There is a point at which an alliance stops looking like coordination and starts looking like coercion.
Europe may be approaching that point.
Washington is pushing the MATCH Act, bipartisan legislation designed to tighten restrictions on semiconductor-manufacturing equipment going to China and extend those restrictions to companies in allied countries, including the Netherlands and Japan. The proposed legislation would effectively pressure the Dutch government to bring its controls on ASML’s China business into line with Washington’s rules. Dutch parliamentary documents confirm that the legislation is intended to impose comparable restrictions on allied companies.
The strategic target is obvious: ASML.
And that raises a much larger question than whether China should have access to advanced chipmaking technology.
It raises the question of how much strategic autonomy Europe actually possesses when Washington decides that a European company's relationship with China has become a matter of American national security.
ASML Is Not Just Another European Company
ASML occupies an extraordinary position in the global semiconductor industry.
Its lithography machines are essential to modern chip manufacturing, and the company has become one of Europe's most strategically important technology assets.
Its 2025 revenue reached €32.7 billion, with €4.7 billion spent on research and development.
But ASML's importance creates a paradox.
The company is Dutch.
Its headquarters, engineering base and corporate identity are European.
Yet its supply chain is deeply international—and crucially intertwined with American technology.
That gives Washington leverage.
And Washington is increasingly using that leverage to shape where ASML can sell, service and maintain its equipment.
The Dutch government has already imposed its own export controls. But the MATCH Act seeks to go further by closing what Washington considers loopholes, including restrictions involving older deep-ultraviolet lithography equipment and servicing. Reuters reported that the proposed legislation could prohibit sales and servicing involving major Chinese semiconductor companies.
This is where the issue becomes bigger than ASML.
If Washington can effectively determine which customers a Dutch technology company is allowed to serve, what does European economic sovereignty actually mean?
China Is a Huge Customer
There is another uncomfortable fact.
China isn't some marginal market for ASML.
ASML's 2025 annual report says customers in China accounted for 29.1% of total net sales, compared with 36.1% in 2024. That amounts to roughly €9.52 billion in 2025 sales.
So the claim that China represented roughly 40% of ASML's exports is too high for 2025 if measured against total company sales.
But 29.1% is enormous.
We're talking about nearly three out of every ten euros of ASML's 2025 revenue.
And ASML itself says its China DUV business was stronger than anticipated in 2025.
Washington therefore isn't asking a small European company to sacrifice an insignificant customer.
It is asking one of Europe's most important technology companies to further reduce exposure to one of its largest markets.
That has consequences.
This Is How Economic Decoupling Works
Decoupling rarely arrives as a single dramatic announcement saying:
“Europe must stop trading with China.”
It happens incrementally.
First, certain technologies are restricted.
Then particular customers are placed on lists.
Then servicing becomes restricted.
Then investment controls appear.
Then suppliers are pressured.
Then allied governments are encouraged—or compelled—to adopt similar rules.
Eventually, an entire ecosystem begins reorganising itself around geopolitical blocs.
The MATCH Act represents another step in that direction.
And Europe needs to understand what it is participating in.
Because once supply chains are reorganised, they are extremely difficult to reconstruct.
Europe Has Seen This Movie Before
Consider Airbus.
In 2018, Airbus's Iran business became entangled in the consequences of America's withdrawal from the Iran nuclear agreement and the restoration of U.S. sanctions. Airbus had a multibillion-dollar agreement with Iran Air for aircraft, but the deal became effectively impossible to execute because the aircraft contained significant U.S.-origin components and therefore fell under American sanctions rules.
The lesson was brutally simple:
A European company can sign a contract with a foreign customer and still discover that Washington has the power to determine whether that contract can actually be fulfilled.
That isn't necessarily an argument that the American sanctions were illegitimate.
It is an argument about dependency.
If a European company relies sufficiently on American technology, financing, components or access to the U.S. market, Washington possesses leverage over its global commercial decisions.
ASML is discovering the same structural reality.
Germany Already Paid a Price for Strategic Dependency
Germany's experience with Russia is another warning, although the circumstances are fundamentally different.
