The Center for a New American Security (CNAS) published a policy brief arguing that the Netherlands' export-control regime on advanced semiconductor lithography equipment to China fails to close critical technology gaps, under the title "Dutch Export Controls Don't Go Far Enough on China."

The Washington-based think tank's analysis targets the licensing framework the Dutch government has applied to Veldhoven-based ASML since March 2023. CNAS concludes the current restrictions fall short of fully blocking flows of advanced DUV immersion systems, EUV technology, and sensitive components to Chinese foundries.

Which ASML systems are already restricted?

The Netherlands began requiring export licenses for ASML's TWINSCAN NXT:2000i and newer DUV immersion systems in March 2023, complementing an EUV ban that had been in place since 2019. The Dutch government expanded the list in September 2024 to include the NXT:1970i and NXT:1980i models, aligning the scope more closely with US Foreign Direct Product Rule restrictions.

ASML's TWINSCAN family produces the lithography tools used to pattern wafers at the most advanced process nodes, including 5nm, 3nm, and upcoming 2nm geometries. EUV systems, the most restricted category, pattern the finest metal layers at the leading edge.

Why are Dutch controls commercially significant?

ASML holds a near-monopoly on EUV lithography and supplies the majority of cutting-edge DUV immersion tools to global foundries. China ranked as ASML's third-largest market in 2023, generating roughly €6.8 billion, or about 29% of system revenue, before licensing decisions tightened. Revenue from Chinese customers fell sharply through 2024, a decline ASML flagged in its quarterly disclosures.

ASML continues to ship lower-end systems to Chinese customers for mature nodes, a category not subject to the same restrictions. The split between restricted and unrestricted product has become a central question in ASML's investor calls.

What is the trilateral framework?

The Dutch controls sit inside a trilateral arrangement the United States, Netherlands, and Japan launched in January 2023. The framework targets China's ability to produce logic chips at 14nm and below, 18nm-half-pitch DRAM and below, and 3D NAND with 128 or more layers. Tokyo operates a parallel regime over Nikon and Canon stepper exports.

US Commerce Secretary Gina Raimondo said in 2023 that the trilateral framework was designed to "deny the PRC access to the most advanced semiconductor technology." The framework has been the subject of bilateral negotiations and allied coordination meetings since then.

What does CNAS want changed?

The brief's title signals a recommendation for tighter enforcement and a broader scope of restrictions. CNAS has historically influenced Washington debate on semiconductor export controls, CHIPS Act implementation, and outbound investment screening. Its critique mirrors that of industry analysts who argue licensing decisions have been too permissive and that third-country transshipment of components remains under-addressed.

CNAS researchers have previously published on the limits of equipment-level controls, advocating for expanded coverage of software, components, and services tied to advanced lithography systems.

How does this affect ASML's order book?

Further Dutch restrictions would primarily compress Chinese capacity expansion at SMIC, Hua Hong, and Yangtze Memory Technologies rather than disrupt existing production lines. ASML management has signaled Chinese demand will remain volatile but materially below its 2023 peak through 2025.

Domestic Chinese toolmakers, led by Shanghai Micro Electronics Equipment (SMEE), have not yet shipped DUV immersion systems at production scale, leaving ASML's installed-base dominance intact. SMEE's most advanced domestic tool targets the 90nm node, roughly five generations behind the leading edge.

What comes next?

The Dutch government reviews licensing criteria periodically, and the European Commission is weighing a common position on advanced semiconductor manufacturing equipment exports. The CNAS brief lands as allied governments debate whether to expand scope or tighten enforcement. ASML's 2025 order book and capacity utilization across Veldhoven and Hillsboro, Oregon, will reflect the policy outcome.