Welcome to the Eurointelligence podcast. I'm Wolfgang Munchau and with me are Zasanna Monsang and Jack Smith.

Today we would like to talk about productivity. In the Netherlands, ASML, our star high-tech company,

has just announced a massive fall in turnover, shocking the market, shocking even seasoned observers

of the industry. Jack, in your story this morning, you made the point that

this isn't just a normal company story, but this has a wider significance for industrial

policy in Europe. So what happened? So for the uninitiated, ASML is a Dutch company that makes

what are known as a photolithography machines. Basically, what these

machines do is they make semiconductor chips, and they use very kind of advanced technology

in order to do so. So the process of developing one of these machines takes decades and

requires a significant amount of research. In the case of one of the machines that ASML produces, its extreme ultraviolet lithography machine,

EUV, nobody else in the world really does it.

To call it being at the technological frontier would be an understatement.

Now, just this week, ASML posted some underwhelming third quarter results.

Now, some of this is due to basically cyclical fluctuations in demand for semiconductors

because cyclical fluctuations in demand for semiconductors affects demand for the machines that makes them.

However, the bigger concern, I think, for a lot of people, market observers looking at ASML,

is the impact of tightening export controls

to China on ASML's business.

So, in recent years and quarters, the Chinese market has accounted for close to half of ASML's

sales and revenue.

So it is very, very important for them, but they've come under a series of kind of tightening

restrictions on what they can send to China and how they can deal with their Chinese customers.

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