China's SMIC Uses ASML Tech for Advanced Chip, US Concerns Mount

China's Semiconductor Manufacturing International Corp (SMIC) has reportedly utilized equipment from ASML Holding NV ASML to produce an advanced processor for a Chinese smartphone, a move that has raised eyebrows in the U.S. 

This development suggests that China might be circumventing export restrictions to advance its chipmaking capabilities.

Also Read: Huawei's Re-emergence Is Not A Threat To Apple's Strong Ecosystem

According to insiders, ASML's immersion deep ultraviolet machines, combined with tools from other manufacturers, were instrumental in creating the chip for Huawei Technologies Co's smartphone, Bloomberg reports. 

This revelation has led to speculations about the effectiveness of export restrictions on Europe's leading tech firm.

The U.S. sanctions affect ASML shipments to six fabs in China, including one SMIC facility.

ASML's role in the global chip supply chain is pivotal, especially with its monopoly on advanced extreme ultraviolet lithography systems, crucial for producing cutting-edge chips.

The U.S., in collaboration with Japan and the Netherlands, has been striving to prevent China from accessing such advanced semiconductor technology.

However, Huawei's recent launch of a new smartphone equipped with a state-of-the-art processor suggests that China might be finding ways around these restrictions.

ASML's inability to sell its most advanced machines to China due to export restrictions has been well-documented. 

Yet, China's willingness to bear significant chipmaking costs and its legal accumulation of less advanced equipment over the years might be providing it with an edge.

Recent moves by the U.S. administration have further tightened export controls, impacting ASML's sales in China. 

The company's CEO, Peter Wennink, has expressed concerns that these measures might push China to innovate and develop competing technologies.

Dutch officials have confirmed their awareness of the U.S.'s recent measures. However, the unilateral approach by the U.S. faced resistance, with some Dutch politicians urging their government to oppose the new U.S. regulations. 

Price Action: ASML shares traded lower by 2.80% at $583.94 on the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.