The US economy continues to grow

Growth in the world’s largest economy was significantly stronger than expected in the first quarter. Growth was 2.0 percent, against expectations of 1.3 percent. So the growth slowdown is much less pronounced than previously feared. Growth was 2.6 percent in the fourth quarter of last year. In addition to the economy, the job market is stronger than ever. Weekly claims for jobless benefits fell to 239,000, compared with expectations of 264,000. More robust macroeconomic data also increased the likelihood of the Federal Reserve raising interest rates further at its next meeting. The probability increased to 86.8 percent from 81.8 percent, according to the CME Fed WatchTool.

The US and the Netherlands want to further restrict exports of chip machines to China

The United States and the Netherlands plan to take joint measures this summer to further restrict sales of chip manufacturing equipment to China. This is done to prevent this technology from being used to strengthen the Chinese military. The Netherlands plans to restrict supply of some equipment, including ASML ( AS: ). The US is expected to go a step further to keep Dutch equipment away from certain Chinese factories.

Last October, the U.S. imposed export restrictions on U.S. companies such as Lam Research and Applied Materials (NASDAQ: ), restricting shipments of U.S. chip manufacturing assets to China for national security reasons. In addition, they have encouraged other countries with large suppliers to impose similar restrictions. The Chinese embassy in Washington has criticized the moves, accusing the US of deliberately disrupting Chinese companies, hindering industrialization and pushing for economic isolation. China will closely monitor developments and vigorously protect its own interests, the Chinese embassy said.

Japan, including chip equipment makers Nikon Corp and Tokyo Electron (TYO:) Ltd, has now introduced rules restricting exports of 23 types of semiconductor manufacturing machinery. These rules will come into effect from July 23. The Dutch government announced today new regulations requiring licensing of ASML’s advanced DUV (deep ultraviolet) semiconductor equipment. ASML’s most advanced machines, EUV (extreme ultraviolet) lithography machines, are not shipped to China. This is not allowed as per current regulations.

ASML noted in March that new Dutch regulations will affect TWINSCAN NXT:2000i and advanced models. Older DUV models like the TWINSCAN NXT:1980Di may also be stopped by the US for supply to six Chinese factories. The new regulations would allow the U.S. to control foreign equipment that contains a small percentage of U.S. parts. The new Dutch regulations will not take effect immediately, they will apply from 1 September next.

In response to the new measures, ASML indicated that it does not expect the additional export measures to have a significant impact on the outlook for 2023 or long-term objectives. ASML expects the global trend in demand for advanced chips to increase in the long term. Additionally, companies such as Intel (NASDAQ: ) and TSMC (TW: ) have recently announced plans to build new chip factories in Europe and the United States.