[Chip Talk] "If Immigration Is Blocked, Then Abroad" The Netherlands' Anti-Immigration Policy Becomes a Concern for 'Super Eul' ASML

Netherlands Ends Tax Benefits for Highly Skilled Workers
ASML Hints at Possible Headquarters Relocation with '40% Foreigners'
Government Scrambles, Unveils 3.8 Trillion Investment Plan
Semiconductor Industry Watches ASML's Moves Closely

"A company can only grow when there is sufficient excellent talent. If we cannot secure talent, we will move to a place where we can grow." (Peter Wennink, CEO of ASML, January press conference)

The Netherlands-based ASML, the world's sole manufacturer of extreme ultraviolet (EUV) lithography equipment, is deeply concerned about the anti-immigration policies emerging from its far-right domestic parliament. While major countries such as South Korea, the United States, and Japan are fervently securing semiconductor talent, the Netherlands is instead abandoning its once-strong, bold talent attraction policies. The local government has responded with large-scale support measures to appease concerns over the possibility of ASML relocating its headquarters abroad. The semiconductor industry is closely watching ASML's moves.

[Image source=Reuters Yonhap News]

Dutch Government Launches 'Beethoven Operation' with 3.7 Trillion KRW Investment to Retain ASML

On the 28th (local time), the Dutch government announced it would urgently allocate a budget of 2.5 billion euros (approximately 3.7 trillion KRW) to the Eindhoven region, where ASML's headquarters is located. The government plans to comprehensively improve housing, education, transportation, and power grids in Eindhoven. Additionally, to ease management burdens, it intends to propose new tax benefits to parliament. The Dutch cabinet stated in a release, "Through these measures, we expect ASML to continue investing and to legally, financially, and practically maintain its headquarters in the Netherlands."

The reason the Dutch government suddenly introduced these policies is that ASML publicly hinted at the possibility of relocating its headquarters due to the strengthening anti-immigration policies in the country.

Since January this year, the Dutch government has abolished tax benefits for foreign workers. This measure came after parliament passed related legislation late last year. The so-called '30% ruling,' a tax benefit that exempts 30% of the salary from taxation for five years for recognized highly skilled immigrants, was a key policy that attracted global talent to the Netherlands. Recently, a bill limiting the number of foreign students at universities was announced. From the perspective of Dutch companies that have nurtured and secured foreign talent through universities, this poses challenges in talent acquisition. Bloomberg reported that not only ASML but also major Dutch companies like NXP Semiconductors have recently voiced strong opposition.

The surge of anti-immigration policies in the Netherlands began after the November general election last year, when the far-right Freedom Party (PVV), led by Geert Wilders, won. Since PVV, which campaigned on immigration restrictions, won, the newly formed parliament has become increasingly far-right, passing a series of anti-immigration bills. Once the new coalition government under negotiation is finalized, anti-immigration policies are likely to be further strengthened.

Taiwanese IT media Digitimes evaluated, "ASML, which once led the forefront of 'Moore's Law' (the principle that semiconductor integration doubles every two years, proposed by Intel founder Gordon Moore), has now become a frontline of geopolitics and domestic politics."

"Multinational Employees Are Key to Success"…ASML Employs Staff from 144 Countries

The reason ASML had to respond strongly by even considering relocating its headquarters amid anti-immigration policies is that its employees come from a wide variety of countries. ASML has 42,416 employees worldwide, representing 144 countries. Of these, about 23,000 work in the Netherlands, with 40% being foreigners from countries such as India, Turkey, Belgium, and Portugal. Additionally, 65% of foreign students at Eindhoven University of Technology, a prestigious Dutch university near ASML, join ASML after graduation. This shows ASML's high dependence on highly skilled foreign workers. ASML emphasized in its recent sustainability report that employees from diverse countries are the core of its success.

At a press conference in January, after the 30% ruling was abolished, CEO Wennink said, "If the Netherlands closes its borders and we cannot secure immigrants or foreign students, we will have no choice but to accept that decision," adding, "(Instead) we are a global company, and if so, we will move to where the company can grow and provide our services." He also expressed readiness to expand business, stating, "We prefer to operate here, but if we cannot secure those people, we will establish bases in Eastern Europe, Asia, or the United States to bring them in."

Earlier, during last year's general election campaign, CEO Wennink showed an open stance on immigration, saying that "highly skilled immigrants are indispensable to the Dutch economy" and that "Dutch university education should be conducted in English, not Dutch," advocating for accepting immigrants.

Peter Wennink, CEO of ASML
Photo by Reuters Yonhap News

ASML is not only a key company driving the Dutch economy but also a leading semiconductor equipment manufacturer influencing the global semiconductor industry. ASML ranks third in European market capitalization, following Denmark's Novo Nordisk and France's LVMH (Louis Vuitton Mo?t Hennessy). This month, its market cap surpassed $380 billion, reaching an all-time high.

It is rare for an outgoing government to announce large-scale support measures during the formation of a new government. However, considering ASML's influence on the Dutch economy, the cabinet led by 'caretaker Prime Minister' Mark Rutte hurriedly introduced emergency measures. Early last month, local media reported that the Rutte cabinet was conducting a cross-ministerial policy called the 'Beethoven Operation' to retain ASML, which was the announcement made on this day. In 2018, when the Dutch government withdrew the 15% dividend withholding tax deferral, which was favorable to foreigners, oil company Shell and multinational consumer goods company Unilever relocated their headquarters to London, UK. The current measures seem aimed at avoiding a repeat of that experience.

"Headquarters Relocation Difficult Considering Supply Chain"…CEO Change Also a Variable

However, the semiconductor industry assesses that ASML is not in a position to easily decide to relocate its headquarters. ASML currently operates in 16 countries with over 60 locations worldwide. ASML, originally a joint venture between Philips and ASMI (a semiconductor equipment company spun off from Philips), started in 1984 in a warehouse next to Philips' Eindhoven office. The following year, in 1985, it built new offices and factories in Veldhoven near Eindhoven and established its base there.

[Image source=Reuters Yonhap News]

A source familiar with the Dutch government told Digitimes, "Moving the entire supply chain is not easy," adding, "ASML has never said it would relocate. It said it would invest more overseas." The semiconductor industry requires a well-established supply chain, including infrastructure such as water and power, cooperation with component suppliers, and talent development with nearby universities, making it difficult to move the headquarters and Dutch factories. Instead, expanding overseas operations rather than additional investments within the Netherlands may be one option.

Another variable is that CEO Wennink, who has emphasized accepting immigrants, will end his term at the end of next month. Having led ASML's rapid growth since 2013, he will retire next month. Christoph P?schel, Chief Business Officer (CBO) who has led ASML's EUV business, will succeed him. Although the leadership change is not expected to drastically alter the company's stance, since CEO Wennink was the main interlocutor with government ministers, this change could be a factor.

For now, ASML welcomed the government's announced plan but expressed a cautious stance. In a statement sent by email, ASML said, "If the plan announced today receives parliamentary support, it will strongly support management conditions, and we will continue to cooperate with the Dutch government to finalize decisions related to our business expansion." However, it added, "The decision we are making is not about whether to stay in the Netherlands but about where to expand."