Assertive, aggressive ASML

Keep your spirits up, invest heavily, roll up your sleeves and good luck. That, in a nutshell, was the message of Herman Boom, ASML’s head of strategic sourcing and procurement, in his presentation last week at the annual Brainport Industries conference in Eindhoven. I’m being a little unfair to ASML, of course: the company maintains a special division with a few hundred technical specialists ready to support suppliers wherever needed – a form of enlightened self-interest.

The guest of honor, Boom, twisted himself diplomatically into knots when asked to assess the supplier network around Eindhoven. “This isn’t a reproach, but a call to action,” he said, adding, “There are so many suppliers in the region that it’s impossible to define an average.”

But for those who listened carefully, Boom’s assessment was tough. One by one, it ticked off ASML’s QLTCS criteria – the metrics by which the company evaluates its suppliers. Quality: “On the low side compared with the rest of the world.” Logistics: “We know how to do that.” Technology: “We’re strong, but we have to work hard to stay that way.” Cost: “Difficult, always difficult.” Sustainability: “Reasonable, but still quite a long road ahead.”

According to Boom, the region must learn to innovate in processes, not just in technology. I would add that ASML could take a look in the mirror on that point. Still, Boom sought to keep spirits high: “In every case, we have to be able to do this better than the rest of the world.”

At what has become the annual ‘high mass’ of the Dutch manufacturing industry, Brainport Industries set the theme this year as “linchpin or pawn.” Everyone dutifully stood up when chairman Edward Voncken asked, at the close of the event, who among the members considered themselves “linchpins.” It’s noble, of course, to want to steer your own fate – but let’s be honest: nearly every supplier spent the past year as a pawn of the region’s most powerful machine builder.

For the uninitiated, a recap: after years of phenomenal growth, ASML’s revenue barely rose in 2024. Still, there was hope that everything would turn out fine in 2025. With that in mind, ASML asked suppliers to start producing early in anticipation of a ramp-up this year. As a result, inventories piled up across the region. And when orders from chipmakers failed to materialize, the supply chain was left holding the bag. Instead of 25 percent growth, suppliers saw a 15 percent contraction. Those who had just invested could leave their milling machines in the crates. Engineering firms and manufacturing companies that had bet too heavily on the ASML economy were left to face the music – while they also had to endure extra heavy cost pressure. ASML’s newly published forecast – 15 percent growth in 2025 – now offers some relief.

Perhaps the most painful lesson of the past year is this: going full throttle for the lithography ecosystem turned out not to be such a good idea. For those who have forgotten, let’s rewind a quarter century. After the disastrous year 2001, ASML began requiring financial stability from suppliers. They were also permitted to derive no more than a quarter of their turnover from Veldhoven. It proved a golden strategy: nearly every manufacturing firm weathered the 2009–2010 financial crisis unscathed. However, in the heady growth years of the last decade, ASML itself loosened the seatbelts. As a result, some high-tech suppliers now derive more than half their revenue from Veldhoven – directly or through a major partner like Zeiss SMT. A few of those firms have been hit so hard that they’ve already gone through two rounds of “reorganizations.”

The contrast with last year’s Brainport Industries conference could hardly be greater. In 2024, Thermo Fisher Scientific’s Maurits Smits all but begged the assembled suppliers not to forget his company amid the ASML frenzy surrounding them.

The good news: for ASML, maintaining a local footprint remains essential, even as attention and less knowledge-intensive work shift to Asia. The lithography specialist still needs capacity in the Eindhoven supply chain for the next ramp-up – and for the continued expansion of its portfolio.

To achieve growth and broaden its reach, the high-tech giant will continue to depend heavily on its suppliers. ASML will also, in Boom’s own words, keep “assertively, maybe even aggressively” pounding on its partners and manufacturers. It’s enlightened self-interest – and everyone stands to benefit, provided they dare to invest and seize the opportunity.