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De overheid is geen geluksmachine. But the Dutch state is quite successful in helping to build it, as shown by the success of ASML's latest microchip machine – the most complex machine on earth. How could the company from Veldhoven grow into the new pearl of Dutch manufacturing companies thanks to the forerunners of the National Growth Fund?

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With a disk of silicon in one hand and 500 dollars in the other, Dutch entrepreneur Arthur del Prado returned from the United States in the late 1950s. The fact that he did not return empty-handed is due to his chance meeting with another emigrant, in the then very young Silicon Valley: Dean Knapic. This engineer was one of the inventors who made it possible to process silicon in such a way that it became a perfect base material for applying semiconductors.

This is how the adventure that is now called ASML began in a small office in Bilthoven with only one desk and a Volkswagen in front of the door. That is where advanced semiconductor materials or ASM was born, which would later spawn ASML.

Del Prado had only one thing in mind: that the Netherlands would develop its own Silicon Valley. He started working on this energetically. In Bilthoven he soon started building his own machines to manufacture chips, but his thinking did not stop there. Of equal importance is how the new tech companies in The Hague worked to improve the business climate for the new economic activity.

Philips Research

Typical of this is the role that the Ministry of Economic Affairs played in the collaboration between ASM and Philips, which led to the establishment of ASML in the early 1980s. Del Prado had been seeking contact with the Eindhoven company for years, which then employed four hundred thousand people, where the best minds in the country worked at a real invention factory, the Philips Research Center. At the Strijp industrial estate, scientists and engineers worked in the Physics Laboratory on both applied and fundamental research.

Although Philips purchased materials from ASM, the company did not see a need for deeper cooperation with Del Prado's company. He had set his sights on this, fully convinced that through collaboration between companies the pace of innovation could be accelerated to such an extent that the rapid developments in the chip industry in the US and Japan could be kept up with.

This principle is still the basis of how ASML works in producing lithography machines, complex systems in which silicon disks are printed with ultra-fine lines that conduct currents. These are applied layer by layer until a microchip is created. The finer the lines that the machines can print, the better the chip. ASML does not build these machines on its own, but uses an entire chain of supplying companies. These are located in and around Veldhoven, and also in other knowledge centers spread all over the world: the lenses come from Germany, other parts from Arizona. And once the machines have been sold and are running in, for example, the Taiwanese factories of world market leader TSMC, there are always maintenance employees from the Veldhoven company nearby to optimize the machinery or resolve malfunctions. Knowledge and skills are shared, not only when using the equipment, but also when developing it. Philips was organized very differently in the 1980s. They did as much as possible in-house there. There was plenty of money and other resources.

Innovative ecosystem

Del Prado became an important discussion partner in regular consultations between the Ministry of Economic Affairs and the semiconductor industry. And he always emphasized how good it would be if the newly emerging companies would join forces with renowned industrial conglomerates such as Philips and Siemens. “Although we have made many proposals for collaboration, it is always the American industry where we have found the support to launch almost all our products,” Del Prado wrote to the Ministry of Economic Affairs and Climate Policy and to Philips. Such an ecosystem of innovative companies had proven to be the key to rapid and successful innovation in the US, and generated a lot of economic growth in America.

The breakthrough in this area came during a meeting at the ministry in November 1982, exactly three weeks before the Wassenaar Agreement was concluded. The discussion discussed Philips' plans to look for a partner in America to develop a machine that could be used to make microchips on a large scale using the newly developed lithography technology. Wouldn't it be better if we did that together, Del Prado wondered? After all, if anyone knew his way around the American chip sector, it was him.

Government subsidies

Money to invest in the perfection of the first so-called wafer stepper machine came from the subsidy fund for technical innovation of the Ministry of Economic Affairs and Climate Policy, the Technical Development Credits (TOK) scheme. This is how a long-cherished joint venture between ASM and Philips was born in 1984: ASM Lithography, or ASML. Both companies invested 7.5 million guilders, and the TOK scheme provided a subsidy of 25 million guilders (11.3 million euros).

“Without the TOK, ASML would not have existed,” former CEO Peter Wennink of ASML told De Telegraaf in January this year. The Dutch government and the European Union have also contributed to the company's growth in other ways. For example, with credits and insurance for exports. Later by investing in the development of increasingly refined lithography machines, including the latest EUV technology for exposing the silicon wafers. It is this Extreme Ultra Violet method that makes ASML today a pawn on the geopolitical chessboard. The United States wants to prevent Chinese companies from using this, because Washington is afraid that China will use this to make chips that could give the army a major technological advantage. China counters that the Americans' goal is to prevent its economy from growing faster and becoming larger than that of the US.

The chip industry is a key player in the global economic arms race. It is not without reason that the European Commission launched the European Chips Act last year, an extensive program to stimulate innovation. ASML plays a leading role in this area.

National Growth Fund

Since the introduction of the euro, the proverb 'turning a dime into a quarter' has been forgotten, but the history of innovation policy in the Netherlands shows that this principle is still alive and kicking, says Rianne Letschert, chairman of the National Growth Fund. This was created by the third Rutte cabinet to support the long-term innovative power of the Dutch economy. Companies that collaborate with each other and with knowledge institutions can rely on money to further develop technology that is promising but not yet advanced enough to be applied in salable products.

The development subsidies (the TOK no longer exists, but there are successors) can be applied for by consortia such as ASML plus its supplying companies. In this example for successors to EUV technology, but also consider companies that innovate in the field of energy transition, sustainability or the development of new medicines. 'If you are not sure whether such an innovation is commercially feasible, it will not be easy for a company to invest a lot of money in it. But the examples from ASML's history show that they can be invaluable to our prosperity.'

Operation Beethoven

For example, compared to the TOK subsidy of 24 million guilders in the 1980s, there is now the 200 million euros that ASML contributes to Operation Beethoven. This is the new government plan for improving accessibility, technical education and housing in the Brainport region of Eindhoven. A total of 2.5 billion euros will be invested in this, partly paid for by the National Growth Fund. “The government has not made an official request for this to us,” says Letschert, “but if it had, we would of course have looked into it.”

Past results may not guarantee the future, but the investments in the Dutch chip industry have been well worth it, says Letschert. This also applies to the other sectors in which the National Growth Fund invests. 'The Rabobank has calculated that for every euro we spend, almost 6 euros of economic growth can ultimately be expected. It is therefore hoped that the new cabinet will not strip down the fund, so that we can also complete the last two investment rounds. When I see what is being developed in the field of regenerative medicine (medicines and other therapies that ensure that the human body can combat a disease itself; ed.), for example, a great future awaits us there alone.'

Key enabling technologies Energy transition Circular economy Nanotechnology Digitalisation & Smart Industry News Valorisation & Market creation Vision 2030 National Growth Fund Agenda Key Enabling Technologies International SME innovation