Washington Squeezes ASML’s China Machines

Every AI chatbot and image generator now sits on a stack of advanced chips. Those chips are made at scale with machines produced by one company: ASML, based in Veldhoven in the Netherlands. Its lithography systems print circuit patterns onto silicon wafers using extreme ultraviolet light, a technology no other firm has been able to replicate at scale.

ASML reported €32.7 billion in net sales for 2025 and guided €34 billion to €39 billion for 2026, pushed by AI demand (ASML annual report). That makes the Netherlands, almost by accident, one of the most important countries in the AI race.

For Malta, this is not a distant Dutch industrial story. The island’s gaming, fintech, compliance and public-service systems increasingly depend on cloud infrastructure built around the same chips. If Europe loses control over the machines that make them, AI policy becomes something Europe consumes, not something it shapes.

On 23 June, the Netherlands joined Pax Silica, a US-led group coordinating minerals, energy, chips and data centres to keep AI supply chains among friendly countries (US State Department). In the same week, Dutch trade minister Sjoerd Sjoerdsma went to Washington to lobby against a US bill that would let Congress dictate what Dutch companies can sell, and to whom (Reuters).

That is Europe’s problem in one picture: join the alliance, then resist the rules written by the ally leading it.

Why a chipmaking machine becomes a weapon

Pax Silica was launched in December 2025 and has since expanded to more than a dozen partners, including Japan, South Korea, India and several EU members. Under Secretary Jacob Helberg designed it around a blunt idea: the AI race is not won only by better software, but by control over the physical base that software needs, from processing power, known in the industry as "compute", to minerals and factories (Hudson Institute, Straits Times).

There is a real security logic here. Supply chains concentrated in unfriendly hands can be cut, priced up or used as leverage. Small states understand that quickly: Malta’s economy has repeatedly learned that regulatory dependence and market dependence are not abstract concepts.

The difficulty starts when coordination becomes coercion. ASML’s most advanced machines, which use extreme ultraviolet (EUV) light, are already blocked from sale to China under export controls. These are government rules restricting who may buy sensitive technology.

The MATCH Act, a bipartisan bill introduced in Congress in April, would go further (Baumgartner House release). It would ban exports of ASML’s older-generation machines as well, the systems that use deep ultraviolet (DUV) light.

DUV machines are less advanced than EUV systems, but they remain valuable. Thousands are already operating inside Chinese factories. The proposed US law would also restrict servicing that installed equipment.

That servicing clause matters. Lithography machines are not one-off purchases that can be left alone once delivered. They need constant expert maintenance, software updates and replacement parts from the manufacturer. If the service line is cut, machines that have already been sold eventually become unusable (Tom's Hardware).

The sovereignty issue is sharper still. The MATCH Act would give allies 150 days to adopt equivalent restrictions. If they refuse, Washington would extend US legal authority over foreign-made products, in effect telling a Dutch company that it must follow American law (Kim Senate release).

The bill has passed committee but has not yet gone to a full vote. TechCrunch reports that it may need to be folded into a larger legislative package before becoming law.

What Europe stands to lose

The financial exposure is immediate. China accounted for roughly 33% of ASML’s 2025 sales, already falling to 19% of net system sales in the first quarter of 2026 (SCMP, ASML Q1 2026).

That revenue funds research and development for the next generation of machines. Reduce it sharply, and Europe’s ability to stay ahead in lithography weakens.

ASML is Dutch, but the industrial system behind it is European. German firms ZEISS and TRUMPF supply the optics and laser systems that make EUV work (ZEISS, TRUMPF). Restrictions on ASML therefore move through a wider supplier chain, not just one company’s order book.

This is where Brussels’ language meets member-state reality. The EU Chips Act aims to double Europe’s global semiconductor market share to 20% (European Commission). The EU’s official line on China is "de-risking, not decoupling" (EU economic security strategy).

But export-control decisions still sit with individual member states. That leaves the Netherlands negotiating largely on its own with Washington over a machine on which the whole European industrial base depends (CSDS VUB).

For Malta, the lesson is familiar. A small country can be formally sovereign and still have little room for manoeuvre if the rulebook is written elsewhere. In financial services, gaming and now AI infrastructure, access to the market often comes with conditions set by larger powers.

Bruegel has argued that ASML’s monopoly gives Europe real leverage in a fragmenting chip world, but only if that leverage is used collectively. Sjoerdsma told Washington that the Netherlands shares the goal of keeping dangerous technology away from hostile actors, but that "cooperation by force" crosses a line (Reuters).

The test is whether Europe can hold that line one country at a time. If it cannot, "trusted partner" risks becoming a softer name for managed dependency: higher costs, less bargaining power and weaker control over the industrial base on which AI will be built.