EBB: The ‘goodbye and good riddance, ASML’ edition

(Editor’s note: This Eindhoven Business Briefing focusing on ASML is part of our Tech Tuesday series. Dispatches covers tech because so many of our highly skilled internationals are engineers and physicists.)

Is it possible that we’ve reached peak Eindhoven?

If you’ve followed the Dutch news, or the financial media for that matter, speculation is rampant that due to rising anti-foreigner sentiment, ASML will leave the Netherlands for a more business-friendly environment.

France, weirdly, is the odds-on favorite largely because the new CEO, Christophe Fouquet, is French. But, it tells you a lot that a country with 35-hour work weeks, constant labor strikes and even more holidays than the Netherlands would be in contention to inherit Europe’s most valuable – as well as most advanced – semiconductor company.

It tells you something is seriously wrong.

Or as outgoing ASML CEO Peter Wennink puts it, the Netherlands has become “fat, dumb and happy.”

That ASML, a global tech giant with a 353 billion euro market cap, leaving would be a blow to Eindhoven is the understatement of the year. ASML and its salaries and stock options benefit a significant number of people here, maybe 12,000 in the region. Most of the financial press consider ASML a “millionaire maker” stock.

Yet, very few people, including political leaders, seem to care, though bureaucrats have concocted the super top-secret Beethoven plan to keep ASML here. Yet, at Techleap’s State of Dutch Tech congress last week, only one minister out of the six invited bothered to show; five others canceled at the last minute.

There are by my estimates a million people in Greater Eindhoven, and the prevailing sentiment is that ASML is a nuisance, driving up housing costs, bringing in immigrants and clogging the roads with traffic. That they can’t make the connection between being a boom town and overall affluence is baffling.

The subtext to all this is the sentiment that ASML has simply outgrown Eindhoven.

Here are the elements contributing to the ASML crisis:

• Geert Wilders

The anti-immigrant sentiment links back to Geert Wilders and his far-right Party for Freedom, which won national elections last year, but has yet to form a government. Wilders is literally a party of one and is staunchly anti-Muslim and pretty much everyone else. A lot of the ASML talent comes from the Islamic world as well as from India and Asia. We know from living here for seven years that Wilders has huge support both in Brabant and in Limburg, where he’s from. That a modern tech company can’t sustain itself on such a small population is of no concern to the nativists.

Having moved to Eindhoven just as the British voted to leave the European Union, I thought I’d seen the nadir of the European Union. Yet Nexit is a plank in Geert Wilder’s platform. A large number of companies left the United Kingdom because they couldn’t survive without doing tariff-free business in Europe.

ASML leadership might be wise to get while the gettin’s good.

• Housing and education

Wilders and the Far Right have seized on two powerful pain points – housing and education. Housing is more expensive and more difficult to find, but that’s true in every thriving city in the world.

At the same time France is expanding English courses, the Dutch want to ban English in the classrooms and limit the number of foreign students studying in the Netherlands. Both brilliant moves in the 21st century for a country with only 17 million people and a population where 20 percent of the people are over 65 years old. Wilders might want to look at the US, home to 73 of the Top 100 most valuable tech companies and where first- and second-generation immigrants are ascendant, including India-born Sundar Pichai at Google and Israel-born Safra Catz at Oracle.

• Transportation

As an American, it’s hard to reconcile that an ambitious ecosystem such as Eindhoven has to depend on an airport that’s forced to close at 10 p.m. It confounds me that residents who bought homes nearby would like to see the airport permanently shuttered because planes are too noisy. Except when they want to grab a cheap flight to the beach.

At the street level, neither Eindhoven officials nor the national policymakers in Den Haag are in any big hurry to fund better transportation in this rapidly growing region, including trams or light rail.

• Culture

ASML has always presented itself as based in Veldhoven, which it is. But Veldhoven is a district of Eindhoven three kilometers from the centrum. This disconnect goes both ways, with people including politicians in Eindhoven having no real emotional connection to ASML.

Of course, business is no place for emotion or sentimentality. Philips moved to Amsterdam in 1998, leaving Eindhoven foundering. That ASML emerged in 1984 from the wreckage of Philips is, more than anything, a fluke. I would imagine that a lot of places, including ASML’s American EUV/DUV center of San Diego, would be thrilled to have ASML’s headquarters jobs.

ASML is basically a supply-train company. It makes few of the parts, such as the lasers and mirrors that go into the photolithography machines. It just assembles them, and there are cities from Krakow to Basel that can handle that.

It’s not impossible that TSMC, the world’s largest chipmaker could acquire ASML and move it to Taipei to create a more horizontally integrated semiconductor production model. That would close the circle as TSMC founder Morris Chang was actually funded in part by Philips.

Do I think ASML will really move? Personally, I don’t care. As Archimedes said, “Give me a place to stand and I can move the world.”

I hear France is nice this time of year.

–– Terry Boyd

China works to cut ties to the West

As it deals with indifference at home, ASML is also facing headwinds from the US, where policymakers are pressuring the company to not sell its most advanced photolithography machines to China. At the same time, China is instituting a “Delete A” initiative, shorthand for “Delete America” in an effort to wean itself from dependence on American technology, according to the Wall Street Journal,

ASML is caught in the middle because its main customers are in the US, but its revenue growth is in China.

One complication is, Santa Clara-based Intel owns a significant piece of ASML having invested $1 billion in the Dutch company back in 2012. Intel, TSMC and Samsung Electronics all invested to help fund ASML’s R&D in exchange for up to 25 percent of its shares. Which gives the US government leverage in ASML’s future.

Epic win for High Tech Campus

And now for some good news.

High Tech Campus Eindhoven just announced a collaboration with Epic Games. The North Carolina-based global video game and software developer is the first official collaboration of 3EALITY: High Tech Campus’s soon-to-open innovation hub for spatial computing and immersive technologies.

Epic Games is the developer of Fortnite, one of the world’s largest games, with over 350 million accounts and 2.5 billion friend connections.   

Epic Games is a big deal as it’s positioned for an IPO … or maybe an acquisition by Disney. Who knows?

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