China's new regulations on rare earth exports have plunged the global lithography machine giant ASML into a paralysis crisis. On October 9, 2025, the Chinese Ministry of Commerce suddenly announced that starting from December 1, it would implement export controls on rare earths and related technologies, requiring all products containing Chinese rare earths to undergo approval before re-export.

This new regulation is like a precise strike, directly hitting the heart of ASML's lithography machines—the precision lasers and magnet systems that rely on Chinese rare earths. Over 70% of the medium and heavy rare earths in ASML's lithography machines come from China. The new regulation may cause delays in global deliveries for weeks, and chip giants such as TSMC and Samsung have already received warnings about the delay.

China's new rare earth regulations clearly state that any foreign product containing 0.1% or more of Chinese heavy rare earths must be approved by China for re-export. For export applications for military use, China generally does not approve them. This regulation covers the entire industry chain, from rare earth mining, smelting and separation to magnet material manufacturing.

The precision lasers in ASML's lithography machines require rare earth elements such as neodymium and dysprosium, while the magnet systems depend on heavy rare earths such as terbium. These materials determine the precision and stability of the lithography machines. After the implementation of the new regulations, all components using Chinese rare earth materials in ASML will face additional approvals in transshipment trade.

ASML is urgently inventorying the amount of Chinese rare earths in its supply chain. The lithography machine has over 100,000 components, and 30% of the suppliers directly or indirectly use Chinese rare earth materials. Especially in extreme ultraviolet lithography machines, the rare earth elements in the laser plasma source are almost entirely sourced from China.

The Prime Minister of the Netherlands stated in a press conference that they are negotiating with China on the issue of rare earth exports. However, the Chinese Ministry of Commerce clearly stated that the control measures are a reasonable initiative to maintain national security. The European Commission issued a statement saying that it is assessing the risk of rare earth supply disruption and advising member states to activate strategic reserves.

ASML's stock price in Amsterdam fell by 7.3% on the day the news was released. Analysts expect that if the rare earth supply is blocked, ASML's lithography machine production in 2026 could decrease by 40%. TSMC and Samsung have sent executives to ASML headquarters to discuss countermeasures.

This crisis originated from ASML cutting off the supply of lithography machines to China under pressure from the United States in 2023. At that time, ASML significantly reduced its exports to China, from hundreds of units per year to less than 100 units. The Chinese market once contributed 30% of ASML's revenue, and after the cut-off, its revenue declined significantly.

China's rare earth production capacity accounts for more than 90% of the world, especially the heavy rare earth separation technology monopolizes the global market. There is no ready alternative source for the rare earth materials used in ASML's lithography machines. Although the United States has restarted the Mountain Pass rare earth mine, its separation technology still relies on China.

The Japanese Ministry of Economy, Trade and Industry held an emergency meeting to discuss the rare earth supply issue. Japanese companies such as Tokyo Electron and SCREEN Holdings also saw their stock prices fall. The Korean Ministry of Industry announced that it would increase its rare earth reserves by 50% and accelerate the development of recycling technologies.

After the cutoff of lithography machines, China's semiconductor industry has accelerated its self-reliance. Shanghai Micro Electronics' 28nm DUV lithography machine has entered the testing phase, and the Chinese Academy of Sciences has made breakthroughs in EUV light source technology. In 2025, the self-sufficiency rate of mature process chips in China reached 68%.

ASML's CEO, Wim van der Meer, had his planned visit to China this month moved forward, and he will discuss rare earth export licensing matters with the Chinese Ministry of Commerce. However, the Chinese Rare Earth Industry Association stated that the approval process will be strictly conducted according to law, and the expected cycle is 4-6 weeks.

Stock prices of global semiconductor equipment manufacturers have fluctuated collectively. Applied Materials in the United States has lowered its fourth-quarter performance guidance, and Lam Research has announced the postponement of new product releases. Analysts believe that China's rare earth control may trigger a restructuring of the global semiconductor industry chain.

China's rare earth processing technology remains at the forefront, with 90% of the global rare earth separation capacity concentrated in China, especially the purification technology for heavy rare earths is uniquely mastered by China. The ultra-pure rare earth materials required by ASML's lithography machines can only be produced in China at present.

German semiconductor materials company Merck has suspended the supply of rare earth magnets, stating in its statement that it is verifying the amount of Chinese rare earths in its products, and expects to complete the assessment within 2-3 weeks, further exacerbating the tension in the semiconductor materials supply.

ASML's headquarters in Veldhoven, the Netherlands, has established an emergency team, monitoring the supply chain around the clock. The company said it is looking for alternative sources of supply, but admitted that it is difficult to completely摆脱 reliance on Chinese rare earths in the short term. The inventory of rare earth materials in lithography machines can only last for 8 weeks.

Data from the Chinese Ministry of Commerce shows that China's rare earth exports in 2024 were 73,000 tons, of which 35% were exported to Japan, South Korea, and other regions with concentrated semiconductor industries. After the implementation of the new regulations, the import costs of rare earths in these regions will significantly increase.

Rare earth elements in ASML's lithography machines are mainly used in laser crystals, permanent magnets, and optical glass. Among them, neodymium-iron-boron magnets are the core component of the positioning system of the lithography machine's worktable, and their precision directly affects the yield of chip manufacturing.

The U.S. Department of Defense is assessing the impact of the rare earth control on military chips. Suppliers of chips for the F-35 fighter jets have already received delivery delay notices from ASML. The Pentagon said it may invoke the Defense Production Act to ensure the supply of rare earths.

Original: https://www.toutiao.com/article/7559949899161240104/

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