Key Takeaways
The Netherlands finds itself in a state of alarm as ASML Holding , Europe’s premier tech giant and supplier of chipmaking machinery, issues a warning to its government. The company has expressed reluctance to expand further within its homeland unless there are substantial improvements in the political landscape to attract foreign talent.
ASML has gone as far as reportedly contemplating a relocation to France, a move that is rarely seen as positive news. This stark declaration has sent shockwaves through the Dutch government. It highlights the urgent need for policy reforms to retain and foster an environment conducive to technological innovation and international talent retention.
The intensifying competition among regional hubs vying for investment underscores the significance of French President Emmanuel Macron’s pro-business reforms and generous subsidies. These measures appear increasingly appealing compared to the Netherlands’ recent tightening of expat worker tax breaks amidst mounting anti-immigrant sentiments.
However, the notion of ASML relocating its extensive Dutch workforce of 23,000 employees to a country known for its 35-hour work week seems far-fetched.
Paris, while attractive, is not immune to populist politics and contends with its own labor market challenges. Moreover, such a move would not strategically position ASML closer to its key markets in the U.S. and Asia. Instead, it appears to be a pressure tactic aimed at extracting concessions. A move that sends a cautionary signal to tech giants like Nvidia and Microsoft.
ASML’s hypothetical move to France wouldn’t be unprecedented in the semiconductor industry. French Economy Minister Bruno Le Maire has articulated ambitious goals for France to lead in semiconductor technology last year, with aspirations for thinner engravings at the nanometer scale. This aligns with the vision outlined by Jean-Marc Chéry, CEO of STMicroelectronics. He emphasized that such advancements in thinness will cater to future market demands.
Le Maire finalized an agreement to establish a new semiconductor factory in France, partnering with STMicroelectronics and GlobalFoundries. To support this endeavor is a significant investment of €2.9 billion in public funds. And it underscores France’s dedication to enhancing its standing in the global semiconductor industry.
ASML‘s assertiveness within its home country is a reflection of its colossal stature. And it accounts for approximately 20% of the Dutch stock-market benchmark index, 10% of the euro-zone blue-chip index, and 2.5% of the MSCI global technology index. Consequently, the company is rightfully concerned that the escalating Dutch antipathy towards immigrants could impede its growth trajectory.
ASML, like other global tech firms, heavily depends on skilled workers, with around 40% of its Dutch workforce being international. Geert Wilders’ election win, targeting universities and foreign students, is a setback for a Nation in the chip war.
The recent Dutch voter sentiment shift is partly influenced by the success of corporate giants like ASML and Adyen. Expatriate workers are blamed for a 65% surge in Dutch house prices over five years. The booming tech industry, centered in regions like Brainport Eindhoven where ASML is based, adds strain to local resources.
ASML recently announced plans to build hundreds of affordable homes in its home territory, a commendable albeit delayed initiative. This reflects the company’s dedication to addressing the wider societal impacts of its operations and supporting the well-being of its local community.
The AI-driven tech surge echoes the “Dutch disease,” where one thriving sector can harm others. Originating from the Groningen gas field, this concept now applies to tech. A study comparing Menlo Park and Visalia shows how tech growth while creating jobs, can also displace manufacturing.
As societies and companies navigate the AI boom, the ASML saga serves as a cautionary tale. As big tech strengthens its grip, striking a balance between innovation and preserving other sectors is paramount, a challenge mirrored in Dutch politics.
While attracting skilled foreign talent is beneficial, it requires parallel investments in local infrastructure, education, and housing. Europe’s ambition in technology, defense, and capital markets hinges on bolstering its position in the chip war at home. No one stands to benefit if the Dutch government undermines Europe’s closest tech contender.