The bigger they are, the harder they lobby. Europe’s largest tech firm, chipmaking-machine supplier ASML Holding NV, has sent the Dutch government into a panic after warning it can’t commit to growing in its home country unless the political climate becomes more amenable to attracting foreign talent. ASML has even reportedly threatened to move to France, which isn’t typically a good sign.
Competition between regional hubs to attract investment is accelerating these days, and it’s quite the compliment for French President Emmanuel Macron that his pro-business reforms and lavish subsidies look more welcoming than the recent clampdown on expat worker tax breaks in the Netherlands amid rising anti-immigrant hostility. But the idea that ASML would actually relocate its 23,000 Dutch staff to the land of the 35-hour work week stretches credulity.
Paris isn’t immune to populist politics; it has its own labour-market headaches, and it wouldn’t bring ASML any closer to its top customers in the US and Asia. So this looks more like a well-timed, well-executed pressure campaign to extract concessions — albeit one that carries a warning for other tech giants such as Nvidia Corp and Microsoft Corp.
If ASML is throwing its weight around at home, it’s because it’s really, really big — worth around 20 percent of the Dutch stock-market benchmark index, 10 percent of the euro-zone blue-chip index and 2.5 percent of the MSCI global technology index. And it’s right to be rattled that an indirect outcome of increased Dutch antipathy towards immigrants will be to curb its growth. Like all global tech companies, ASML thrives on attracting skilled workers, and about 40 percent of its workforce in the Netherlands isn’t Dutch. The fact that universities and foreign students were among targets in a recent election won by hardliner Geert Wilders seems like an own goal for a country on the frontlines of a global chip war. If ever there was a time for ASML to play hardball, now is it.
But Dutch voters’ recent turn against the liberal consensus is also partly a consequence of the success and size of ASML and other darlings like Adyen NV. Expat workers have been blamed for fueling a 65 percent rise in house prices in the past five years in the Netherlands, which is a 10th the size of California; Amsterdam alone has a shortfall of around 45,000 homes. The very thing that makes tech booms successful — clusters of smart, well-paid people like the Brainport Eindhoven region where ASML is based — also strains local resources. Hence why ASML last month announced a plan to build hundreds of affordable homes in its home territory — a good idea, if a little late.
The AI-fueled tech boom may be setting us up for a new variant of the “Dutch disease” — when one booming sector starts disproportionately displacing or atrophying other sectors. The term was originally used to describe the commodities gold rush around the Groningen gas field, which has very different economic effects. But something like it has happened in the tech world. Research comparing the development of Menlo Park in California to the town of Visalia three hours away shows how tech’s displacement of manufacturing jobs has transformed communities unequally. Marko Coric, a consultant who has written a study of Brainport, gives the example of a software company that hires 200 engineers in a tech hub; if that only helps real estate agents and Michelin-star chefs while pricing out less skilled workers, that’s not ideal.
Societies and companies riding the AI boom should watch this ASML fight closely. Big Tech is getting bigger at the moment, and there’s a need to find a healthy path between the extremes of killing the goose that lays the golden egg — which is where Dutch politics is headed — and the corporate blackmail that favours one sector over another. Attracting qualified foreign talent is an obvious benefit — as seen in the recent overhaul of the US visa program — but it should be accompanied by a serious focus on local infrastructure, education and housing. If Europe is going to be serious about standing on its own two feet in tech, defense and capital markets, the chip war needs a stronger home front. No one wins if the Dutch government hamstrings the closest thing Europe has to a tech champion.
Lionel Laurent is a Bloomberg Opinion columnist. Views do not represent the stand of this publication.
Credit: Bloomberg
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