ACITI Op-Ed: Europe’s Quiet Chip Power: How the Netherlands Holds the Key to the Post-Davos World Order

By Dr Umair Ghori, Associate Professor, Faculty of Law, Bond University

The tipping point into a new global order is unlikely to arrive with a dramatic land grab, a barrage of tariffs, or even the kidnapping of a foreign leader. More plausibly, it will come quietly through a subtle recalibration by a small but strategically indispensable country deciding it no longer wants to carry the costs of someone else’s rivalry.

 In the contest for technological and geopolitical primacy between the United States and China, that country may well be the Netherlands.

 Despite its modest size, the Netherlands occupies a singular position in the global technology ecosystem. It is home to ASML, the only company in the world capable of producing photolithography machines that use extreme ultraviolet (EUV) technology. These machines are not merely another input in semiconductor manufacturing; they are the bottleneck. Without EUV systems, the most advanced computer chips (increasingly measuring at two nanometres, approaching the scale of a single strand of human DNA) simply cannot be produced.

 No EUV machines means no frontier artificial intelligence, no meaningful progress in quantum computing, and no leap to the next generation of industrial and military technologies. That reality gives a country of just 18 million people extraordinary leverage over the trajectory of the most consequential strategic rivalry of the 21st century.

 For the past several years, Washington has leaned heavily on that leverage. As part of its strategy to slow China’s technological rise, the United States pressed the Netherlands, along with other actors in the semiconductors arena such as Japan, South Korea and Taiwan) to impose strict export controls that cut Chinese firms off from EUV-capable tools. The logic was clear: choke access to the most advanced manufacturing equipment, and slow Beijing’s ability to move up the technological value chain.

 The impact has been real. Chinese firms have been forced to push the older deep ultraviolet (DUV) technology to its limits while pouring billions into domestic alternatives that, despite impressive progress, still lag years behind the cutting edge. In Washington, this outcome is often cited as proof that export controls work and that allied coordination remains strong.

 Yet that narrative masks a more uncomfortable truth. The United States does not actually control the most critical lever in this contest. It borrows it.

 The Netherlands has paid a significant price for aligning so closely with US policy. ASML has foregone billions of dollars in potential sales to China, one of the world’s largest semiconductor markets. The Dutch government has accepted that economic hit on the assumption that the United States remains a reliable partner, that allied interests broadly converge, and that the rules-based order underpinning these sacrifices is still intact.

 Those assumptions are now under strain.

 As US foreign and economic policy has become more erratic, more openly transactional, and more willing to apply pressure even the closest of allies, the cost-benefit calculus for middle powers has shifted. The past week alone has offered a glimpse of that recalibration playing out in real time.

 At Davos, the Canadian Prime Minister Mark Carney spoke about the erosion and rupture of the post-World War II economic order and the need for middle powers to reduce overdependence on the United States. His remarks were not radical; they were pragmatic. In an environment defined by uncertainty, diversification is no longer hedging, it is risk management.

 At the same time, US President Donald Trump was publicly threatening higher tariffs on a range of countries, including close European partners, while escalating rhetoric over Greenland that included references to annexation by force. Although those threats were later walked back, the episode exposed the limits of coercive pressure and the political damage it inflicts and the trust deficits it creates.

 The Greenland episode followed several weeks of chaotic foreign policy moves, including the extraordinary kidnapping of Venezuela’s president. Together, these actions have reinforced a growing perception among allies that the United States power is becoming less restrained.

 Canada’s subsequent decision to strike a trade deal with Beijing sent a clear signal. It was not an abandonment of the alliance with Washington, but it was a declaration of autonomy. Middle powers, it suggested, are looking for room to manoeuvre. That should worry Washington.

 If Canada can recalibrate its China policy in pursuit of national interest, there is little reason to believe that Europe will not follow soon after. Australia, already navigating a delicate economic thaw with Beijing, faces similar incentives. Europe, grappling with sluggish growth, industrial competitiveness, and energy insecurity, faces even stronger ones. And this is where the Netherlands re-enters the picture.

 If Europe were to look eastward and attempt a partial reset in its relationship with China, access to EUV technology would inevitably become part of that conversation. That does not require an immediate lifting of export controls. Even a signal that Dutch compliance is conditional and tied to broader strategic or economic concessions would shift the balance of leverage overnight.

 For China, such a signal would provide critical breathing space. For the United States, it would mean the erosion of one of the few tools that genuinely constrains Beijing’s artificial intelligence ambitions.

 This is why the issue is about far more than chips.

The post-World War II order rested on a simple but powerful bargain: the United States would anchor the system through predictability, restraint, and shared rules, and its allies would accept constraints in return for stability. If that anchor weakens, the system does not simply realign. It fragments.

 In a fragmented world, power becomes decentralised, alliances become conditional, and norms give way to transactions. Technology supply chains are negotiated issue by issue, rather than enforced by a single organising authority. In such a system, countries that control critical sectors wield disproportionate influence.

 The lesson for Washington is uncomfortable but straightforward. Its most effective leverage over China depends on partners with their own domestic pressures, economic limits, and political red lines. Those partners are increasingly uneasy, not only about China, but about the reliability of US leadership itself.

 Keeping them onside requires more than pressure. It requires behaving like a safe ally. In the race to dominate artificial intelligence, the decisive power may rest not in Washington or Beijing, but in a handful of highly specialised machines built in Europe. If US allies begin to question whether holding that line still serves their interests, the balance of power could shift far faster than Washington expects.