Dutch PM to meet China's Xi as chip export policy strains ties

Prime Minister Mark Rutte (R) of the Netherlands welcomes China's President Xi Jinping on the second day of his state visit, at The Hague March 23, 2014. Paul Vreeker/United Photos/File Photo

AMSTERDAM - The Dutch prime minister will travel to Beijing next week for a meeting with Chinese President Xi Jinping on "economic ties", the Dutch government said on Friday, a meeting likely to be strained over computer chip export policy matters.

The Dutch government this year began denying licences for ASML, the biggest supplier of equipment to computer chip makers, to export many of its products to China, following pressure from the United States.

ASML dominates the global market for lithography systems, multi-million dollar tools essential in helping to create the circuitry of computer chips.

One of Xi's top policy goals has been to help China build up its domestic chipmaking industry, spending billions on subsidies.

Meanwhile the U.S. government is seeking to undermine China's ability to make its own chips, and has enlisted aid from the Dutch and Japanese governments in restricting equipment exports.

Under rules in place since Jan. 1, ASML has said it no longer expects to receive licences from the Dutch government to ship its more advanced "DUV" tool lines to Chinese customers.

But it remains unclear how much of the equipment ASML has already sold to Chinese customers it will be able to continue to service.

It sold gear worth more than 6 billion euros ($6.5 billion) to Chinese chipmakers in 2023, making China ASML's second-largest market behind Taiwan and ahead of South Korea.

Without spare parts, ASML's machines are expected to become impossible to operate within weeks.

During the March 26-27 visit, Dutch Prime Minister Mark Rutte is expected to meet with Xi and premier Li Qiang, while Dutch Trade Minister Geoffrey van Leeuwen is also attending and expected to meet with Chinese Trade Minister Wang Wentao.

"They will discuss economic cooperation opportunities, the importance of a level playing field, and the importance of equal market access," the Dutch government said in a statement.

($1 = 0.9244 euros)

(Reporting by Toby Sterling; Editing by Hugh Lawson and Barbara Lewis)