PwC: The Dutch chip sector risks losing billions due to stagnant growth

Dutch chip suppliers face a key challenge. Their heavy dependence on a few large chip giants threatens future growth and could lead to a loss of revenue potential of €6 billion. To avoid the impending financial blow, diversification into adjacent markets is necessary, says the latest PwC report.

The dependence on several major players such as ASML, ASM and NXP is under scrutiny. These companies have taken the industry to unprecedented levels, but now the symbiosis seems to be a trap. Suppliers need to expand their customer portfolio and innovate in other sectors to stay relevant.

Sensitivity of specialization

Specialization has not harmed the Dutch chip industry. Our focus on specific technologies and the establishment of deep relationships with several significant clients have given us a strong market position. But in a rapidly changing world, this specialization is also a weakness. The risk increases as addiction increases.

The advice is clear: diversify. But how can companies with such deep roots in the chip sector make this change? The management board faces a complex task here. This requires not only discovering new markets, but also investing in distinctive technologies and attracting talent that dares to think outside the box.

ASML will invest 80 million euros in research at TU/e

Chip machine manufacturer ASML and Eindhoven University of Technology (TU/e) have signed an agreement to expand their cooperation.

The Dutch government and the European Union can play a supporting role here. Policymakers are urged to develop initiatives that stimulate innovation and help suppliers access new markets.

The Chinese government recently invested another $47.5 billion in its semiconductor industry. This is the third planned state-backed investment fund. The hundreds of billions of yuan underscore President Xi Jinping’s goal of making China self-sufficient in semiconductors.

That goal has become even more urgent after the United States imposed a series of export controls in recent years amid concerns that Beijing could use advanced chips to enhance its military capabilities.

The role of large chip companies

The big chip companies themselves cannot sit on the sidelines. It is in their interest to maintain a healthy supplier ecosystem. By partnering with smaller players and startups, they can encourage innovation and strengthen their supply chain. It also means they may have to accept that their suppliers will work with competitors rather than having exclusive relationships, PwC says.

The coming years will be crucial for implementing these changes. This is an opportunity for the Netherlands to maintain and strengthen its position as a leading force in the chip industry. Time will tell whether the industry will be able to adapt and thrive in a changing global economy.