How does it maintain this high position in disruptive times?
ASML has taken off. Both the share price and the annual figures of the Dutch high-tech company are on the increase again. ASML has captured 80 per cent of the global market in semiconductors. Innovation made ASML a success, but the high-tech giant did innovate in a highly specific manner.
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Founded in 1984 as a joint venture between Philips and ASMI, ASML produces lithography machines for the makers of chips and semiconductors. According to CEO Peter Wennink, the Dutch company’s impressive market share is mainly thanks to investments in innovation, also – or perhaps precisely because – in lesser economic times.
‘We’ve always spent a lot on product innovation,’ Wennink says in the online magazine of the ministry of Economic Affairs, EZ in beeld. ‘After the crisis years 2008 and 2009, when our rivals cut back a lot on Research and Development we, for instance, had a new product ready and our rivals not.’ The ASML innovations include the ‘step-and-scan’ and the ‘twinscan’ technologies, which make the company’s plant and machinery work more effectively and quicker than those of the competition.
In recent years, ASML has doubled its R&D budget to more than 1 billion euros per annum. This had a slightly negative impact on the profit figures for a while, but in Veldhoven they’re now starting to reap the benefits. 2016 is all about the latest discovery: extreme ultraviolet light (EUV). The EUV machine ensures that chips have increasingly smaller details and, with that, possibilities.
‘Innovation is crucial to our success,’ states the ASML website. But there are other factors involved. ASML, for instance, not only focuses on innovation, but also on ‘open innovation’ – growth through collaboration and knowledge sharing. The company does this through partnership with the technical universities of Eindhoven, Delft and Twente, and research institutes FOM and TNO, and with Philips.
Government support was also an important success factor. ASML was given innovation credit by the ministry of Economic Affairs (EZ). ‘I don’t know if, without the innovation instruments of the ministry of Economic Affairs, we would have had such a big R&D section in the Netherlands,’ Wennink admits.
The innovations of ASML are noticed globally. For instance, in 2011 the company was included in the Top-100 Global Innovators List of Thomson Reuters. Shell and Philips are the only two other Dutch companies that achieved this.
Still, not everything is going smooth at ASML. An ING analyst called the developments around the EUV technology ‘not very predictable’, another – Patrick Ho of Stifel Nicolaus – noted to Bloomberg that the EUV ‘is less efficient than expected’ and ‘probably not capable of delivering the ROI that investors had hoped for’.
Meanwhile, the company continues apace. ‘We spend a significant proportion of our financial resources on R&D and we expect to continue doing so.’