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Can the US actually prevent ASML from selling equipment to China? ASML is not American. Also, given how obscenely expensive a war would be, couldn't China save

Can the US actually prevent ASML from selling equipment to China? ASML is not American. Also, given how obscenely expensive a war would be, couldn't China save money by just hiring the entirety of TSMC's and ASML's technical staff at 10x the market rate for ten years? Paying a premium to headhunt technical experts is a tried-and-true method of catching up to a front-runner. In fact, both Taiwan and South Korea did this, poaching underpaid Japanese talent.

davrosthedalek 6y ago
The US not directly, but certainly EU can. And if China actually starts a war, it is likely that the EU would be rather opposed to helping China.
joshuaissac 6y ago
>Can the US actually prevent ASML from selling equipment to China? ASML is not American. Yes. ASML is integrated into the dollar-based global financial system, so it will have to respect American financial sanctions. This is the same way that such sanctions against Iran and North Korea work.
- hectormalot 6y ago
  ASML can sell if they want, but indeed the US has a lot of ways to make that unattractive. Case in point, the US has recently started pressuring the Dutch Government to prevent sales by ASML to China. I think the current stance is that they (Gov + ASML) are still considering how to proceed. An interesting aspect though: I think the technological superiority of ASML is a big asset in these discussions. e.g. If the US would follow up on a threat of sanctions against ASML (e.g. banning US companies from working with ASML) it would hit the US semiconductor industry quite hard (particularly Intel), while non-US players (e.g. TSMC) could continue producing with euv. In effect, they would have to go much further to keep some similarity of a level playing field: e.g banning all products containing chips produced on ASML machines. That would hit a lot more companies, many of them US based too. Creating even more reasons for the US Gov to not to take such drastic steps. Therefore I expect that it is much more likely they'll use pressure on the EU / NL government systems to force the behaviour they want, compared to economic sanctions vs ASML. > ASML is integrated into the dollar-based global financial system, so it will have to respect American financial sanctions I'm no expert, but if a company wants to pay ASML in Euros, I'm pretty sure they can accept euros. The dollar is convenient, not a requirement.
  - selimthegrim 6y ago
    Dutch intelligence is skilled and highly respected by Five Eyes countries - I don’t think the US is going to steamroll them
  - _jal 6y ago
    > if a company wants to pay ASML in Euros, I'm pretty sure they can accept euros. The implication is not about accepting payment. The western banking system can and has blackballed firms that took money from people the US didn't like.
  - flyinglizard 6y ago
    There's no reason to believe Dutch government and US government are on different sides here. No one from the West wants to wake up one day to find they've been assigned a place in China's system.
  - kube-system 6y ago
    > I'm no expert, but if a company wants to pay ASML in Euros, I'm pretty sure they can accept euros. The dollar is convenient, not a requirement. Companies rarely exchange money directly, though. They usually have a bank do it on their behalf, and those banks are subject to the laws of the countries they operate in.
    - xxpor 6y ago
      And it's harder to avoid dollars than it might appear. How does one convert between TWD and EUR? Via USD. You also have to avoid SWIFT, since the US controls that too. The Europeans just set this up to avoid these issues with Iran: https://en.wikipedia.org/wiki/Instrument_in_Support_of_Trade_Exchanges https://en.wikipedia.org/wiki/Instrument_in_Support_of_Trade... It took nearly a year and a half between the founding and the first payment.
  - csharptwdec19 6y ago
    ASML is at best ambivalent. On one hand, they brag about how a company in China took apart an ASML machine, and replicated every component, but it didn't work. But I'm sure ASML knows that they'll try again. They have at least a limited interest in keeping their technology from being stolen.
chongli 6y ago
just hiring the entirety of TSMC's and ASML's technical staff at 10x the market rate for ten years That's assuming those folks would want to move to China and work there. If strategic tensions are increasing to the point where war is feared and China uses this as an alternative, who would want to move there and risk becoming a hostage?
- tartoran 6y ago
  Yes and also what stops the other side from making a better counteroffer?
  - vkou 6y ago
    The fact that for a small field of employment, a sovereign can dramatically outbid the free market, if it so chooses.
    - WanderPanda 6y ago
      But on average its bad to outbid the free market, so countries systematically doing it don‘t last long
- iorrus 6y ago
  You can hire them in Europe, Huawei has R&D sites in Europe.
  - pinkfoot 6y ago
    SMIC also has a fab in Italy.
- z2 6y ago
  Not saying the trend will continue, but brain drain isn't a new phenomenon to Taiwan specifically, with a reported one-tenth of Taiwan's semiconductor engineers not just working mainland companies but living there too. Despite risks, the pay, no language barrier, and a purposefully generous immigration policy (full residency rights to all Taiwanese) help. https://asia.nikkei.com/Business/China-tech/Taiwan-loses-3-000-chip-engineers-to-Made-in-China-2025 https://asia.nikkei.com/Business/China-tech/Taiwan-loses-3-0...
deepnotderp 6y ago
Much of ASML's EUV expertise comes from Cymer. Although ASML owns them, they're still mostly geographically in the US O believe.
- sveme 6y ago
  All the optics come from Zeiss, the laser from Trumpf.
dirtyid 6y ago
>Can the US actually prevent ASML from selling equipment to China? ASML is not American. Netherlands / ASML is subject to Wassenaar Arrangement which US can ultimately trigger to ban dual use tech sales.
- xxpor 6y ago
  Technically the Wassenaar Arrangement isn't a treaty, so it has no legal force. Probably doesn't make much of a difference though.
  - dirtyid 6y ago
    No, but it's a "legitimate" political instrument in the US toolbox. So far this administration has expended soft-power - diplomatic pressure. Unless Netherlands / ASML concedes forever, Wassennar is probably next before ridiculous hardpower drama like sanctioning ASML from US tech or weaponizing dollar trading against ASML. I suppose with recent TSMC US plants and Brazil 5G subsidy developments, dumping cash to bribe ASML.
puranjay 6y ago
China has already been doing that at scale. Look up the Thousand Talents Program [0] 0:https://en.wikipedia.org/wiki/Thousand_Talents_Plan https://en.wikipedia.org/wiki/Thousand_Talents_Plan
alliao 6y ago
US already did I thought? Around Jan 2020 I saw news about US lobbied hard for ASML to stop selling high end units to China. And they complied. China is in a tough place right now with regards to chips.
rplst8 6y ago
You think that people would sell out their countrymen so easily? Maybe one or two, but a whole industry's worth.