For decades, Germany built a powerful export-oriented industrial economy while benefiting from relatively cheap Russian pipeline gas.
The arrangement was economically attractive.
German industry received energy.
Russia received European currency.
Both sides benefited.
Then geopolitics changed.
The war in Ukraine shattered the assumption that economic interdependence would automatically produce political stability.
Europe dramatically reduced its dependence on Russian energy.
That may have been necessary from a security perspective.
But it also demonstrated something European policymakers should never forget:
Strategic dependency can become an economic vulnerability overnight.
And Europe now risks creating another form of dependency—this time technological and geopolitical.
But There Is an Important Difference
We should be careful not to pretend that all these cases are identical.
Russia's invasion of Ukraine is not equivalent to China's semiconductor ambitions.
Iran's relationship with the United States is not equivalent to China's relationship with Europe.
And semiconductor export controls are not the same thing as energy sanctions.
But there is a common structural question:
How much economic pain is Europe willing to absorb in pursuit of geopolitical objectives designed primarily in Washington?
That is the question European leaders need to answer honestly.
The Sanctions Strategy Has a Fundamental Problem
The West's objective is understandable.
Prevent China from obtaining the most advanced technologies necessary to produce cutting-edge semiconductors and advanced military systems.
The problem is that technological restrictions create an enormous incentive for the targeted country to develop substitutes.
And there is evidence that this process is already happening.
Recent reporting indicates that China has begun mass-producing immersion DUV lithography tools domestically, precisely the category of equipment that Western restrictions have attempted to limit.
If confirmed and sustained, that development would illustrate the paradox at the heart of technological sanctions:
The harder you make it for a country to buy your technology, the more valuable it becomes for that country to develop its own.
Restrictions can slow technological progress.
But they can also accelerate technological independence.
China Doesn't Need ASML Forever
This is the part Europe should be watching most closely.
China does not necessarily need to replicate ASML's most sophisticated machines immediately.
It needs to become progressively less dependent on foreign equipment.
It can begin with mature-node manufacturing.
Then improve domestic DUV technology.
Then develop more advanced processes.
Then strengthen domestic semiconductor materials.
Then build domestic software.
Then improve chip-design capabilities.
Then develop alternative manufacturing equipment.
Every technological restriction creates another incentive to complete another part of the domestic supply chain.
That doesn't mean China will successfully reproduce everything.
ASML's technological lead is extraordinary and has taken decades to build.
But the strategic objective isn't necessarily to reproduce ASML overnight.
It is to make ASML unnecessary over time.
And That Is a Dangerous Outcome for Europe
There is an extraordinary irony here.
Washington wants to restrict ASML's access to China in order to constrain China's semiconductor ambitions.
But if restrictions become sufficiently aggressive, China will have an even stronger incentive to build a domestic alternative.
If China succeeds, the West eventually loses something more valuable than today's sales.
It loses future market access.
And ASML loses a customer.
Meanwhile, Chinese competitors gain experience.
That is the paradox of decoupling.
You may weaken your competitor while simultaneously weakening your own commercial position.
Europe Needs Its Own China Strategy
This does not mean Europe should ignore national security.
It doesn't mean Europe should sell every technology to everyone.
And it certainly doesn't mean sensitive semiconductor technology should be transferred without restrictions.
The problem is the absence of an unmistakably European strategic doctrine.
Europe should decide for itself:
- Which technologies are genuinely strategic?
- Which exports should be restricted?
- Which restrictions should be coordinated with America?
- Which should be independent European decisions?
- What economic costs are acceptable?
- What industries require protection?
- What markets must remain open?
- What technological capabilities must Europe develop domestically?
Instead, Europe increasingly risks becoming the territory where American security policy and Chinese economic power collide.
That is not strategic autonomy.
That is strategic dependency.
Europe Cannot Afford to Lose China and America Simultaneously
This is the brutal economic calculation.
Europe needs the American market.
It needs American technology.
It needs American security guarantees.
But it also has enormous commercial relationships with China.
China is a major market for European manufacturers.
It is deeply embedded in global supply chains.
