by alephnerd | 2025-11-24 20:54:49+00:00
> Nothing remotely similar to commodities like software and hardware

First, what I should have done earlier in this conversation because I keep forgetting how broad and complex of an industry this is:

What do you mean by the semiconductor industry? No country other than the US has an end-to-end domestic pipeline from design to fabrication to packaging to developing EDAs.

For this thread, I have limited my conversation to fabrication and package. These industries have largely coalesed around the US and Korea/Japan/Taiwan/China/ASEAN for decades because of industrial policies and educational programs.

For chip design, this industry is largely limited to the US, Israel, India, China, and Taiwan for decades due to a number of key hires at Intel back in the 1990s.

The strategy needed to develop a domestic chip design ecosystem is completely distinct from that for developing a domestic fabrication or packaging ecosystem.

> Pharma is not a commodity nor resembling anything like "free market" competition

It very much is depending on the type of compound, just like it is depending on the type of semiconductor (or downstream components).

> It's all about patents, massive regulatory moats, massive state subsidies and government protectionism plus backroom deals between pharma and politicians

Hate to break your cherry, but that's all industries. I remember our lawyers spending months working with the trade promotion ministry of a certain CEE state along with KPMG in order to get a sweet heart deal to open a dev hub in an IT park that was associated with a politically connected oligarch. The economics of biopharma really aren't that different from semiconductors:

1. You have an entirely separate design phase that is completely independent of synthesis/fabrication

2. You have entire sub-segments of the industry devoted just to synthesis/fabrication along with testing

3. Both are high capex/low margins industries, as Asian players in both China and India have largely disrupted the generics market while higher margin IP tends to be owned by the American subsidiaries of European Biopharma companies

4. It doesn't necessarily make sense to synthesize low margins APIs when you will inevitably be undercut by American, Chinese, or Indian players so the best solution is to specialize in design because that at least allows you to own IP.

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This is a question for each individual European nation, because this is something that the European Union cannot solve - do EU nations actually care about developing industrial policies intended to develop domestic capacity or not in specific industries.

If so, does each European nation actually have the state-level capacity and the human capital capacity to start making a case for investment.

Additionally, can any European state give the 50%-150% capital subsidy grants or 0-1% interest rate loans that countries like South Korea, Japan, China, Taiwan, the US, and India along with their state-level components?

After chatting with my friends who work on these types of questions in Bruxelles as well as a couple larger European capitals, the answer was no, simply because the fiscal leeway just doesn't exist and the demand really doesn't exist either. If Volkswagen AG or Groupe Renault is pushed into a corner, they will just shift manufacturing out of Europe and towards China or India respectively.