Is 1,700 enough?

ASML is undergoing a painful transformation. The high-tech sprinter must reinvent itself as a marathon runner. Explosive bursts of power must give way to controlled, sustained effort. Preparation, predictability, strategy and organization now matter as much as raw speed. Weight loss, a pacing strategy and hydration plans: these things are unfamiliar to an athlete who, until recently, could rely almost exclusively on engineering muscle.

For years, a new reality in chip technology has been pressing in on the Dutch lithography champion. ASML built its dominance on shrinking the lines etched onto silicon. That race is nearing its limits. The frontier has shifted toward 3D integration, advanced metrology, yield optimization and cost control. To lead in that world requires a different culture, one that fuses innovation with predictability and uncompromising quality.

Complex beast

The broader currents in the semiconductor industry leave ASML little choice. On one hand, the AI boom has created a remarkably favorable climate, with seemingly limitless capital pouring into technological advancement. On the other hand, the focus is moving from horizontal scaling – more transistors per square millimeter, ASML’s traditional forte – to vertical integration: stacking more memory and computing power into a cubic millimeter. At the same time, the costs of design tools, materials, equipment and cleanrooms are soaring. Chipmakers are reordering their priorities. They want reliability, uptime and consistent performance.

It’s rarely acknowledged in public that ASML has long underperformed on precisely those criteria. It could afford to. Customers chose the sprinter, the company that delivered breakthrough technology first. And the sprinter was so far ahead that eventually no serious competitors remained. Canon and Nikon, the marathon runners, were left behind.

Speed has carried ASML far. Last year, it posted a record profit of nearly ten billion euros, numbers its former parent Philips never approached, neither in absolute terms nor in margins. That a company at such a pinnacle now reorganizes and lays off 1,700 leadership roles is difficult for unions and local politicians in Eindhoven to comprehend. Yet, it’s understandable.

For many of those employees, the decision is painful. They’re leaving a remarkable company and may well accept lower pay elsewhere. In Veldhoven, generous bonuses had become almost routine. The imbalance in regional incomes has been felt across the broader Brabant high-tech ecosystem, where suppliers struggle to attract talent capable of matching ASML’s engineers.

Some have made the move in the past, often with good results. Erik Loopstra, for example, brought fresh energy to Zeiss in Germany after leaving ASML. The departure of 1,700 engineers may ultimately invigorate the wider ecosystem – and, if managed well, ASML itself.

The company is in a position of strength. It has capital. It likely commands the most powerful R&D organization in the world. The challenge now is to make that technical force more agile and future-proof. That means cutting back the bureaucracy that has crept in over the past decade. Cynics have quipped that Philips had quietly reemerged in Veldhoven.

ASML’s engineering engine needs an overhaul. Its Development & Engineering organization achieved the extraordinary: bringing EUV lithography to market and securing a monopoly in one of the world’s most strategic technologies. EUV was developed under immense pressure, with every available resource deployed to make it production-ready before 2018. Between 2010 and 2015, more than a hundred competency groups were mobilized with a single sacred mission: extend immersion lithography and tame the complex EUV beast.

Tax

The ‘cowboys’ of Veldhoven must now work differently if they’re to stay ahead. Cultural shifts of this magnitude often require a shock. Jack Welch reshaped General Electric by dismissing thousands of managers. ASML itself was born from such a rupture: in 1984, fifty engineers from Philips Science & Industry, weary and demoralized, formed the nucleus of a new company. Their frustration was soon overtaken by the energy of hundreds of engineers drawn by a genuine technical challenge.

The early success of ASML rested on a blend of seasoned lithography veterans and fresh talent. That balance remains the central task today: combining the experience of highly capable baby boomers and Gen X engineers with the drive of millennials and Gen Z, who must be given room to thrive.

Listening to customers comes first. Then redesigning processes and organization. Then injecting the right talent. It’s time to build a company that marries innovation with disciplined quality systems. Concepts like reliability were once foreign to many engineers for whom innovation and process seemed irreconcilable. Other industries – automotive, aerospace – have shown that the two can coexist.

Chief executive Christophe Fouquet acknowledged as much when presenting the 2025 results. Stakeholders, he said, had told the company it wasn’t agile enough, that it responded too slowly. Customers want ASML to focus on quality. Younger engineers delivered another blunt message: the organization had become so complex that much of their time was spent navigating bureaucracy rather than innovating.

An employee post on a Dutch technology forum captured this sentiment: multiple managers for delivery, manufacturability, reliability and issues; project leaders and program managers all competing for attention; engineers working across overlapping reporting lines. Complexity had become a tax on creativity.

Open question

ASML appears to have waited for a credible sign of market recovery before acting. That signal came when TSMC, its most important customer, announced it would significantly expand fab capacity in response to sustained AI demand. With that reassurance, management has moved.

Following the departures of longtime leaders Peter Wennink and Martin van den Brink, the company chose a gradual transition. It took two years to appoint a successor to the chief technology officer. Now, Fouquet is confronting the bureaucracy head-on. For years, it was evident that ASML risked becoming more like Philips. Fouquet has taken on a restructuring that might once have been deemed un-ASML.

His task is formidable: to turn a muscular sprinter into a disciplined marathon runner, without losing the will to win. Whether 1,700 departures are enough remains an open question.