TSMC and ASML can
Remotely Disable Chip-Making Equipment if Mainland China Invades Taiwan
·
Taiwanese
chip manufacturer TSMC and Dutch machine supplier ASML have ways of disabling
their equipment, sources told Bloomberg
·
The
companies cannot export their most advanced chip making equipment to Chinese
manufacturers as the US seeks to curb its rival’s technological advance
ASML
Holding and Taiwan Semiconductor Manufacturing Company (TSMC) have ways to disable
the world’s most sophisticated chip-making 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.
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 that 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 (US$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 chip-making 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 per cent 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 last year produced a smartphone to rival Apple’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.
China
has long claimed that the island of Taiwan is its territory, with President Xi Jinping
both advocating for unification and refusing to rule out a military intervention.
The superpower has been building its military and nuclear arsenal on a scale not
seen since World War II and a top US admiral testified in March that it’s readying
to be able to invade Taiwan by 2027.
The
US Congress last month approved US$8 billion in aid to enhance the island’s defences.
The Biden administration is also looking to boost semiconductor production on American
soil, promising US$39 billion in grants to chip makers to hedge against any future
supply-chain disruption.
The
stakes are high, with around 90 per cent 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”.
The
EUV machine has helped turn ASML into Europe’s most valuable tech stock with a market
capitalisation topping US$370 billion – more than double that of its client Intel.
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
chip maker.
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 cannot 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 chip-making machines out of order.
“Nobody
can control TSMC by force,” Liu said. “If there is a military invasion you will
render TSMC factory non-operable.”