Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

ASML, TSMC have means to deactivate chip machines if China invades Taiwan - report

Published 05/21/2024, 07:54 AM
Updated 05/21/2024, 07:56 AM
© Reuters.  ASML, TSMC have means to deactivate chip machines if China invades Taiwan - report
ASML
-
TSM
-

ASML Holding (AS:ASML) and Taiwan Semiconductor Manufacturing (TSM) have mechanisms to disable their advanced chipmaking machines if China invades Taiwan, Bloomberg News reported on Tuesday.

The US government has been growing increasingly concerned about the potential escalation of Chinese aggression towards Taiwan, which produces most of the world's advanced semiconductors.

ASML has reassured Dutch officials about its ability to remotely disable its extreme ultraviolet (EUV) machines, which are crucial for producing the smallest microchip transistors used in AI and military applications. The Dutch government has conducted simulations to understand the risks better.

The EUV machines are the most sophisticated in the world and require regular maintenance and updates. This necessity allows ASML to remotely shut off the machines if needed, effectively acting as a kill switch.

The Veldhoven, Netherlands-based company is the sole manufacturer of EUV machines, which sell for over €200 million ($217 million) each.

ASML's technology is tightly controlled to prevent it from being used by rival nations. The Netherlands, under US pressure, prohibits the sale of EUV machines to China.

Recently, the Dutch government also began halting exports of ASML’s next-most advanced chipmaking machines due to US pressures, measures that are expected to impact up to 15% of ASML's sales to China this year.

ASML's EUV technology has made it Europe's most valuable tech stock, with a market capitalization exceeding $370 billion, more than double that of its client Intel Corp . (NASDAQ:INTC). Since the EUV machines were first developed in 2016, ASML has shipped over 200 units to clients outside China, with TSMC being the largest purchaser.

The need to maintain EUV machines very frequently presents a significant challenge, Bloomberg’s report states. Without ASML’s spare parts and on-site servicing, these machines would quickly become inoperative. Maintaining EUVs requires a clean room environment, where engineers must wear special suits to prevent contamination.

TSMC Chairman Mark Liu, in a September interview with CNN, suggested that any attempt to take control of Taiwan would result in the company's chipmaking machines becoming out of order.

“Nobody can control TSMC by force,” Liu said. “If there is a military invasion you will render TSMC factory non-operable.”

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.