Dutch chip suppliers face a crucial challenge. Their heavy dependence on a few large chip giants threatens future growth and could lead to a missed revenue potential of €6 billion. Diversification into adjacent markets is necessary to avoid this impending financial blow, the latest report from PwC concludes.
Why this is important:
The chip industry, one of the cornerstones of the Dutch high-tech sector, is at a crossroads. The growth taken for granted for years is running into barriers. A report by PwC underscores the urgency. It warns of the growth problems of Dutch suppliers to the chip industry, which risk a €6 billion drop in sales by 2030.
The dependence on a few major players, such as ASML, ASM, and NXP, is under sharp scrutiny. These companies have taken the industry to unprecedented heights, but now symbiosis seems to be becoming a trap. Suppliers must broaden their customer portfolio and adopt innovations in other sectors to stay caught and stay caught up.
The vulnerability of specialization
Specialization has not hurt the Dutch chip industry. Focusing on specific technologies and establishing deep relationships with a few significant customers have ensured a strong market position. But in a rapidly changing world, this specialization is also a weakness. The risks increase as dependence increases.
The advice is clear: diversify. But how can companies so deeply rooted in the chip sector make this shift? Here lies a complex task for management. It requires not only exploring new markets but also investing in distinctive technologies and attracting talent that dares to think outside the box.
The Dutch government and the European Union can play supportive roles here. Policymakers are called upon to develop initiatives that stimulate innovation and help suppliers gain access to new markets.
The Chinese government recently invested another $47.5 billion in its semiconductor industry. It is the third planned state-backed investment fund. The hundreds of billions of yuan underscore President Xi Jinping’s goal of making China self-sufficient in semiconductors.
That aim has become even more urgent after the U.S. instituted a series of export controls in recent years out of fear that Beijing could use advanced chips to enhance its military capabilities.
The role of large chip companies
The big chip companies themselves cannot sit on the sidelines. It is in their interest to maintain a healthy ecosystem of suppliers. By partnering with smaller players and start-ups, they can encourage innovation and make their supply chain more robust. This also means that they may have to accept that their suppliers will collaborate with competitors rather than pursue exclusive relationships, PwC said.
The next few years will be crucial in making these changes. It is an opportunity for the Netherlands to maintain and strengthen its position as a leading force in the chip industry. Time will tell if the industry can adapt and thrive in a changing global economy.
