ASML and the Geopolitics of Chip Manufacturing: Balancing Strategic and Political Pressures

This case may be used in courses related to international business, strategic management, political science, and international relations. It is better suited for students in graduate programs and C-suite executives as it exposes the students to wide-ranging variables with extensive implications and no clear solution to the central predicament. It offers an excellent way to introduce a course, yet it serves better as the culmination module in a course that tackles complex strategic inquiries. The case offers a unique opportunity to present a business case intertwined with important geopolitical ramifications. ASML’s decisions will have a significant impact on the company’s bottom line but could also influence the global balance of power.

This is a critical discussion of a situation that pervades much corporate strategy in the 21st century. It requires an analysis of the problem from different perspectives. The central question to consider is whether ASML should maximize shareholder return at all costs (i.e., protect China, its fastest-growing market) or abide by the policies set forth in the jurisdictions where it resides and consider disengaging from its fastest-growing market. After working through the case and assignment questions, students will be able to do the following:

• Understand and describe the geopolitical corollaries in strategic industries.
• Assess the pitfalls of ignoring government policy.
• Assign measurable values to intangibles like quarrels with the government.
• Consider the effects on market participation of disengagement due to geopolitics.
• Weigh a company’s long-term financial health against short- and medium-term sacrifice.