The Dutch dominated the technology transfer that shaped the modern world. Their financial and agricultural innovations spread to Britain in the 17th century, paving the way for the Industrial Revolution and the expansion of the British Empire. Peter the Great, a Russian king, studied Dutch shipbuilding techniques to build the navy that established Russia as a maritime power in the 18th century. And in the 1970s a Pakistani scientist, AQ Khan, stole blueprints from a Dutch laboratory to launch his country’s nuclear-weapons program and similar efforts in North Korea, Iran, and Libya.
File photo: The bottom module of a $400 million high NA EUV machine made by ASML is shown at the headquarters of Belgian chip research lab IMEC on March 18, 2026 (Reuters)
Could Dutch information have tipped the global balance of power again? This is the allegation of the Trump administration. Since 2019 the US has blocked exports to China of extreme ultraviolet, or EUV, lithography machines that make the world’s most advanced semiconductors. These machines, whose creations power the most capable artificial-intelligence models, are made exclusively by ASML, a Dutch company. However, in recent weeks, Howard Lutnick, the US Secretary of Commerce, has put the company in jeopardy by sharing his concerns that one of these machines could reach China.
Unlikely, says ASML. Europe’s most valuable company has told US authorities it knows the exact location of all 340 EUV machines it produces, including 26 that have been discontinued. Nobody is in China, it says. In addition, only ASML can transport highly sensitive machines, which it monitors online, and the components it ships are controlled by ASML engineers at customers’ fabs. “ASML has never shipped an EUV machine to China, nor have we shipped any component, module or equipment specifically designed for use in an EUV machine to China,” the company says. Despite repeated requests, ASML has yet to be provided with any evidence to support Mr. Lutnick’s allegation.
The Dutch government, while taking the American claim seriously, is also retreating. On a visit to Washington in late June, its trade minister, Sjoerd Sjoerdsma, tried to convince Mr. Lutnik, other officials and members of Congress that the Dutch government strictly enforces its export controls, including EUV technology. In an interview with The Economist on July 2, Mr. Sjoerdsma declined to provide details of any conversations regarding Mr. Lutnick’s claim. But he says that the Dutch government is not currently investigating the American allegation. “If there were things that needed to be investigated or perhaps even prosecuted, obviously we would do that,” he says.
At first glance the dispute hinges on whether Mr Lutnick’s allegations have any basis. Although no information supporting this has been made public, some people briefed on it have described it as “unverified”, yet “not unfounded”. Many industry experts consider it highly unlikely that a complete EUV machine from ASML was shipped to China. But some believe that the components in question may perhaps be from ASML’s own suppliers or through other third parties. Others believe the problem is more likely to be ASML’s exports to China of its older deep ultraviolet, or DUV, lithography equipment and related parts and services, much of which does not fall under export controls. ASML’s DUV-related exports to China could account for about a third of its revenue in 2025.
However, behind the dispute lie deep differences over China’s technological progress and how Western governments should respond. It also highlights recent friction between the Trump administration and many US allies, particularly in Europe. Some American officials consider Europe weak in relation to China. However, many European governments fear that the Trump administration is undermining their economic and security interests while trying to force its own preferential deals with China. Some European officials and executives are also concerned that the Trump administration is trying to force ASML and related companies to move more of their business to the U.S. to help grow the chip industry.
An important question is how far China has progressed in making its EUV machine. News agency Reuters reported in December that a team of former ASML engineers in China had completed a prototype EUV machine by early 2025 and were testing it in a high-security laboratory in Shenzhen. ASML said it cannot control where former employees work but that they are bound by confidentiality agreements and in some cases the company has successfully taken legal action in response to the theft of trade secrets.
The prototype has not yet produced any working chips, but the Chinese government aims to produce a functional chip by 2028, Reuters reports. Most industry experts think this is unrealistic, and that it could take a decade for China to have a fully functional EUV machine. Still, they believe China is making faster-than-expected progress on its EUV project as well as some alternative technology.
Another major US concern is China’s innovative use of DUV technology. Chinese semiconductor companies such as SMIC and Huawei have pioneered a technology called “multi-patterning”, which uses DUV technology to create logic chips of less than 7 nanometers, close to the industry’s cutting-edge technology. They were previously made only by EUV machines. While that technology brings higher costs and more errors than EUV devices, some US experts believe it could allow China to produce the millions of advanced chips needed to catch up with the US in the race for AI supremacy. Meanwhile, the prevailing view in Europe is that such risks must be balanced with the need to protect and expand the revenues of ASML and its surrounding ecosystem, while also avoiding retaliation from China.
One pillar of the US response is a new coalition of countries involved in the Western AI supply chain. Known as Pax Silica, it was launched in December and aims to encourage partnerships and common rules in areas ranging from energy and critical minerals to advanced manufacturing and AI models. It has so far received support from 24 signatories, including the EU and the Netherlands, which signed during the visit of its trade minister in June. This could make it easier to share cutting-edge technology between like-minded countries and integrate export controls related to EUV systems.
The more divisive US initiative is the MATCH Act, legislation that was introduced with bipartisan support in April. This will not only block the sale of DUV machines to China, but also restrict ASML’s provision of servicing, spare parts and software support for the hundreds of DUV machines already there. And it would give the Dutch and other allied governments 150 days to align their controls with the US – or face action under foreign direct product rules. It imposes US export controls on foreign products whose manufacturing involves technology originating in the US and, in the case of ASML, it will be forced to comply or face heavy fines and other penalties. Supporters say that such measures are necessary in view of national security. “I don’t support telling companies not to do it. I support making it illegal to do it,” says Gregory Allen, former director of strategy and policy at the Pentagon’s Joint AI Center, who now runs a research and consulting firm.
The Dutch (and some other allies) disagree. The MATCH Act is “really unfortunate from our perspective,” Mr. Sjoerdsma says. He expresses particular concern about the threat of extra-territorial application of US law on Dutch and affiliated companies. “We believe each country can decide best for itself what technology its companies should develop and what security risks it may or may not pose,” he says. Another reason for his government’s skepticism is the contradiction between the Trump administration’s demand to restrict the export of older DUV devices and the Trump administration’s agreement to allow the export of Nvidia’s H200 AI chips to China. These can only be made by some of the latest EUV machines.
Mr Sjoerdsma now faces similarly tricky negotiations over an expected visit to China. It has condemned the MATCH Act and recently introduced rules authorizing it to penalize foreign companies that comply with U.S. sanctions or export controls. The Netherlands is already grappling with the backlash over its decision in September to take control of Chinese-owned Dutch chipmaker Nexperia to prevent it from operating in China. The Chinese government responded by blocking Nexperia exports from China, severely disrupting European and Japanese carmakers.
The controversy over Mr Lutnick’s claim could subside, especially if the US fails to share supporting evidence. But this is just a preliminary defense in a larger battle over the AI chokehold. And this probably won’t be the last time ASML and its iconic technology gets caught in the crossfire.
