Thursday, 04 March 2021 10:51

Dutch firm ASML extends chip deal with China's SMIC till end of 2021

Dutch firm ASML extends chip deal with China's SMIC till end of 2021 Pixabay

The Dutch company ASML, the biggest manufacturer of lithography equipment for making semiconductors, has extended a deal with Semiconductor Manufacturing International Corporation, China's biggest chip maker, according to a short statement issued on Wednesday.

The ASML statement was made after SMIC revealed a volume purchase deal on which it has already spent US$1.2 billion (A$1.54 billion), Reuters reported.

The statement said the deal began in 2018 and had been slated to end last year, but was extended till the end of 2021.

SMIC was one of the Chinese companies placed on a blacklist by the US Government in September last year, with American firms required to obtain a licence from the Department of Commerce if they wished to sell products to the Chinese entity.

ASML manufactures a critical tool that is used in making advanced semiconductors, known as an extreme ultraviolet lithographic machine.

Two years ago, the US put pressure on the Dutch Government to cancel a licence issued to ASML to sell such a machine to SMIC, part of its efforts to prevent Chinese telecommunications equipment vendor Huawei Technologies from obtaining advanced semiconductors for its flagship smartphones.

ASML said the deal with SMIC was for older technology, known as deep ultraviolet lithography.

The ASML statement said: "A disclosure has been made by SMIC under Hong Kong listing rules regarding a Volume Purchase Agreement with ASML.

"This relates to an existing agreement for DUV lithography that was already entered into on 1 January 2018 and that would run originally until 31 December 2020 and which was extended on 1 February 2021 to be valid until end December 2021.

"The total amount of purchase orders under the VPA was completed in the past 12 months’ period from 16 March 2020 until 2 March 2021 – to an aggregate amount of US$1.2 billion. The VPA, including its extension, is not a material event for ASML.

"We understand that the transactions contemplated under the VPA constitute disclosable events for SMIC under the Hong Kong Listing Rules."

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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