There is also a European regulation on goods with dual usage (civil and military). The Netherlands follow that regulation and publish monthly overviews of exported goods within this category.

The Dutch Government has not yet found a way out of this situation. Members of Parliament did ask for a debate about the topic as some members of parliament hold the opinion that the Netherlands should be free to export to any country it deems safe to do so.

Implications for EuroHPC

One of the objectives of the EuroHPC JU is "to support the development in the Union of world-class exascale and post-exascale High Performance Computing technologies, including low-power micro-processor and related middleware technologies, and their integration into supercomputing systems through a co-design approach, as well as their uptake in large-scale and emerging application fields".

It has been stressed by European Commission and EuroHPC representatives that attaining technological independence in HPC is important for the future of Europe. Being dependent for key technologies from other countries, like China, or the USA is seen as a threat for Europe's prosperity. The European Processor Initiative, that wants to design a processor based on European technology that can be used in both HPC and automotive is seen as an important element of the European strategy. If, however, the United States could effectively block the sales of advanced chip producing machines, it could mean that for its HPC technology it can only turn to US manufacturers, instead of having a choice of chip manufacturers across the world.

The ASML case shows just having very good European technology is not sufficient: the USA can block exporting European developed technology on a political level. So, the ASML case can be seen as a test of the European intention to become independent for key technologies.

Meanwhile a 120 million euro high-tech machine based on European technology is gathering dust in Veldhoven.

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