Dutch Export Controls Don’t Go Far Enough on China

Summary

• Good start: Since 2023, successive Dutch export controls on advanced chipmaking equipment have been critical in preventing China from building competitive AI chips.
• But not enough: In 2024 ASML sold nearly $3 billion of equipment and services to Chinese entities, including a vital component to a company with known ties to the Chinese military. 
• Security stakes: Dutch intelligence services identify China as the top threat to the Netherlands' economic security – a threat that will only increase as China grows its AI capabilities.
• Closing the gaps: The Netherlands should extend existing controls to subcomponents, restrict Dutch personnel from servicing Chinese fabs, and require exporters to verify end-users.

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The Financial Times reported last December that Chinese chip manufacturers are upgrading old ASML lithography machines to produce 7-nanometer chips. This is a sign that China is finding workarounds to produce advanced AI chips using technology from the Dutch company.

While these chips lag behind the leading edge, they remain capable of accelerating China’s AI capabilities. It’s part of a broader problem: ASML continues to sell equipment and provide servicing to Chinese entities under the current export control regime, undermining the Netherlands’ security interests. 

The stakes for the Netherlands are high. The Dutch intelligence services have called China the greatest threat to Dutch economic security. Chinese operators are targeting Dutch authorities and critical infrastructure with cyberattacks and cyber espionage. As recently as March 2026, the EU sanctioned two Chinese entities for hacking more than 65,000 devices across six member states. 

China is also collaborating with Russia on battlefield AI, meaning Dutch chipmaking equipment can indirectly fuel the Netherlands’ most immediate security threat. 

The Netherlands must act now before China advances its AI capabilities and further threatens Dutch economic and national security.

Where current controls fall short

The Netherlands controls key semiconductor manufacturing equipment (SME) chokepoints. Two lithography technologies are critical to making advanced AI chips – extreme ultraviolet (EUV) and deep ultraviolet immersion (DUVi) systems. ASML is the world’s sole provider of the former and accounts for 90% of the latter. 

Since 2019, the US and Dutch governments have worked together to restrict ASML EUV systems from China – arguably the single most consequential decision in protecting Western AI dominance.

Thanks to Dutch export control measures applied in 2023, the export of DUVi lithography machines requires a license from Dutch Customs (CDIU). The Netherlands does not implement country-wide controls: its policy is country-neutral, with applications assessed on a case-by-case basis. This means that Chinese customers are not subject to a presumption of denial – only those on EU sanctions lists or the US Entity List face automatic restrictions.

As many as 41 Chinese companies currently hold a valid license to import DUV machines. The numbers speak for themselves: ASML sold nearly $3 billion of equipment and services in 2024 to Chinese entities of concern.

Three gaps undermine the effectiveness of Dutch export controls.

The first concerns what can be exported. While Dutch export controls apply to SME subcomponents classified as dual-use, many other subcomponents can still be critical for lithography processes. In 2024, ASML sold a vital part to a subsidiary of an entity with known ties to the Chinese military. Dutch export controls also do not prohibit re-export, meaning China can still access Dutch equipment sold from another country.

The second is ongoing servicing. While export controls applied in 2024 require Dutch companies to gain a license to service restricted equipment in China, such licenses continue to be granted. ASML continues to service installed equipment in Chinese fabs, extending the operational life of machines China would otherwise be likely unable to maintain. The presence of Dutch engineers in China has led to the theft of confidential data and even the creation of an EUV prototype by ex-ASML engineers. 

The third is end-use verification. Dutch export controls do not require exporters like ASML to notify CDIU of possible military end uses, except for known connection to weapons of mass destruction or delivery systems. While many companies do this voluntarily, it is an inadequate safeguard when the lines are often blurred between military and commercial end users in China.

Closing the gaps

The Dutch Ministry of Foreign Affairs can protect its national and economic security through three steps.

First, it should work with the Ministry of Economic Affairs to introduce export controls on all lithography subcomponents, not just those deemed dual-use, to further prevent China from upgrading its DUVi capabilities.

Second, in coordination with the Ministry of Justice and Security, it should restrict Dutch nationals from servicing existing chipmaking equipment at Chinese entities. The United States has already restricted Americans from supporting advanced semiconductor production in China; the Netherlands should follow suit.

Third, it should direct the CDIU to adopt mandatory end-use verification requirements. This would place the burden of proof on exporters, not regulators, and help close the gap between what licenses permit and how equipment is actually used by Chinese chipmakers.

Chinese indigenization

Some may worry that withholding access to ASML equipment only incentivizes China to indigenize its chipmaking supply chain.

But Beijing has made clear its plans to indigenize SME since 2015. China is already dedicating significant resources to indigenization through espionage, talent poaching from ASML and German precision optics firm Zeiss, and reverse-engineering older equipment.

Cutting off DUVi sales and servicing won’t change this strategy. But exporting critical technology to China will only fuel its development of sovereign alternatives. 

Short-term costs, long-term stakes

The case for action is clear, but tighter export controls would cut into ASML’s revenue. In 2024, China accounted for nearly 60% of ASML’s lithography sales by unit volume and 25% of ASML’s global servicing business. Beyond direct costs, Beijing might accelerate its talent poaching and espionage, attempt economic coercion, or even threaten to nationalize ASML’s China-based operations. 

But it’s worth putting the potential for retaliation into perspective. The Netherlands has tightened controls on ASML equipment three times since 2023. Each time, China protested but did not impose bilateral penalties. The proposed measures are a continuation of the Netherlands’ current policy direction, not a radical departure.

Continuing to service installed equipment enables knowledge transfers – not just through ASML’s own Chinese-national engineers, but also the customer engineers they work alongside. It is with this tacit knowledge that China could most effectively indigenize its SME industry. Once that capability is established, no export control regime can claw it back.

The allied dimension

Acting on the SME supply chain requires allied coordination – which has become more difficult given Washington’s mixed signals on export controls, including allowing chip sales to China even as Congress pushes to tighten SME controls.

But these positions are not contradictory: chip controls only hold so long as China cannot manufacture its own advanced chips, while SME controls are more durable. Controlling the machines that make chips matters more than controlling any specific chip.

The US has its own role to play in engaging allies and partners like the Netherlands to align and enforce export controls on key chokepoint SME. But the Netherlands is not a passive bystander. 

The Dutch sit atop the most pivotal bottlenecks in the global semiconductor supply chain – and how they choose to use that leverage will determine their economic and national security in the age of AI.