The Netherlands is responding to US policy toward China with a plan to limit exports of semiconductor technology

The Dutch government said on Wednesday it plans to impose new restrictions on exports of semiconductor technology to protect national security, joining efforts by the United States to limit chip exports to China.

The United States in October imposed sweeping export restrictions on shipments of US chipmaking tools to China, but for the restrictions to be effective, it needs other key suppliers in the Netherlands and Japan, who also oversee key chipmaking technology, to agree. Allied countries have been in talks on this issue for months.

Dutch Trade Minister Liese Schrenemacher announced the decision in a letter to parliament, saying the restrictions would be introduced before the summer.

Its letter did not mention China, the main Dutch trading partner, nor did it name ASML Holding NV (ASML.AS), Europe’s largest technology company and a major supplier to semiconductor manufacturers, but both would be affected. It identified one technology that would be affected is “DUV” lithography, the second most advanced machine that ASML sells to computer chip manufacturers.

“Because the Netherlands considers it necessary for reasons of national security that this technology be subject to censorship at full speed, the Cabinet will present a national control list,” the letter read.

ASML said in its response that it expects it will have to apply for licenses to export the most advanced part among its DUVs, but that will not affect fiscal guidance for 2023.

The market for lithography systems is dominated by ASML, which are multi-million dollar machines that use powerful lasers to create microcircuits for computer chips.

The company expects sales in China to remain flat at €2.2 billion in 2023 – meaning relative contraction as the company expects overall sales to grow by 25%. Major ASML customers such as Taiwan Semiconductor Manufacturing Co. and Intel on capacity expansions.

ASML has never sold its more advanced “EUV” machines to customers in China, and the bulk of DUV sales in China go to relatively less advanced chip makers. Its largest customers in South Korea, Samsung and SK Hynix have significant manufacturing capacity in China.

The Dutch announcement leaves major questions unanswered, including whether ASML will be able to service the more than €8 billion of DUV machines it has sold to customers in China since 2014.

Schrenemacher said the Dutch government had decided to take measures “as delicate and precise as possible … to avoid unnecessary disruption of value chains”.

“It is important for companies to know what they are facing and to have time to adjust to the new rules,” she wrote.

Japan is expected to release an update on its chip equipment export policies as soon as this week.

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