New Dutch export controls on advanced semiconductor manufacturing equipment

The Netherlands adopted a Regulation on Advanced Semiconductor Manufacturing Equipment (Regeling van de Minister voor Buitenlandse Handel en Ontwikkelingssamenwerking van 23 juni 2023, nr. MinBuza.2023.15246-27 houdende invoering van een vergunningplicht voor de uitvoer van geavanceerde productieapparatuur voor halfgeleiders die niet zijn genoemd in bijlage I van Verordening 2021/821 (Regeling geavanceerde productieapparatuur voor halfgeleiders)) making the export outside the EU of such equipment  subject to a license from the Dutch Minister for Foreign Trade and Development Cooperation ("Dutch Regulation"). These export controls have entered into force on 1 September 2023.

Regulation (EU) 2021/821 (“Dual-Use Regulation”) controls the export outside the EU of dual-use items listed in Annex I. Pursuant to Article 9 of the Dual-Use Regulation, EU Member States can impose a license requirement on the export of dual-use items not listed in Annex I for reasons of public security, including the prevention of acts of terrorism, or for human rights considerations. The Netherlands made use of this provision when adopting the Dutch Regulation making the export of certain advanced semiconductor manufacturing equipment subject to an export license. 

As of 1 September 2023, a license is required to export from the Netherlands to outside the EU advanced semiconductor manufacturing equipment listed in the Annex of the Dutch Regulation. These items are "production equipment, software and technology for semiconductor devices or materials, not controlled by 3B001, 3D001, 3D002 and 3E001 of Annex I to the Dual-Use Regulation, as follows, and specially designed components and accessories therefor", including:

• EUV pellicles
• Production equipment for EUV pellicles
• Lithographic equipment
• Equipment for atomic-layer deposition (ALD) of 'pull-out' metals
• Equipment designed for epitaxial growth of silicon (Si), carbon-doped silicon, silicon germa- nium (SiGe), or carbon-doped SiGe
• Equipment designed for void-free plasma-enhanced deposition of a low-K-κ, void-free dielectric in voids less than 25 nm wide with an aspect ratio (AR) equal to or greater than 1:1 between metallic lines with a dielectric constant lower than 3.3
• Associated software and technology

“Export” is defined on the basis of Article 2 (2) of the Dual-Use Regulation, which covers:

• Export, re-export and outward processing procedures when the listed items are exported from the Netherlands;
• Transmission of software or technology by electronic media, including by fax, telephone, electronic mail or any other electronic means from the Netherlands to a destination outside the EU.

As of 1 August 2023, exporters can request an individual or global license to export these restricted items by filing a license application (template available here) with the Director-General of Customs (Centrale Dienst voor In- en Uitvoer or "CDIU"). The authorities can request the exporter to provide the contract on the basis of which the items would be exported and a signed End-Use Certification ("EUC").

Based on the preparatory documents of the Dutch Regulation, there are three objectives of the Dutch Regulation, which are taken into account in assessing license applications:

• Preventing Dutch goods from contributing to undesirable end use, such as military use or in weapons of mass destruction.
• Preventing undesirable strategic dependencies.
• Maintaining Dutch technological leadership and western standards. When assessing a case relating to semiconductor technology, a specific consideration is made on a case-by-case basis, based on these three principles.

The Dutch Regulation is adopted following a widely reported 'deal' between the Netherlands, Japan and the United States to restrict exports of advanced semiconductor manufacturing equipment to China.

Next steps

• Companies in the semiconductor industry, and those that use semiconductors in their manufacturing process, should assess the impact of these Dutch export controls on their own organization and their broader supply chain.
• The Dutch Regulation would mainly affect a small group of Dutch manufacturers of advanced semiconductor manufacturing equipment. The Ministry anticipates the new license requirement will trigger 24 one-off license applications and 20 license applications on an annual basis (see explanatory note to the Dutch Regulation). In a press statement of 30 June 2023, Minister for Foreign Trade and Development Cooperation Liesje Schreinemacher indicated that the Dutch Regulation is drafted in a precise way to avoid causing unnecessary disruptions in the global semiconductor manufacturing supply chain.
• National measures adopted under Article 9 of the Dual-Use Regulation may have an impact on exports from other EU Member States. Article 10 of the Dual-Use Regulation requires EU Member States to impose a license requirement for the export of items restricted by national control measures of another EU Member State if the exporter has been informed that these items may be used in relation to public security concerns or human rights considerations. It cannot be ruled out that other EU Member States which have similar technology may apply national export controls to follow the Netherlands' initiative.
• As a key actor in the advanced semiconductor supply chain, the Netherlands is taking a step towards coordination with the United States in restricting China’s access to advanced semiconductor technology. In this regard, please see our assessment on US export controls on China regarding semiconductors and supercomputers and US outbound investment screening mechanism. These measures may result in China adopting its own controls (for example, recent export controls on strategic raw materials, gallium and germanium, which are critical to the semiconductor supply chain).

Please reach out to any of the Hogan Lovells contacts listed above with any questions.

Authored by Lourdes Catrain, Stephanie Seeuws, Matthijs Dols, and Alp. Y. Ozturk.