If China invades Taiwan, chip machine maker ASML is rumoured to have the ability to disable its equipment remotely in TSMC's fabrication facilities. In ASML's EUV lithography systems, the most extensive client is TSMC, which uses extreme ultraviolet (EUV) wavelengths to manufacture the highest quality semiconductors.

It is possible to use these chips for many different applications, from smartphones and car electronics to (most importantly) artificial intelligence and military applications, among others. Taiwan Semiconductor Manufacturing Co. (TSMC) and ASML Holding are rumoured to have devised a way to disable the world's most sophisticated chipmaking machines if China invades Taiwan, according to people familiar with the matter. 

There have been some private concerns by officials of the US government about the consequences if Chinese aggression escalates into an attack against the island responsible for producing the vast majority of the world's advanced semiconductors, two of the sources cited said, speaking anonymously. When the Dutch government met ASML about the threat, the company assured officials that they would be able to disable the machines remotely. 

Two more sources stated that ASML had assured officials that it could disable the machines remotely. A report from Bloomberg on Tuesday quoted people familiar with the matter saying that two of the world's largest chipmakers could turn off the "kill switch" on their most advanced chipmaking machines remotely should China invade Taiwan, according to the report. ASML, one of Europe's largest technology companies by market value, is a Dutch company that manufactures advanced machine tools and products for chip companies. 

These include Taiwan's own TSMC, which has been estimated that 90% of the world's most advanced processor chips come from the Taiwanese. This news of a forced shutdown, or "kill switch," on ASML's chipmaking equipment comes as Washington and Beijing intensify their rivalry, and as people have grown increasingly concerned about a possible Chinese invasion of Taiwan, which Beijing claims as its territory. Despite Dutch officials' fears regarding the capability of ASML to remotely disable its extreme ultraviolet (EUV) machines, which play such a crucial role in the manufacture of the smallest microchip transistors for artificial intelligence and military purposes, it has assured them that ASML is capable of doing so. 

To understand the risks better, the Dutch government has conducted simulations. As the EUV machines are one of the most sophisticated in the world, they require regular maintenance and upgrades regularly. In this way, ASML can effectively function as a kill switch if necessary, by remotely shutting down the machines. Currently, the only manufacturer of European Ultraviolet (EUV) machines in the world is based in Veldhoven in the Netherlands, and they sell for over €200 million ($217 million) per unit. 

There is a closely controlled system in place that allows ASML to prevent rival nations from gaining access to its technology. A ban has been put in place by the Netherlands on the sale of EUV machines to China as a result of pressure from the US. In response to US pressures, the Dutch government has also begun to take action against ASML's next-most advanced chipmaking machines, halting exports of ASML's next-most advanced chipmaking machines. 

As a result, ASML can expect its sales to China this year to fall by approximately 15%. With a market capitalization of more than $370 billion, ASML is Europe's most valuable tech stock, more than twice what its client Intel Corp. possesses, thanks to its EUV technology. ASML began shipping EUV machines to customers outside China in 2016, and ASML has shipped more than 200 units to customers outside China, the largest of which has been TSMC, which has been the biggest customer. 

As Bloomberg points out in its report, maintaining EUV machines regularly poses a significant challenge, and this is not the first time. It would become impossible for these machines to operate if ASML were not to provide spare parts for them and on-site service for them. To keep EUVs in good working order, engineers must maintain a clean room environment in which special suits must be worn to prevent contamination from happening. 

Mark Liu, the chairman of TSMC, stated in an interview conducted with CNN in October that Taiwan’s chip-making machines would cease to function if Taiwan’s government attempted to regain control over the country. The EUVs are about the size of a city bus, so maintenance and updates are required regularly. ASML and TSMC may remotely disable their advanced chip-making machines if China invades Taiwan, according to sources. ASML, the world’s sole manufacturer of EUV lithography systems, has implemented a "kill switch" capability to prevent its technology from falling into the wrong hands. 

These machines, critical for producing advanced semiconductors used in AI and military applications, sell for over €200 million (S$292 million) each. ASML’s technology is subject to strict government controls. The Netherlands, influenced by US concerns over China's potential technological advantage, prohibits the sale of EUVs to China. Under US pressure, the Dutch government halted exports of ASML’s next-most sophisticated machines in 2024 and even requested the cancellation of previously scheduled shipments to Chinese customers. 

These export-control measures are expected to affect up to 15% of ASML’s sales to China this year. The stakes are particularly high, as Taiwan produces approximately 90% of the world’s most advanced chips. ASML's EUV technology has significantly contributed to its status as Europe’s most valuable tech stock, with a market capitalization exceeding $370 billion, more than double that of Intel. Since the introduction of EUV machines in 2016, ASML has shipped over 200 units to clients outside China, with TSMC being the largest purchaser.

EUV machines require frequent maintenance and updates, necessitating ASML's spare parts and on-site servicing. These machines are housed in clean rooms, where engineers must wear special suits to prevent contamination. ASML offers joint service contracts to certain customers, allowing them to perform some routine maintenance independently. However, ASML asserts that it cannot access its customers' proprietary data. 

In a September interview with CNN, TSMC Chairman Mark Liu indicated that any attempt to seize control of Taiwan would render the company’s chipmaking machines inoperative. This statement underscores the fragility and strategic importance of maintaining operational control over these advanced technologies in the face of geopolitical tensions.