Made in Eindhoven: the small Dutch city turned technology powerhouse

Washington’s efforts to block China’s access to high-end technology have focused on just two places outside the US: Tokyo and Eindhoven.

The small, low Dutch town whose historic core was destroyed during World War II is home to ASML, which makes the world’s most advanced silicon chip-making machines. These make the semiconductors used in everything from smartphones to rockets.

Eindhoven’s tech sector has attracted EU commissioners who visit it regularly to understand how a place plagued by industrial decline in the early 1990s has transformed into a regional tiger economy, growing at 8 per cent a year. Its businesses and scientists file nearly 500 patents per 100,000 people annually, one of the highest rates in the world. And a quarter of Dutch private sector research and development, 3 billion euros a year, is spent here.

A large part comes from ASML, Europe’s most valuable semiconductor company with a market capitalization of 250 billion euros. Signify, the former lighting division of Philips, chipmaker NXP and truck maker DAF are also Eindhoven-based innovators.

Jos Benschop, senior vice president of technology at ASML, said Eindhoven has been key to the company’s growth due to its centuries-long experience in high-tech manufacturing. “We have so many collaborations here. We operate globally, but being close to people is so important,” he said in an interview at ASML’s growing campus on the outskirts of the city.

The company is unique Extreme Ultraviolet (EUV) lithography Machines could not have been built without VDL, a local family business focused on solving complex engineering challenges, he said.

“It’s very easy to invent. It’s hard to turn it into something you can actually manufacture.” The most advanced machines are each worth around $170 million, and since 2019 their export to China has been banned by the Dutch government.

The Hague has now reached an agreement with the US to restrict some less advanced machines but has not yet announced any details. The company still has an order backlog of 40 billion euros and is hiring around 250 people a month in the city and expanding its factory to meet demand.

Eindhoven’s transformation story is similar to that of a disruptive start-up that started with just a kitchen table, garden shed and quirky inventors, said Paul van Nunen, director of Brainport Development, the regional development agency.

But it has two uniquely Dutch ingredients: the polder model of government, which brings politicians, businesses and unions together to find common solutions; and Philips, the electronics company that started making light bulbs in Eindhoven in 1891.

Van Nunen’s office on a former Philips research campus overlooks the courtyard where ASML began in a shack in 1984 as a joint venture with ASMI, another local chip machine manufacturer.

In the early 1990s, big employers like Philips and DAF closed factories in the face of cheap competition from Asia. Mayor Rein Welschen invited the chairman of the local employers’ association, the Technical University and business leaders to his home and they hatched a plan to fight back.

When Philips moved its headquarters to Amsterdam in 2001, the public and private sectors worked together to repurpose the labs and retain staff.

“Eindhoven got the better deal by moving,” said van Nunen. “When I was young, this whole area was a no-go zone – only Philips employees were allowed in. Now it’s a place of collaboration.”

Another research base of Philips became the high-tech campus, home to more than 260 companies, including TomTom, Siemens and Huawei. US investments Fund Oaktree Bought it in August 2021.

Companies there are developing artificial intelligence, quantum computers and photonics – microchips that run on light instead of electricity.

“This is the smartest square kilometer on earth,” said Johan Feenstra, chief executive of Smart Photonics. It has taken advantage of old Philips clean rooms to set up a photonic chip production line. They can reduce data center power consumption and be deployed in remote areas.

Smart Photonics has raised 38 million euros from Dutch investors and now employs almost 150 people from 30 countries.

Eindhoven University of Technology is a source of recruits. Robert-Jan Smits, the president, said the institution believes in the virtue of involving students in practical projects, such as the world’s longest 3D-printed bridge in Nijmegen.

“Eindhoven is unique. Me, the CEOs and the politicians see each other often. With my bike I can be at ASML, Philips and NXP in no time,” said Smits.

“We are for the region, with the region and through the region. Our job is not to make ASML bigger. It is intended to create more ASMLs.”

The region expects to create 70,000 jobs over the next decade and is demanding government funds to double the size of the university, improve practical skills training and build homes.

Jeroen Dijsselbloem, mayor of Eindhoven, said his city has “unique potential” when it receives money from the government.

The former Dutch finance minister added that the region should also get support from the EU as it seeks to limit its reliance on China and the US for technology and investment.

“If we speak of strategic autonomy for Europe . . . Brussels needs to realize that there aren’t that many options. One of the options is definitely this region.”