ASML is expected to enter relatively calm waters in 2025 as demand for the company’s chip machines is lower than previously expected. This dip could be a good thing for the region’s high-tech industry, experts tell Studio040.
The Veldhoven chip machine maker has a number of obstacles to overcome in 2025. US sanctions determine what ASML can and cannot sell to Chinese customers, and new sanctions in 2025 are not ruled out. In the meantime, Canon has launched a chip machine that can compete with the older ASML machines that are still widely sold, and Intel and Samsung – important customers of ASML – are in difficult waters.
On top of that, there is the demand for ASML machines that is decreasing worldwide. Nevertheless, ASML has strong growth ambitions and the company looks to the future with great confidence.
Suppliers
ASML’s lower operating results in 2024 are also being felt by other companies in the region. Suppliers to the company are also facing a smaller number of orders as a result of the reduced demand for chip machines.
“ASML put on the brakes last year, you can immediately see how much impact that has on the companies in their supply chain,” says Peter Reniers, union leader of FNV. “ASML doesn’t build anything itself, but orders all the machine parts and builds its machines that way. And the companies that make all those parts: for example VDL, KMWE and Frencken, they have all reduced their flexible shell.”
Reniers finds this a worrying development. “Think of the amount of talent that needs to be attracted. It is very remarkable to see that people are now being sent away while they will be needed again in the near future.”
It is the result of the thin line on which the high-tech companies that produce for ASML balance, says the union representative. “ASML sets high demands on those companies. They have to innovate, invest and increase production capacity. ASML is therefore obliged to maintain that chain, but that is not easy when demand decreases.”
Blindly stare
The high-tech companies in the region will only become more dependent on the chip sector in the future. And that may be dangerous. Joost Eyck and Steven Pattheeuws wrote a report on behalf of consultancy firm PWC in the summer of 2024 about the focus on the chip sector in the Brainport region. They found that it may be going too far.
High-tech companies in the region would now still generate 2.6 times as much turnover from sectors outside the chip sector, but in the coming years that would decrease to only one and a half times as much, the experts calculated. “In our report we conclude that there is a risk if you lose sight of many other sectors in the Netherlands,” says Pattheeuws.
“If you miss opportunities for a few years, you will gradually start to lag behind. We did that twenty years ago, but if you don’t focus on other sectors, your knowledge will be diluted. Applications in the field of aviation, healthcare technology, AI applications. These are sectors that are now being snowed under.”
Loss of knowledge
While these companies also have important knowledge, says trade unionist Reniers. “Once these companies leave or do not invest further here, you also lose that knowledge. At Philips, the entire development branch has been paralyzed, while everyone knows how much that research branch has yielded. If you do not invest in that anymore, you are calling the problems upon yourself. That you as a government are now going to cut back on something like education is completely incomprehensible,” says Reniers.
Government policy
According to the union leader, it creates an uneven playing field. “If you look at Germany and Belgium, it is better regulated, companies there spend relatively less money on energy because of government subsidies. Here we are more concerned with climate goals than with those economic interests.”
“The balance is gone. Look at companies like Standard Aero, for example, which has already left Tilburg. A lot of knowledge and innovation has been lost as a result and is not easily returned.” In addition, there is also a major problem for new companies or expansions due to the lack of connection to the electricity grid.
“The government must remove barriers to growth,” says Joost Eyck. “Entrepreneurs should not have to make choices about which sector they focus on. But companies themselves can do much more. By automating and applying artificial intelligence, they can increase their productivity and for their growth and capacity expansion they can also go outside the Netherlands, for example to Eastern Europe.”
“If you look at companies in Germany and Eastern Europe, they work much more efficiently. More is being automated so that you can use the capacity you have better,” says Eyck.
Automation
According to the experts, many suppliers of ASML could take steps in this area in a period with relatively little growth. These companies often still have a start-up culture, where many steps in the production process of the chip machines are not automated or structured.
There are also positive aspects to these low levels of automation, Pattheeuws sees. “The focus is very much on the end market: on making the products and bringing them to the customer. There is less attention paid to how the products are made. Innovation is also possible in that area, and that is still happening very little.”
“A lot of these companies have doubled in size in a few years,” says Eyck. “They’ve really been on their toes trying to keep up with demand, to keep up with the pace of innovation, but now you see the industry is getting into calmer waters. Then you can professionalize your business, automate it to get ready for the next wave of growth. You don’t want a dip, but if it has to come, this is not a bad time.”
Source: Studio040
For Eindhoven News: Lila Mehrez
