Project Beethoven - The Dutch Strategy to Support the Chip Technology Leader ASML
Project Beethoven allocates €2.51 billion to “…strengthen the Dutch chip industry and support the future growth of activities in the Brainport Eindhoven hub.”, “…investment in vocational and professional talent, and in sufficient space, good accessibility and affordable housing…”.
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In March 2024, various sources from ASML, the leading global manufacturer of chip-making equipment, indicated the possibility of expansion outside of the Netherlands due to stringent immigration policy and a lack of infrastructure spending from the Dutch government.
ASML manufactures chip-making equipment globally, supplying producers such as Intel, Samsung, and TSMC, thereby directly contributing towards the global development of semiconductor technology, enabling advancements throughout the semiconductor manufacturing process, and leading to the most advanced chips on the market today. ASML’s cutting-edge technologies have enabled its growth to become Europe’s most valuable tech company.
Parties within the new Dutch government indicated potential changes to immigration policy, significantly reducing overall migration into the Netherlands. These regulatory changes would have major consequences on the immigration of highly skilled workers into the Netherlands, harming the development of highly advanced industries, such as the Dutch semiconductor industry.
The increasingly stringent migration policy and lack of infrastructure spending allocated by the Dutch government prompted ASML to explore alternative countries for expansion. As ASML represents a significant portion of the Dutch economy, the news of expansion outside of the Netherlands shocked the Dutch government, prompting a rapid and extensive response in the form of Project Beethoven.
Project Beethoven allocates €2.51 billion to “…strengthen the Dutch chip industry and support the future growth of activities in the Brainport Eindhoven hub.”, “…investment in vocational and professional talent, and in sufficient space, good accessibility and affordable housing…”.
The Dutch approach
Compared to other countries leading in the semiconductor industry, the Dutch approach to industry support through Beethoven varies significantly.
In identifying the strategic nature of the industry, the United States and China chose to allocate direct subsidies to industry leaders through the CHIPS Act and Big Fund respectively. Project Beethoven, aims to facilitate the overall industrial growth, rather than directly allocating resources to industry representatives. It is important to note that, in the context of the European Union, direct subsidies are heavily regulated and require extensive deliberation for approval.
From a strategic perspective, infrastructure spending achieves a comparable result to that of the CHIPS Act or Big Fund. Similarly to the American and Chinese approaches, Project Beethoven strengthens the strategic position of the Dutch government due to the global importance of companies such as ASML, NXP, and BESI from an economic and strategic perspective.
Like the Netherlands, the European Union has identified the strategic nature of the semiconductor industry and its importance for European Strategic Autonomy.
The European Economic Security Strategy identifies three pillars, “promote”, “protect”, and “partner”.
As part of the “promote” efforts, the European Union has announced a European Chips Act, mobilising €43 billion in public and private funds for the development of the industry.
The “protect” pillar exercises various economic tools such as export controls and investment screening to safeguard European interests in strategic sectors.
The “partner” pillar aims to leverage various trade agreements and international partnerships.
These economic security policies represent a significant change in the European Union’s approach to its single market. Previously, matters of economic security fell under the purview of national governments.
The Economic Security Strategy, paired with increasing cooperation on defence production, indicates a significant development in the depth of cooperation between member states.
The European Chips Act, under the “promote” pillar, aligns with the American and Chinese approach to industrial policy, aiming to develop capacity.
While capacity building is necessary for the European Union to compete economically with the United States and China, Europe, apart from the Dutch semiconductor industry, lacks capabilities in the semiconductor sector. As the objective of the European Economic Security Strategy is to achieve strategic autonomy, capability building is critical to achieving parity with developed semiconductor industries.
Project Beethoven could serve as an example of a possible course of action for the European Union. Stimulating innovation within the European Union in all critical technologies is essential to achieving strategic autonomy.
The “protect” pillar, while necessary for strategic autonomy, should not negatively impact innovation in the European industry. For example, major reductions in sales due to extensive export control measures incur significant costs on the industry, ultimately leading to a reduction in resources to be allocated towards R&D.
The use of export controls to limit the capabilities of a competitor may have an adverse effect, encouraging domestic capabilities. Using infrastructure improvements to stimulate innovation in critical technologies fosters domestic economic competition and further encourages industrial development through positive externalities, enhancing European strategic autonomy.
A Framework for a European Strategy?
Developing an effective “promote” policy involves various considerations, primarily regarding the allocation of infrastructure support. Due to the centralised nature of the Dutch semiconductor industry in the Eindhoven Brainport region, the allocation of support for infrastructure such as education and roads was straightforward.
However, adopting a similar approach in the European Union will require careful consideration. Which country’s critical industry is prioritised? How much should be allocated to each critical technology? Does the European Union support the development of startups and new industries or strengthen existing industry leaders? These are all questions that policymakers will have to answer.
Strengthening existing industry leaders will enhance their position within the European and global markets.
Additionally, due to their experience in the industry, support towards infrastructure may be allocated more efficiently, as demonstrated by the TU Eindhoven’s ability to double the number of students educated for the chip sector enabled by Project Beethoven.
On the other hand, support for new industry contenders may allow for the diversification of critical industries across the European Union. Yet, the development of new industries will incur a time lag, a concerning prospect considering the rapid development of critical technologies outside of the European Union.
Project Beethoven highlights the importance of a balanced approach to economic security, simultaneously strengthening the Dutch semiconductor industry and strategic autonomy.
IEP@BU does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.
