Brainport companies are investing heavily in Southeast Asia, driven by expected growth in the semiconductor industry. While ASML suppliers are relocating their production to Malaysia and Singapore, the question remains as to when the chip machine manufacturer itself will follow.
Last weekend, the Eindhovens Dagblad newspaper reported that the suppliers of the Dutch tech gem are expanding en masse in the Far East. Growth prospects and geopolitical developments make Southeast Asia a strategic priority for the sector.
VDL says it is pursuing a “global growth strategy in the semiconductor equipment industry” with significant investments on three continents. Following recent expansions, VDL ETG Singapore now has 47,000 square meters of production space—about seven football fields. VDL ETG recently opened new facilities in Singapore and Vietnam.
Neways, in turn, presented a new factory in Malaysia in May. Regional players such as NTS, Frencken, and KMWE are also expanding their capacity in the region. AAE director Frank Mulders confirmed to the newspaper that he is in the process of acquiring a company in Malaysia. Prodrive Technologies is also investigating opportunities for a location or acquisition in the region, according to financial director Karel van Gerven.
Geopolitics forces relocation
US export restrictions on chip machines to China are strengthening the appeal of alternative Asian locations. Neways, for example, was forced to relocate certain modules with US components from China to Malaysia.
Dutch companies are also following their customers in the region. US chip machine manufacturers such as KLA and Applied Materials have had factories in Southeast Asia for many years. This also applies to Dutch sector peers Besi and ASM. Eindhoven-based chipmaker NXP is building a new factory in Singapore.
ASML denies assembly factory
ASML itself is still missing from the list. The Veldhoven-based chip machine manufacturer has parts built at foreign sites in the US and Taiwan, but still assembles all its machines in the Netherlands.
ASML has denied to the ED that it wants to develop final assembly activities in Southeast Asia. “There are no plans to move final assembly for ASML machines to Asia,” said a spokesperson. The company is, however, expanding its supply chain “for non-critical parts” to operate closer to its customers.
Nevertheless, three possible locations are circulating among suppliers: Malaysia, Singapore, and Taiwan. ASML has already signed a letter of intent with Malaysia’s economic development agency MIDA to expand its supply chain.
The transfer of products to Asia remains complex due to ASML’s high standards of cleanliness and precision. Brainport Industries is therefore working with MIDA to build a local supply network, with support from the Dutch ministries of Economic Affairs and Foreign Affairs.
Tip: Cabinet fears ASML will become a weapon in US-China trade war