And it is becoming increasingly competitive in industries Europe itself considers strategically important.
If Europe simultaneously loses access to Chinese markets while becoming increasingly dependent on American industrial policy, Europe risks becoming economically squeezed from both sides.
America captures investment.
China builds competing industries.
Europe loses markets and manufacturing capacity.
That is not a sustainable long-term strategy.
The Goal Should Be De-Risking, Not Blind Decoupling
There is a crucial distinction between de-risking and decoupling.
Europe should absolutely reduce dangerous dependencies.
It should diversify energy supplies.
Secure critical minerals.
Build semiconductor capacity.
Protect sensitive technologies.
Strengthen defense manufacturing.
Develop domestic AI infrastructure.
Build resilient supply chains.
But diversification means having alternatives.
Decoupling means destroying relationships regardless of cost.
Those are not the same thing.
A genuinely sovereign Europe should be capable of trading with China, maintaining an alliance with America and still making independent decisions about its own economic interests.
That is what strategic autonomy should mean.
Russia, Iran and China Are Adapting
The biggest mistake would be assuming that sanctions automatically produce capitulation.
They don't.
Sometimes they do.
Sometimes they cause severe economic damage.
Sometimes they force technological adaptation.
Sometimes they create black markets.
Sometimes they encourage alternative financial systems.
Sometimes they accelerate domestic manufacturing.
And sometimes they do several things simultaneously.
Russia has demonstrated significant capacity to sustain military production despite Western sanctions.
Iran has spent decades developing ways to operate under sanctions.
China has responded to semiconductor restrictions with massive investment in domestic technological capabilities.
None of this means sanctions are useless.
It means sanctions are not a substitute for strategy.
Europe Needs to Wake Up
The question facing Europe is not whether America is an ally.
It is.
Nor is the question whether China presents strategic challenges.
It does.
The real question is whether Europe can remain an independent economic power while navigating the rivalry between two much larger geopolitical blocs.
ASML is a perfect case study.
Europe possesses one of the world's most strategically important technology companies.
China is one of its largest markets.
America possesses enormous leverage over its technology supply chain.
And European policymakers are now being asked to choose.
That should terrify anyone who cares about European industrial sovereignty.
Because the lesson isn't simply about ASML.
It is about Europe's position in the twenty-first-century economy.
Europe Cannot Build Its Future by Outsourcing Strategic Decisions
For decades, Europe enjoyed the luxury of believing that economics and geopolitics could be separated.
Cheap Russian energy.
Chinese manufacturing.
American security.
European regulation and high-value engineering.
It was an extraordinary arrangement.
But that world is disappearing.
The United States increasingly views technology through the lens of national security.
China increasingly views technological self-sufficiency as a national-security imperative.
Russia has demonstrated the risks of strategic economic dependence.
Europe therefore needs to develop something it has historically struggled to exercise:
strategic economic power.
Not anti-Americanism.
Not pro-China romanticism.
Not appeasement of Russia.
Something much more difficult:
European sovereignty.
The ASML Question Is Really Europe's Question
If ASML eventually loses much of its Chinese market, the company will survive.
It is too technologically important to disappear overnight.
But the bigger question is what happens to the ecosystem around it.
What happens to European semiconductor research?
What happens to the thousands of suppliers?
What happens to future investment?
What happens if Chinese competitors eventually emerge?
What happens when European companies discover that access to major global markets depends on political permission from Washington?
And what happens when Europe eventually realises that it has surrendered commercial relationships without building enough alternatives?
These are questions Brussels should be asking before, rather than after, the factories close.
The objective should not be to choose between Washington and Beijing.
It should be to ensure that Europe has enough technological, financial and industrial power to choose for itself.
Because if Europe cannot decide who its own companies are allowed to sell to, cannot protect the markets its industries depend upon, and cannot develop alternatives to foreign technology and energy, then the continent may remain wealthy—but it will not be strategically sovereign.
ASML should therefore be treated as more than a Dutch company. It is a test of whether Europe still intends to control its own industrial future.
And if Brussels fails that test, the consequences will extend far beyond Eindhoven.
Comments
Post a Comment