28-03: This article from March 27th has been updated to reflect the fact that the Dutch cabinet has confirmed its investment in its tech sector.
The Dutch government is pulling out the purse strings for its tech-heavy Brainport Eindhoven region. 2.5 billion euros in additional spending is set to benefit the TU Eindhoven university and the rest of the area, including about 500 million for the development of local infrastructure. Will the additional cash be enough?
The investments are shaping up to add to 2.5 billion euros, coming partially from the local Eindhoven municipality (800 million). The Dutch government is expecting ASML to return the favour, however: it is hoping the extra investments in housing, universities and infrastructure will ensure the company keeps its global headquarters in Veldhoven, Netherlands.
It is slowly beginning to look like the major investment that Eindhoven’s Mayor Jeroen Dijsselbloem advocated for two weeks ago. In doing so, he pointed out the importance of more investment in the region’s accessibility, which is crucial to providing countless tech companies with employees. Since the region itself is jam-packed, workers being able to get to work from the outside is necessary in many cases.
Although ASML isn’t the only prominent tech company in the region, it is considered the jewel in the crown for Brainport Eindhoven (and, realistically, for the entire Dutch tech industry). In conversation with the Dutch FD, Dijsselbloem noted that each ASML employee creates 2.8 additional workplaces in the supply chain. Any departure or even a gradual withdrawal of ASML would therefore have major consequences.
Not just a financial matter
The cabinet has finally realized that additional investment is needed. With the leaked “Beethoven plan,” the Dutch government is betting on keeping ASML’s HQ retained in the Netherlands for the long term. The company’s overall presence is relative, by the way, because ASML already has offices all over the world. This gives the chip machine maker the choice to expand somewhere other than its native Veldhoven headquarters. The Dutch government hopes to ensure that ASML also continues to expand within the Netherlands.
A major pain point at the moment is that the government cannot develop plans that are all that drastic. It’s a caretaker cabinet that’s waiting on coalition talks for its successor to form. As a result, political decision-makers are forced to hold back on radical investments. However, the current plans should at least offer a preview of what’s to come for the region. That’s certainly what local businesses are hoping for.
Reading tip: ASML stays in the Netherlands, but may continue expansion abroad
Nevertheless, this isn’t all just a financial matter. ASML, NXP and other tech companies in the Eindhoven region cannot rely on only local talent. Promising international students have to be given room to study at TU Eindhoven, while foreign talent already in the workforce needs to find the Netherlands an attractive destination. Both groups are facing issues, though. Firstly, existing tax benefits for expats have been cut. Secondly, international students aren’t seen as welcome additions by some of the potential coalition parties that will form the next Dutch government. In other words, ASML’s talent pool is at risk due to political upheaval.
Higher level measures as well
It’s uncertain whether the next Dutch government will indeed follow through, but to keep hold of ASML, they’ll have to. European cooperation may also offer a way forward, although the competition with other EU member states is fierce, too. There are competing interests inside the EU that aren’t at all targeting the continued relevance of the Dutch tech sector. After all, Germany, France and Poland, among others, are also keen to expand their chip industries and are offering vast financial sums to make their dreams a reality. For example, multiple countries are supplementing investments from parties such as Intel and TSMC with contributions of their own, resulting in more lucrative local jobs and extra strategic importance.
It is essential for the Netherlands to bridge the gap between business aims and political ideas. Departing ASML CEO Peter Wennink noted that elected officials in The Hague aren’t all on the same page when it comes to understanding why keeping hold of his company is all that important.
Just to emphasize a simple fact: ASML is the sole supplier of the most advanced chip machines, allowing it, like perhaps only ASML, TSMC and Nvidia can, to position itself as the focal point of the chip industry. For the Netherlands, being ASML’s home means that it has a say over one of the most important links in the semiconductor value chain, something few countries can say. Admittedly, it still has to accept U.S. influence, partly because some of the components of ASML scanners are of American origin.
Countries like Taiwan, the United States and South Korea seem to better understand the strategic relevance of their respective chip industries. The investments in those countries vastly outstrip the mere 2.5B euros mentioned here. It’s a matter of debate whether or not Europe can coordinate a similar effort, possibly through its Chips Act. Nevertheless, the Netherlands may instead have to compete with other European nations just to keep hold of what’s already in its possession.
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