Researchers warn: the Netherlands needs more ASML-style innovators to stay competitive

The Netherlands needs more companies like ASML to drive innovation. For years, spending on research and development (R&D) has lagged behind the European target. ASML is investing a lot of money in innovation, but the chip machine manufacturing company from Veldhoven spends more than the next 10 companies in the R&D top 30. This makes the Netherlands vulnerable, TNO researchers warn.

In a conversation with journalists on Wednesday, the research organization spoke of a potential "Nokia risk," referring to the Finnish tech company Nokia, which rose to prominence in the 1990s. The company's subsequent decline in this century had a major impact on the Finnish economy.

According to TNO, Dutch investments in R&D have hovered around 2 percent of the country's total economic output for years. This should be at the 3 percent mark. To turn the tide, the Cabinet published a plan of action last Friday. TNO stated that this is a step in the right direction, but "Everything depends on the execution."

Philips, Booking, and KPN follow ASML when it comes to the largest investors in R&D in the Netherlands, according to TNO, which looked at the figures from 2023. But the investment fees of 700 million euros, 420 million euros, and 307 million euros, the companies are far behind ASML’s figure of 2.8 billion euros.

The sums involved at ASML, in turn, pale in comparison to the American tech giants, which each invest tens of billions in this area. The researchers also point out that countries like South Korea, the United States, Japan, Belgium, and Germany all invest more than 3 percent of their gross domestic product (GDP) in innovation.

According to TNO, large companies have the capacity to spend more on R&D. In addition, successful policies could lead to “more parties getting involved, who then become big and move in the direction of ASML.”

Through 2030, a total of 14.9 billion euros in direct public funding and 34.5 billion euros in private financing would be needed to drive innovation. If the Netherlands fails to boost innovation, it could affect the country’s competitive position relative to other nations. TNO also warns that the supply of future technical talent may dry up

The Cabinet suggested nine actions that could help raise investments. This involves, among other things, mobilizing institutional investors such as pension funds, whose capital can help start-ups grow into scale-ups. In addition, the government wants to establish a platform to attract "knowledge-intensive companies" to the Netherlands or encourage their expansion within the country.