ASML’s new chief is stepping into the middle of a trade war

When ASML Holding NV Chief Executive Officer Peter Wennink took over a decade ago, he was leading an under-the-radar Dutch technology company where China sales were an afterthought.

The company he’s handing off is Europe’s most valuable technology business. It’s been targeted by the White House in its expanding trade war with China as the US seeks to keep ASML’s cutting-edge technology away from its geopolitical adversary. 

Incoming CEO Christophe Fouquet, a 15-year veteran who is currently ASML’s chief business officer, will have to navigate the perilous relationship between Washington and Beijing when Wennink retires in April. The strategic nature of ASML, as the world’s most advanced producer of chipmaking machines, ensures that the halls of power in both capitals will keep close tabs on his every decision.

Wennink, who was outspoken in his criticism of policies that limit global trade, had sought to maintain access to the Chinese market as geopolitical tensions intensified.

“I had the privilege to be in the team that has set the strategy, the direction of the company, and no need to say that I embrace it entirely,” Fouquet said on Thursday. “I think there should be no expectation that I will be turning the table.”

ASML has been sending a “message of caution to the people who’ve asked our advice on this,” Fouquet said. “We stay true to that message.”

US pressure on the Veldhoven-based company started in 2019, when President Donald Trump’s administration pushed the Dutch government to ban sales of ASML’s top-of-the-line extreme ultraviolet, or EUV, lithography machines to China. ASML is the only company that makes such technology, which is used to create semiconductors that power everything from smartphones to sophisticated military gear.

Then, pushed by Joe Biden’s administration, the Netherlands tightened export controls on China further this year, restricting the sale of less-advanced gear. The Dutch government was largely silent when Washington took a unilateral step in October to further limit the export of ASML machines by controlling the sale of specified foreign-made machinery with any amount of US materials.

The US-initiated export bans on ASML have angered some local lawmakers, who see them as impinging on the Netherlands’ sovereignty. Other Dutch politicians have said the government should have acted quicker to limit ASML’s high-tech chipmaking machines to China.

Fouquet, a French national, will have to balance the competing demands while attempting to satisfy shareholders accustomed to growth, even as his biggest market is squeezed. During a decade under Wennink, shares rose more than 900%. 

Still, the new US and Dutch curbs will affect as much as 15% of the firm’s sales in China, Wennink said previously. China accounted for 46% of ASML’s sales last quarter — compared with 24% in the previous quarter and 8% in the three months ending in March — as companies there rushed to import its machines before export controls take effect. 

Still, Burn J. Lin, a former Taiwan Semiconductor Manufacturing Co. vice president and one of the semiconductor industry’s leading figures, has said it is too late to curb China’s advances in semiconductors.

An ASML machine was already used by China’s Semiconductor Manufacturing International Corp. to manufacture a processor for the Huawei Technologies Co. smartphone which has capabilities that stunned the world when it went on sale in August. 

Fouquet, who previously held executive roles in semiconductor equipment industry at KLA Corp. and Applied Materials Inc., used a call with reporters to call for a detente in the trade war.

ASML has been sending a “message of caution to the people who’ve asked our advice on this,” he told reporters. “This industry has been extremely collaborative and in order to continue growing this industry we see all players are very important.”