Europe benched in high tech 'Champions League' says ASML

Calls for stronger team play in the global economic tournament

The EU needs to get serious and act more decisively and collectively if it wants economic security, especially in advanced technology, as it is trailing global rivals such as Japan, China, and the US.

This was the sobering opinion from Dutch photolithography giant ASML at a conference on European competitiveness and economic security organized by the European Policy Center last week.

ASML's EU Government Affairs Lead, Wouter Baljon, told the conference that the world was in the midst of a technology war, that China is trying to increase its leverage, and the US is using export controls as an economic weapon, while the EU, taken as a whole, can't be considered to be even in the "Champions League" when it comes to high tech.

The EU doesn't have the same number of state officials looking into economic security as other major players on the world stage, and is "living in la la land" about the battle for control of the technology market.

ASML was in the news in recent years after being caught up in the "chip wars" between Washington and Beijing. The Dutch biz is regarded as Europe's most valuable tech company because it is one of the leading developers of the photolithography machines used in chip manufacturing, and currently the only source for the most advanced extreme ultraviolet lithography (EUV) gear.

It was claimed at the start of this year that ASML had canceled shipments of some less advanced deep ultraviolet (DUV) machines to China under pressure from the Biden administration ahead of new and stricter regulations.

The company has at times appeared less than satisfied with the situation, with CEO Peter Wennink once complaining that ASML has given up enough sales opportunities at the behest of the US.

At the conference, ASML's Baljon said the battle had actually been going on for 50 years, but that people are now aware there is a European company involved thanks to media coverage.

However, Baljon said the chip equipment conflict had been unleashed by the US in 2022 when the export controls were introduced "outside of the multilateral fora in which there was previously discussion on these topics."

On economic security, Baljon used the football analogy of a Champions League, in which he counted the US, China, and Japan, with the EU relegated to the second tier.

"If you think of the Europa League or tier 2, we look at countries in our industry like Korea, like Taiwan, and at best, the EU as a collective," he said. If you listen to European Commissioner Thierry Breton, the EU aspires to be in the Champions league, Baljon stated, "but for high technology, they struggle to perform at Europa League level."

"We are not an incumbent, unfortunately, we as the EU27 are a challenger, and we need also the instruments and approaches to reflect this," he said. But the European Commission is "only as geopolitical as the Franco-German axis allows it to be," Baljon claimed.

When it comes to the global stage and the "rules and reflexes" for the art of geoeconomic statecraft, Baljon said there are effectively three or maybe four European countries that have played a significant part, "and one has unfortunately left the European Union."

He warned the consequences of this trade conflict will likely extend beyond the chip industry.

"If you think about China announcing controls on gallium, germanium, and rare earth metals, China is trying to increase its leverage and is not using it yet – but who knows what is what is to come," he said.

Baljon appeared to imply that Europe needs to wake up to the new geoeconomic reality.

"We haven't acknowledged that export controls have become an industrial policy instrument. We still live in this la la land that it's about dual-use goods, it's military-civil fusion. But if you look at what the United States is doing, it's all about curtailing the ability of China to make industrial progress," he said.

If Europe wants economic security and to join the big league, the only way it can get there is by acting collectively, Baljon stated.

"I'm not necessarily advocating for a bigger role of the European Commission, even though that would help, but European member states coming together and involving industry a little more clearly," he said.

You can view the full conversation, below, at the 3:44 mark. It's an interesting watch.

Youtube Video

In its most recent financial results, for Q3 of 2023, ASML reported net sales of €6.7 billion ($7.2 billion), down a little from the previous quarter, but said it expected the Q4 figures to show sales between €6.7 and €7.1 billion ($7.2-7.7 billion). ®

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