By Toby Sterling, Karen Freifeld and Alexandra Alper

AMSTERDAM/WASHINGTON (Reuters) -The Netherlands’ authorities on Wednesday mentioned it plans new restrictions on exports of semiconductor know-how to guard nationwide safety, becoming a member of the U.S. effort to curb chip exports to China.

The announcement marked the primary concrete transfer by the Dutch, who oversee important chipmaking know-how, towards adopting guidelines urged by Washington to hobble China’s chipmaking business and gradual its army advances.

The U.S. in October imposed sweeping export restrictions on shipments of American chipmaking instruments to China, however for the restrictions to be efficient it wants different key suppliers within the Netherlands and Japan, who produce key chipmaking know-how, to agree. The allied international locations have been in talks on the matter for months.

Dutch Commerce Minister Liesje Schreinemacher introduced the choice in a letter to parliament, saying the restrictions can be launched earlier than the summer time.

Her letter didn’t identify China, a key Dutch buying and selling associate, nor did it identify ASML Holding (NASDAQ:) NV, Europe’s largest tech agency and a significant provider to semiconductor producers, however each can be affected. It specified one know-how that can be impacted is “DUV” lithography techniques, the second-most superior machines that ASML sells to pc chip producers.

“As a result of the Netherlands considers it essential on nationwide safety grounds to get this know-how into oversight with the best of pace, the Cupboard will introduce a nationwide management record,” the letter mentioned.

A White Home consultant didn’t instantly reply to a request for remark.

Chinese language overseas ministry spokesperson Mao Ning mentioned on Thursday that China resolutely opposed the Netherlands’ determination and mentioned Beijing had lodged representations with the Dutch aspect.

“We hope the Dutch aspect will adhere to an goal and honest place … act to safeguard its personal pursuits, and never comply with the abuse of export management measures by sure international locations,” Mao mentioned, with out naming international locations.

China has often known as the USA a “tech hegemony” in response to export controls imposed by Washington.

ASML mentioned in a response it expects to have to use for licenses to export probably the most superior section amongst its DUV machines, however that may not impression its 2023 monetary outlook.

ASML dominates the marketplace for lithography techniques, multimillion greenback machines that use highly effective lasers to create the minute circuitry of pc chips.

The corporate expects gross sales in China to stay about flat at 2.2 billion euros in 2023 – implying relative shrinkage as the corporate expects general gross sales to develop by 25%. Main ASML prospects akin to Taiwan Semiconductor Manufacturing Co and Intel Corp (NASDAQ:) are engaged in capability expansions.

ASML has by no means offered its most superior “EUV” machines to prospects in China, and the majority of its “DUV” gross sales in China go to comparatively much less superior chipmakers. Its largest South Korean prospects, Samsung (KS:) and SK Hynix each have important manufacturing capability in China.

The Dutch announcement leaves main questions unanswered, together with whether or not ASML will be capable to service the greater than 8 billion euros ($8.44 billion) value of DUV machines it has offered to prospects in China since 2014.

Schreinemacher mentioned the Dutch authorities had selected measures “as fastidiously and exactly as doable … to keep away from pointless disruption of worth chains.”

“It’s for firms of significance to know what they’re dealing with and to have time to regulate to new guidelines,” she wrote.

Japan is anticipated to difficulty an replace on its chip gear export insurance policies as quickly as this week, sources mentioned.

“For nationwide safety causes we always overview export guidelines, nevertheless it does not imply we’ve determined something at this level,” Japan’s Minister for Financial system, Commerce and Trade (METI) Yasutoshi Nishimura mentioned in parliament when requested about doable restrictions.

A METI official concerned in export controls informed Reuters there was no plan to announce any adjustments on Thursday or Friday. The official, who spoke on situation of anonymity, was not authorised to speak to media.

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