AMSTERDAM (Reuters) -ASML, the largest supplier of equipment to computer chip makers, is considering a major expansion in the Dutch city of Eindhoven, an important step toward resolving doubts about where it will grow its operations in the future.

The company and the city of Eindhoven said on Monday they had signed a letter of intent to explore an expansion large enough to house 20,000 new employees in a relatively undeveloped area in the north of Eindhoven near the city’s airport.

The decision follows an announcement last month that the Dutch government would spend $2.7 billion to improve infrastructure in the Eindhoven region to prevent the company from moving operations abroad.

“As we have said before, ASML prefers to keep its core activities in the Netherlands as close as possible to the existing locations” in the neighbouring town of Veldhoven, where ASML is currently headquartered, CFO Roger Dassen said in a statement.

He said the company views availability of talent, infrastructure, housing and a positive investment climate generally as preconditions for investment, adding that the measures recently announced by the government had helped.

“This shows faith in our business climate and the support that the Cabinet has committed to the chip sector,” Economy Minister Micky Adriaansens said.

A spokesperson for the city of Eindhoven, a booming technology hub, confirmed the letter has been signed with a view to ASML’s expansion at the Brainport Industries Campus.

ASML is the Netherlands’ largest company and Europe’s largest technology firm. Currently 24,000 out of its 40,000 employees are based in the country.

It dominates the market for lithography systems, which use light beams to help create the circuitry of computer chips, and expects strong growth as the global semiconductor market doubles in the coming decade.

(Reporting by Toby Sterling, Writing by Charlotte Van Campenhout, Editing by Louise Heavens, Kirsten Donovan)