Dutch firm ASML becomes European 'hostage' in China-US technological competition

Editor's note: Tang Jie is a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Chinese Ministry of Commerce. The article reflects the author's opinions and not necessarily the views of CGTN.

Due to the restrictions imposed by the US on Dutch company ASML to restrict its export of high-end lithography machines and other equipment to China, ASML's business in the Chinese market has been affected to a certain extent. 

China used to be an important market for ASML, accounting for nearly half of its global sales. 

However, due to the restrictions of the US, ASML's orders in the Chinese mainland have dropped sharply in the third quarter of 2024, and it is expected that the proportion of revenue in the Chinese market will drop to about 20 percent in 2025. 

This has caused ASML's order volume to be less than half of expectations, and its net profit has fallen by nearly 16 percent year on year. 

The stock price has also plummeted, facing the largest drop in 26 years. 

Christophe Fouquet, the CEO of ASML, pointed out that the US's restrictions on ASML's normal business practices would harm the company's economic interests, as China is an important market for the world. He also pointed out that such restrictions may trigger a greater backlash and emphasized that the global semiconductor supply chain cannot be decoupled because such irrational behavior is expensive and complex and does not match the needs of economic development.

The company is currently actively communicating with the US on the scope and impact of export control regulations in order to strive for its business autonomy and to fulfill and respect the "spirit of the contract."

As shown in the above situation, the most direct consequence of the US restrictions on some European companies is that their market share becomes limited, their revenue and profits are reduced, and their investment and development are restricted. 

Due to the decline in market share and reduced profits, the funds available for research and development of European technology companies become limited, and they may have to cut their research and development budgets, which will affect their innovation capabilities and the speed of technological upgrading in related fields.

Countries like Germany, France and Sweden are launching domestic initiatives to support startups in key sectors and through collaborative projects to reduce reliance on US tech firms. 

Some European governments are actively responding to the challenges posed by US policies like "America First" through a mix of policy initiatives, funding programs and strategic alliances. 

These efforts aim to strengthen Europe's technological sovereignty and foster innovation. 

They are working to reduce dependence on the US and other foreign powers by building self-reliant ecosystems in critical sectors, such as the Digital Markets Act and the Digital Services Act. 

These regulations aim to curb the dominance of US tech giants such as Google, Amazon and Apple and create a fairer market for European companies.

Generally, the "America First" policy often involves tariffs, trade restrictions and a push for domestic procurement, emphasizing domestic economic growth, protectionism and prioritization of US industries.

Policies that prioritize national interests may reduce opportunities for collaboration on research and development or regulatory alignment, they have and could continue to have significant long-term impacts on the development of European technology companies. 

For European technology companies, this could mean reduced access to the lucrative US market or increased costs of doing business there. 

European companies may face challenges in scaling their operations globally, as the US is a key market for many tech sectors, including software, hardware and advanced manufacturing.

Restrictions on technology sharing or joint ventures may also arise due to concerns about intellectual property and national security.

European tech companies could face isolation in critical areas of innovation, limiting their ability to benefit from shared knowledge and resources.

In terms of soft power, technological talent usually prefers to work and innovate in a stable, open environment with good development opportunities. 

However, the limited market and unclear development prospects of European technology companies caused by US policies may reduce the interest of outstanding talent in European technology companies. 

Talent within European technology companies may also choose to leave due to the difficulties and uncertainties faced by the companies.

The US remains a magnet for global tech talent, and "America First" policies that prioritize domestic hiring and investment in innovation could exacerbate the brain drain from Europe to the US. Tech companies may find it harder to retain top talent, slowing their growth and innovation capacity.

In terms of strategic autonomy, the strategic development of European technology companies is constrained by US policies, and it is difficult to formulate independent development strategies in accordance with their own business interests and market laws. 

ASML has been like a hostage amid Sino-US technological competition. 

Its normal business activities and strategic planning are interfered with and influenced by the US government, and it cannot conduct business freely, resulting in serious damage to its strategic autonomy of corporate development.