Chip market could lead to recovery in industry in 2025
The Nevi Netherlands Manufacturing PMI fell by two tenths to 48.4 in January. Output fell slightly faster than in the previous month. However, entrepreneurs have become quite optimistic about the coming year, as many as 45 percent expect a recovery. Thanks to the fierce competition for AI, the chip market may pick up this year.
ASML confirmed its growth expectations for 2025 at the end of January. In addition, the chip machine manufacturer reported that it had had a strong fourth quarter, mainly thanks to upgrades of previously delivered machines. If the positive expectations for 2025 come true, the many Dutch suppliers will benefit.
ASML's growth is mainly due to investments in Artificial Intelligence (AI). This requires very powerful chips, which can only be produced with the best chip machines. Taiwanese chip manufacturer TSMC also reported strong results for the fourth quarter of 2024 and increased the budget for investments in 2025.
Fierce competition for AI
There is fierce competition between the United States, China and Europe around AI. American tech companies are investing heavily in the necessary data centers, and President Donald Trump announced on the day after his inauguration that he wants to invest hundreds of billions in AI together with the business community. Last week, Chinese startup DeepSeek claimed that it has developed a ChatGPT-like model at a much lower cost.
If the Chinese were indeed to succeed in developing AI applications that require much less computing power, it could put pressure on investments in data centers in the coming years.
In any case, it is clear that the competition for AI is not yet settled. The European Commission also announced plans to boost investment in AI. All in all, it seems that the demand for chip machines will continue to grow strongly in the coming years. Dutch industry is at the forefront of this and will therefore benefit from it.
Competitive position of European industry under pressure
High energy costs and strict regulations are putting pressure on the competitiveness of European industry, especially in energy-intensive industries such as the chemical industry and the steel industry. On the advice of Mario Draghi, former Prime Minister of Italy and former President of the European Central Bank (ECB), the European Commission is coming up with plans to simplify regulations and improve the competitiveness of European industry. Reportedly, the European Commission wants to cut administrative obligations around sustainability and strict regulations on mergers and acquisitions. The Commission, which will present detailed plans at the end of February, also wants to do something about the high energy costs for European industry.
In the meantime, Trump is also not standing idly by when it comes to new industrial policy. His finance minister, Scott Bessent, wants to introduce a universal import tariff of 2.5 percent in the short term, which can then be increased by 2.5 percentage points to 20 percent every month. Other countries will then have time to negotiate with the Americans. The European Commission has been preparing for negotiations for months.
The preliminary purchasing managers' index for the German manufacturing sector improved slightly in January, but German industry remains very weak, presumably due to the slump in the German automotive industry and in energy-intensive industries. As a result, European industry is not yet recovering, although consumer demand for goods is picking up thanks to improved purchasing power. Dutch companies increased the production of consumer goods in January, according to the Nevi Netherlands Manufacturing PMI.