PwC warns of Dutch high-tech “monoculture”

The Dutch tech industry risks missing out on billions of euros in sales in the longer term due to an overly one-sided focus on the semiconductor industry, writes accounting firm PwC in a new report. Due to the increasing ‘specialization’ of suppliers, there’s less outreach to other sectors that need advanced technology, such as automotive, medtech, telecom and aerospace.

Until 2019, suppliers made two and a half times more sales outside the semicon sector than within it. That has since declined to 1.6 times, and PwC foresees a further decrease to less than half by 2028, partly because of the industry’s expected strong growth. “These companies are missing out on business due to growth limitations in the Netherlands. In conversations with us, they explained: if we have to choose due to space or capacity constraints, we prioritize semiconductors,” says Joost Eyck, manager of the technology, media and telecom team at PwC.

The Netherlands is losing market share in other key high-tech sectors to other countries because of this development. Depending on a handful of large companies also produces vulnerability. “It’s problematic for individual companies to become increasingly dependent on a few customers in one sector. It leaves them more vulnerable during economic downturns. This individual vulnerability, in turn, affects the stability of the robust ecosystem we currently enjoy. The diversity, painstakingly built up over the years, is rapidly transforming into a monoculture. An appealing one, no doubt, but more fragile and economically less robust,” argues Van Eyck’s colleague Steven Pattheeuws.

On the other hand, suppliers have their hands full trying to keep up with growth spurts. The Dutch government is propping up ASML’s growth ambitions through Operation Beethoven, but smaller companies could also use some support, PwC notes. “These entrepreneurs have had to stretch themselves to meet demand but couldn’t mature sustainably. Hence the doubts about their readiness for another growth period. Many companies are simply not prepared for that yet.”

Right now, space and energy are the biggest bottlenecks, PwC was told by the 40 or so companies surveyed for the report. “If this sector is considered to be strategic, these companies should be given priority access to the energy grid. And when it comes to physical space, negotiations with municipalities and provinces often drag on. It doesn’t always come down to reluctance, but if a municipality promises space for a company’s expansion on a new industrial estate in two years, then it’s simply too slow.”