davrosthedalek 6y ago

The US not directly, but certainly EU can. And if China actually starts a war, it is likely that the EU would be rather opposed to helping China.

joshuaissac 6y ago

>Can the US actually prevent ASML from selling equipment to China? ASML is not American. Yes. ASML is integrated into the dollar-based global financial system, so it will have to respect American financial sanctions. This is the same way that such sanctions against Iran and North Korea work.

hectormalot 6y ago
ASML can sell if they want, but indeed the US has a lot of ways to make that unattractive. Case in point, the US has recently started pressuring the Dutch Government to prevent sales by ASML to China. I think the current stance is that they (Gov + ASML) are still considering how to proceed. An interesting aspect though: I think the technological superiority of ASML is a big asset in these discussions. e.g. If the US would follow up on a threat of sanctions against ASML (e.g. banning US companies from working with ASML) it would hit the US semiconductor industry quite hard (particularly Intel), while non-US players (e.g. TSMC) could continue producing with euv. In effect, they would have to go much further to keep some similarity of a level playing field: e.g banning all products containing chips produced on ASML machines. That would hit a lot more companies, many of them US based too. Creating even more reasons for the US Gov to not to take such drastic steps. Therefore I expect that it is much more likely they'll use pressure on the EU / NL government systems to force the behaviour they want, compared to economic sanctions vs ASML. > ASML is integrated into the dollar-based global financial system, so it will have to respect American financial sanctions I'm no expert, but if a company wants to pay ASML in Euros, I'm pretty sure they can accept euros. The dollar is convenient, not a requirement.
- selimthegrim 6y ago
  Dutch intelligence is skilled and highly respected by Five Eyes countries - I don’t think the US is going to steamroll them
- _jal 6y ago
  > if a company wants to pay ASML in Euros, I'm pretty sure they can accept euros. The implication is not about accepting payment. The western banking system can and has blackballed firms that took money from people the US didn't like.
- flyinglizard 6y ago
  There's no reason to believe Dutch government and US government are on different sides here. No one from the West wants to wake up one day to find they've been assigned a place in China's system.
- kube-system 6y ago
  > I'm no expert, but if a company wants to pay ASML in Euros, I'm pretty sure they can accept euros. The dollar is convenient, not a requirement. Companies rarely exchange money directly, though. They usually have a bank do it on their behalf, and those banks are subject to the laws of the countries they operate in.
  - xxpor 6y ago
    And it's harder to avoid dollars than it might appear. How does one convert between TWD and EUR? Via USD. You also have to avoid SWIFT, since the US controls that too. The Europeans just set this up to avoid these issues with Iran: https://en.wikipedia.org/wiki/Instrument_in_Support_of_Trade_Exchanges https://en.wikipedia.org/wiki/Instrument_in_Support_of_Trade... It took nearly a year and a half between the founding and the first payment.
- csharptwdec19 6y ago
  ASML is at best ambivalent. On one hand, they brag about how a company in China took apart an ASML machine, and replicated every component, but it didn't work. But I'm sure ASML knows that they'll try again. They have at least a limited interest in keeping their technology from being stolen.

