Growth, innovation, geopolitical pressures: the 2024 chip market in 4 events
In this article, I look back at the 2024 semiconductor industry through four events.
Published on December 26, 2024
%20(1).png&w=3840&q=75){kind=small}
As editor-in-chief, Aafke is ultimately responsible for the content of our platform, but she also likes to get into the pen herself. She is also responsible for the content of our events. She likes nothing better than explaining complicated things in an accessible way and is fond of telling the story of the people behind the technology.
The global semiconductor industry experienced a remarkable recovery last year. After a decline in 2023, international sales rose to $588 billion in 2024, up 13% from the previous year and 2.5% above the 2022 record. In this article, we take stock based on four events.
1. The Dutch semiconductor industry: from Beethoven to Chopin
In March, it was announced that the national government and the industry were jointly allocating €2.5 billion to strengthen growth and activities in Brainport around the microchip sector under the heading “Project Beethoven.
Less than two months later, Gelderland announced it wanted money, too. The province, which has annual revenues of €3 billion thanks to the chip industry, announced that it fears the departure of crucial tech companies. And so it is demanding hundreds of millions to preserve and strengthen the sector. Project Chopin's initiative should improve the business climate and attract talent from home and abroad.
The ChipNL consortium also made an urgent appeal for funding. More than 30 companies, including giants ASML and NXP, are calling on the government to make substantial annual investments. They argued that without this support, the Netherlands risks losing its competitive advantage as global competition increases and other countries increase their investments. The industry's plea is clear: An annual boost of €100 to 150 million would be essential to maintain the Netherlands' lead in chip manufacturing and innovation.
2. Photonics as a promising newcomer - and NL becomes European centerpiece
On the 11th of November, the news came out that the Netherlands will have a European facility for developing photonic chips. These chips transmit information via light waves instead of electrical signals. The EU is reserving 380 million euros for this project, of which 133 million euros will go to Dutch components of the pilot plant.
I spoke with Ton van Mol, who, as managing director of TNO at Holst Centre, is also responsible for the Photonic Integration Technology Centre (PITC), the partnership between TNO, TUe, UT, and Photondelta. Van Mol compares the current photonics phase to the early days of the semiconductor industry: “We want to build the same standardized and tightly organized industry, with specialized foundries and a segmented supply chain. “Photonic chips are at a tipping point, similar to where the semiconductor industry was decades ago.”
QuiX Quantum, based in Enschede, achieved a significant breakthrough in quantum technology in May. They succeeded in creating on-chip Greenberger-Horne-Zeilinger (GHZ) states, which are essential for information retention in photonic quantum computers. QuiX Quantum is leading worldwide in developing practical and powerful quantum computers.
The global photonic chip market, valued at $12 billion, is expected to grow to $65 billion by 2032.
-1.png&w=828&q=75)
NL becomes the centerpiece European photonics sector. 'This moment is similar to the early days of the semiconductor industry'
The Netherlands will soon have a pilot production line to develop photonic chips. We interviewed Ton van Mol, who is directly involved in the project as managing director of TNO at Holst Centre.
3. With Trump's win, geopolitical tug-of-war takes a new turn
On the 6th of November, Trump won the U.S. presidential election. That means higher import tariffs, a stronger focus on independence, and a reversal of chip policy.
With Trump's victory, the Republican focus on the technology and chip industry shifts further to the forefront. The CHIPS Act, an investment boost of more than $400 billion for the U.S. chip sector, has been under fire by Republicans who question its effectiveness and geopolitical impact.
The CHIPS Act was enacted in 2022 to bring chip production back to the United States and limit China's growing influence in the semiconductor sector. In late November, the Biden administration announced a $7.865 billion investment under the CHIPS Act. This investment aims to strengthen domestic semiconductor manufacturing and ensure the supply chain.
On December 2nd, the United States again announced tightening restrictions on chip exports to China, with far-reaching consequences for 140 Chinese companies. This drastic measure, intended to slow China's AI development, may not hit Dutch companies as hard as expected. According to the Financial Times, the Netherlands gets an exception because our country has already established its restrictions. Europe also wants to introduce restrictions; a consortium of 300 European companies warned of the consequences.
Only two days after that, China came up with a counterattack. In response to the U.S. restrictions, the superpower is imposing an export ban on materials crucial for semiconductor and battery production.
Trump wins: turnaround in chip policy US
Trump is the new president of the United States: higher import tariffs for foreign goods, a stronger focus on independence, and a U-turn in chip policy.
4. Technical blunders and adjusted expectations, but ASML remains a shining world leader in chip machines
Although Q3 quarterly figures were published a day early due to a technical error, power politics and geopolitical tensions further invaded the boardroom, and there was a historic share price fall (from €5.6 billion to €2.6 billion) - the Veldhoven-based chip machine manufacturer remains a shining player on the world stage of the chip market.
Earlier this year, I interviewed CFO Roger Dassen. His message was clear: ASML wants to grow in the Netherlands, but it has to be able to do so. “If you look at the number of Dutch graduates at technical universities, there are not enough. So we need international students and migrant workers.”
Furthermore, ASML said goodbye to CEO Peter Wennink in May; France's Christophe Fouquet stepped into his shoes. That same month, it signed a letter of intent for expansion at Brainport Industrie Campus (BIC) in Eindhoven. It announced an investment of €80 million in collaboration with TU/e. In partnership with imec, the company opened a Lithography Lab where customers can test with the latest High NA EUV machines.
ASML CFO Roger Dassen: “We want to grow in the Netherlands, but we must be able to do so”
Last week, ASML presented its 2023 annual results. IO interviewed cfo Roger Dassen about the 2024 outlook, labor migration, and a more diverse workplace.