(Bloomberg) — The Netherlands wants to build a new national chip champion akin to ASML Holding NV with an investment of 1.1 billion euros ($1.2 billion) in next-generation photonic technology.
The technology involves communicating information via light instead of electronic signals and can be used in chips, which have become highly sought after due to a combination of supply issues and growing demand worldwide. The European Commission has designated photonics as one of six “key enabling technologies.”
The initiative unveiled in Hague on Thursday is run by PhotonDelta, a government-backed agency established to develop a photonics ecosystem in the country. The organization will fund 200 start ups and foster scale-up in 26 established companies. The Dutch government will provide 471 million euros of funding, with the remaining amount co-invested by various partners including Eindhoven University of Technology and University Twente.
Ewit Roos, chief executive officer of PhotonDelta, said he expects the Netherlands to dominate the global photonic chip market with the initiative, very much in the spirit of ASML, which has an effective monopoly on advanced extreme ultraviolet lithography machines. The Veldhoven-based company has eclipsed Intel Corp., the world’s biggest maker of PC processors, in market capitalization.
“If we continue these developments, the photonic sector in the Netherlands should have a turnover of 5 billion euros in 2030,” with a market share of as much as 30%, Roos said in an interview.
Chinese Interest
The initiative marks the second push by the Dutch government into photonic technology after a 2020 investment of 20 million euros in Smart Photonics, an Eindhoven-based photonic chipmaker, to stave off interest from China in the strategic technology.
“A Chinese venture capital company backed by lots of government money was in the market for Smart Photonics,” said Roos, adding that swift action by the Dutch government kept the technology in the country. “We gave a very strong signal to China back in 2020,” he said.
To this day, the Chinese remain interested in Dutch photonics companies, said Roos. The government has also blocked ASML’s plans to drive deeper into China through sales of its extreme ultraviolet lithography systems, blocking a request for an export license amid trade tensions between Washington, D.C., and Beijing.
“We invested lots of money and research in solar cells but lost the entire industry to China,” said Roos. “We have the opportunity to do it differently this time around.”
Photonic technology, which enables transferring more data but takes less energy, is a highly strategic and versatile, said Martijn Heck, professor in photonic integration at Eindhoven University. The applications vary from autonomous driving to quicker but more sustainable data infrastructure needed for quantum computing and 5G connectivity.
“The European Union has been naive when it comes to strategic autonomy, but they are waking up,” Heck said in an interview. “If you do not control this supply chain, you will never know what happens exactly and if back doors are being build into the chips. In the end it is about state security.”
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
