All-pervasive AI boom leads to growing shortages

The combination of the war with Iran and the stormy growth of AI investments is causing both higher prices and greater shortages of materials, chips and printed circuit boards. The Nevi Dutch Manufacturing PMI shows that delivery times have increased further in October, for the seventeenth month in a row.

Since the spring, Dutch industrial firms have sounded alarms over shortages of semiconductors and electronic components. These concerns are increasingly confirmed by S&P Global's global shortages figures. In September, the semiconductor shortage eased slightly, but the shortage of electronic components continued to increase, according to S&P Global's surveys of global purchasing managers.

The Nevi Purchasing Managers' Index already indicated rapid growth in the Dutch manufacturing industry in the autumn of 2025 and in the spring of 2026. This has also been evident in the figures of Statistics Netherlands (CBS) since last summer. Dutch industrial production grew by 12 percent in August compared to the same period a year earlier, which was mainly due to the growth of the machinery industry (+45 percent), in which ASML and other chip machine manufacturers play a dominant role. Figures from S&P Global, among others, show that the industry in countries such as the Netherlands, Taiwan and South Korea is growing significantly faster than in other countries, thanks to the rapid growth of investments in AI data centres, especially in the United States (US). The chip industry is the driving force behind the rapid growth of the industry. Many other sales markets are growing much more slowly or not at all.

Circumstances changed dramatically

This stormy growth rate is probably not sustainable, because the scarcity of components is increasing. In recent years, Dutch industry has gone through a downturn, partly due to the sharp rise in natural gas prices since the war in Ukraine, which is putting pressure on basic industry. Anyone who had claimed in 2021 that the chip market would no longer be cyclical, and thus would no longer be characterised by high peaks and deep troughs, was already belied in 2022 by declining semiconductor sales. Demand for chip machinery also weakened, leaving many suppliers to ASML with weak demand for chip machine parts. In 2025, the supply chain was already preparing for a strong recovery in demand in the same year, but that turned out to be an overly optimistic expectation. Several leading suppliers struggled with overcapacity, which even forced some to make painful cutbacks.

After three weak years, market conditions have changed dramatically this year. Overcapacity is currently disappearing like snow in the sun due to the all-pervasive growth of investments in data centres for AI applications. Although industrial companies are trying to increase their capacity, the current growth rate is unlikely to be sustainable. When publishing its quarterly figures in mid-October, ASML already warned that capacity in both 2027 and 2028 will not be sufficient for the enormously rapidly increasing demand, despite a 30 percent increase in capacity in 2028.

This threatens a repeat of the global shortages of semiconductors and electronic components during the Covid pandemic. At that time, the chip market focused on semiconductors for consumer electronics such as laptops and displays, which were in high demand during the lockdowns. As a result, the automotive industry missed out, resulting in much lower production volumes. Currently, both chip manufacturers and manufacturers of printed circuit boards seem to be concentrating on the AI market, in which much higher margins can be achieved due to scarcity. As a result, there is a threat of increasing shortages in other sectors. Figures from Statistics Netherlands show that the electrical engineering industry in particular is struggling with a shortage of parts.

Scarcity exacerbated by hoarding

The scarcity is exacerbated due to hoarding behaviour: purchasing managers fear shortages and higher prices. For this reason, they are buying more, which further drives up the shortages and thus prices. The raw materials needed by the chip industry and the printed circuit board industry have also become much more expensive, partly due to war in the Strait of Hormuz, which has caused oil, natural gas, sulfuric acid and epoxy resin to rise sharply in price.

With chip machine makers such as ASML and its extensive high-tech supply chain, the Netherlands is excellently positioned for the stormy growth of AI, but at the same time the risks are building. ABN AMRO expects the current growth rate of the Dutch manufacturing sector to slow down by mid-2027, as the global industry cannot scale up fast enough. Especially in other markets, there is an acute shortage of chips and electronic components. The growth of the industry as a whole is therefore becoming even more dependent on AI.

The war in Iran also poses a risk due to rising oil and gas prices, which are saddling energy-intensive industry in particular with higher costs. The war also causes turmoil in bond markets and, thus, higher interest rates. As the manufacturing sector is rather capital-intensive, this leads to higher financing costs for manufacturing firms in particular. In addition, the demand for some industrial products is vulnerable to higher interest rates, as the financing costs for buyers of these products are also rising.