ASML and TSMC Can Remotely Disable Chip Machines If China Invades Taiwan

ASML Holding NV and Taiwan Semiconductor Manufacturing Co. have ways to disable the world’s most sophisticated chipmaking machines in the event that China invades Taiwan, according to people familiar with the matter.

Officials from the US government have privately expressed concerns to both their Dutch and Taiwanese counterparts about what happens if Chinese aggression escalates into an attack on the island responsible for producing the vast majority of the world’s advanced semiconductors, two of the people said, speaking on condition of anonymity.

ASML reassured officials about its ability to remotely disable the machines when the Dutch government met with the company on the threat, two others said. The Netherlands has run simulations on a possible invasion in order to better assess the risks, they added.

Spokespeople for ASML, TSMC and the Dutch trade ministry declined to comment. Spokespeople for the White House National Security Council, US Department of Defense and US Department of Commerce didn’t respond to emailed requests for comment.

The remote shut-off applies to Netherlands-based ASML’s line of extreme ultraviolet machines, known within the industry as EUVs, for which TSMC is its single biggest client. EUVs harness high-frequency light waves to print the smallest microchip transistors in existence — creating chips that have artificial-intelligence uses as well as more sensitive military applications.

China has long claimed that the island of Taiwan is its territory, with President Xi Jinping both advocating for peaceful unification and refusing to rule out a military intervention. While US officials have warned that China is seeking the capability to invade Taiwan by 2027, Taiwanese officials have downplayed the threat of an imminent invasion and officials in Beijing have said the American warnings of a timeline are baseless. The People’s Liberation Army isn’t massing troops on the coast and Xi has been primarily focused on steadying China’s economy to hit long-term development goals. Global Chip War

About the size of a city bus, an EUV requires regular servicing and updates. As part of that, the company can remotely force a shut-off which would act as a kill switch, the people said, speaking on condition of anonymity. The Veldhoven-based company is the world’s only manufacturer of these machines, which sell for more than €200 million ($217 million) apiece.

ASML’s technology has long been subject to government interventions aimed at preventing it from falling into the wrong hands. The Netherlands prohibits the company from selling EUV machines to China, for instance, because of US fears they could lend its rival an edge in the global chip war.

It was at the behest of the US that the Dutch began this year to halt exports of ASML’s next-most sophisticated chipmaking machines. Even before that ban took effect, US officials had asked ASML to cancel some previously scheduled shipments to Chinese customers, Bloomberg News reported.

The company expects as much as 15% of this year’s sales to China will be affected by the latest export-control measures.

Evidence suggests the restrictions may have come too late to stem Chinese advances. Huawei Technologies Co. last year produced a smartphone to rival Apple Inc.’s iPhone using chips made with older ASML printers in combination with tools from two US suppliers, Bloomberg News reported in October after conducting a break-down of the phone.

Beijing has made technological self-sufficiency a national priority and Huawei’s efforts to advance domestic chip design and manufacture have received government backing.

The Biden administration is also looking to boost semiconductor production on American soil, promising $39 billion in grants to chipmakers to hedge against any future supply-chain disruption.

The stakes are high, with around 90% of the world’s most advanced chips made in Taiwan. On May 20, Taiwan inaugurated Lai Ching-te as president in the global chip hub, putting in power a man Beijing has branded an “instigator of war.”

Read More: Taiwan’s New President Calls On China to End Threat of War

The EUV machine has helped turn ASML into Europe’s most valuable tech stock with a market capitalization topping $370 billion — more than double that of its client Intel Corp.

ASML has shipped more than 200 of these machines to clients outside China since they were first developed in 2016, with TSMC snatching up more of them than any other chipmaker.

EUVs require such frequent upkeep that without ASML’s spare parts they quickly stop working, the people said. On-site maintenance of the EUVs poses a challenge because they’re housed in clean rooms that require engineers to wear special suits to avoid contamination.

ASML offers certain customers joint service contracts where they do some of the routine maintenance themselves, allowing clients like TSMC to access their own machines’ system. ASML says it can’t access its customers’ proprietary data.

TSMC Chairman Mark Liu hinted in a September interview with CNN that any invader of Taiwan would find his company’s chipmaking machines out of order.