chongli 6y ago

just hiring the entirety of TSMC's and ASML's technical staff at 10x the market rate for ten years That's assuming those folks would want to move to China and work there. If strategic tensions are increasing to the point where war is feared and China uses this as an alternative, who would want to move there and risk becoming a hostage?

tartoran 6y ago
Yes and also what stops the other side from making a better counteroffer?
- vkou 6y ago
  The fact that for a small field of employment, a sovereign can dramatically outbid the free market, if it so chooses.
  - WanderPanda 6y ago
    But on average its bad to outbid the free market, so countries systematically doing it don‘t last long
iorrus 6y ago
You can hire them in Europe, Huawei has R&D sites in Europe.
- pinkfoot 6y ago
  SMIC also has a fab in Italy.
z2 6y ago
Not saying the trend will continue, but brain drain isn't a new phenomenon to Taiwan specifically, with a reported one-tenth of Taiwan's semiconductor engineers not just working mainland companies but living there too. Despite risks, the pay, no language barrier, and a purposefully generous immigration policy (full residency rights to all Taiwanese) help. https://asia.nikkei.com/Business/China-tech/Taiwan-loses-3-000-chip-engineers-to-Made-in-China-2025 https://asia.nikkei.com/Business/China-tech/Taiwan-loses-3-0...

deepnotderp 6y ago

Much of ASML's EUV expertise comes from Cymer. Although ASML owns them, they're still mostly geographically in the US O believe.

sveme 6y ago
All the optics come from Zeiss, the laser from Trumpf.

dirtyid 6y ago

>Can the US actually prevent ASML from selling equipment to China? ASML is not American. Netherlands / ASML is subject to Wassenaar Arrangement which US can ultimately trigger to ban dual use tech sales.

xxpor 6y ago
Technically the Wassenaar Arrangement isn't a treaty, so it has no legal force. Probably doesn't make much of a difference though.
- dirtyid 6y ago
  No, but it's a "legitimate" political instrument in the US toolbox. So far this administration has expended soft-power - diplomatic pressure. Unless Netherlands / ASML concedes forever, Wassennar is probably next before ridiculous hardpower drama like sanctioning ASML from US tech or weaponizing dollar trading against ASML. I suppose with recent TSMC US plants and Brazil 5G subsidy developments, dumping cash to bribe ASML.

puranjay 6y ago

China has already been doing that at scale. Look up the Thousand Talents Program [0] 0:https://en.wikipedia.org/wiki/Thousand_Talents_Plan https://en.wikipedia.org/wiki/Thousand_Talents_Plan

alliao 6y ago

US already did I thought? Around Jan 2020 I saw news about US lobbied hard for ASML to stop selling high end units to China. And they complied. China is in a tough place right now with regards to chips.

rplst8 6y ago

You think that people would sell out their countrymen so easily? Maybe one or two, but a whole industry's worth.