If the Trump presidency and Brexit By convincing the European Union to start acting more like a sovereign power rather than a supermarket, Covid-19 has shown that there is a frustratingly long road ahead.
At first it was fights over protective medical equipment. Then the unsuccessful introduction of the vaccine. Now the bloc’s technological dependence on the United States and Asia is sharply deteriorating.
Semiconductor deficiency entering global markets is a brutal reminder of how factories and know-how left the continent. Meanwhile, the rising market value of Facebook Inc., Amazon.com Inc., Apple Inc., Netflix Inc. and Alphabet Inc., Google’s parent company, shows what investors will bet on in the future. The total market capitalization of US technology in recent times surpassed the aggregate value of European shares for the first time.
The EU dominates technology regulation, but this shows it is better at protecting its 400 million consumers than it is developing a new killer app. As French Emmanuel Macron As it was said in December, FAANG is in force in the US, BATX in China, and the EU has GDPR data protection law.
To remedy the situation, officials in Brussels, Paris and Berlin turned to industrial policy. Inspired by the success of the Airbus SE in rivalry with Boeing Co…, public money is being poured into sectors from electric batteries to cloud computing with the aim of creating pan-European champions. Last efforts are in chips, and the EU seeks produce at least 20% of the world’s semiconductors by 2030, double the current level, due to Using money from the Covid Block Recovery Fund to build modern factories.
However, the EU is so far behind that the bloc is seriously at risk of missing another technological revolution.
Europe needs more than factories – it needs tech firms in its territory that can serve as customers, as my Bloomberg Opinion colleague Alex Webb argued. Otherwise, this latest Airbus-style alliance with firms such as NXP Semiconductors NV and Infineon Technologies AG will result in better service to high-tech centers overseas in the US and Asia.
Cash is important, but also important are the conditions that foster the development of innovative “ecosystems” that the EU is sorely lacking. According to entrepreneur Gilles Babinet, who advises the French government, four key criteria are: venture capital to fund ideas, universities to produce them, geographic clusters that attract companies with deep pockets, and supportive policies.
The EU lags behind in most of these areas: its universities fight to retain top talent, its venture capital pool relatively small, and even with a new The harvest of billion-dollar startups cannot match that of California or Shenzhen. There is a top-down policy, but no seeds on the ground.
These are huge gaps that need to be closed for the next generation of Airbus. The European Electric Battery Alliance emerged after years of Asian dominance, and the new Airbus cloud computing out of touch with the reality of such wealthy US rivals as Microsoft Corp. and Amazon.
Trying to bridge the gap between the deep networks of US venture capitalists and China’s shameless statist approach, the bloc fails on both sides. In 2000, EU leaders pledged that by 2010 the bloc would become the most dynamic knowledge economy in the world. This did not happen, and the pace of innovation in China increased. five times faster than in the EU since 2012.
Europeans should go back to the drawing board and look not at Airbus, but at ARM Ltd.
Created in Built for decades in Cambridge and spun off by Apple, ARM is a semiconductor developer whose technology has been found. in smartphones around the world. This made him an attractive target for acquisitions, first by the Japanese SoftBank Group Corp. and now by the American company Nvidia Corp. customers fear that access conditions will be worse if a US competitor gains control of the company. Antitrust regulators are investigating.
This shows Europe’s double weakness: the lack of innovation hubs that companies like ARM produce, and the lack of incentives to help them expand and compete. yourself. Instead, too many promising technology firms are being taken over by foreign companies. Sale German robotics company Kuka – for Chinese investors good example. Strasbourg-based researcher Eric Rougraff says that historically the EU’s approach to foreign takeovers has been an “open door” policy. The new verification policy will help block sales of strategic technology, but it’s too late.
The original Airbus worked in its own way because all the parts somehow matched, despite political interference. If you don’t focus more on encouraging innovation than ordering it, there will be too many other Airbus.
This column does not necessarily reflect the views of the editors or Bloomberg LP and its owners.
To contact the editor responsible for this story:
Melissa Pozgay at [email protected]