In the EU it seems we are very much at risk of being cut off from frontier AI if the US government should decide to do so.
Already shipped machines can not be taken back, nor can they be stopped. Sure, you can cut the support, and buildup of new fabs will be stalled. But the other side, Chinese or USA, has many more levers to pull. Raw materials, energy (LNG), was majority of consumer goods, solar panels, batteries, semiconductors. EU doesn't mine or make most of them, and isn't nowhere close to even starting, instead, industrial base is already shrinking.
Even worse, ASML may dominate EUV, but other suppliers do very well in DUV. The moment ASML becomes unreliable, all of them will get infusion of money, as they become national security issue.
What about ASML subsidiaries in USA, like Cymer and ASML Wilton, will they take the bullet for the parent? Or will they become part of new competitor, with all the knowhow.
And China has already set domestic capacities in this area as a national priority.
Is that not self evident by the insane revenue from frontier labs?
The only reason OpenAI and Anthropic are making a loss is due to training new models to keep up with competition - not because the industry is flawed in terms of business model.
Insane competition does not last forever. When chip manufacturing first started, there were dozens of companies that had fabs that made compute chips. Nowadays, only TSMC is viable. Samsung and Intel survived because of geopolitics.
Always sell shovels in a gold rush I guess
No...? Of course not?
Because revenue is only one side of the equation. Did you ever look at total cumulative OPEX and CAPEX, and how long it will take them to even just break even at current growth?
They're likely over $80b ARR by now. They'll be at $800b ARR next year at the same rate. Let's say their growth gets cut down to 3x instead of 10x - that's still $240b ARR by this time next year.
When you are growing so fast, you don't need to make a net profit. You just need to make sure your unit economics are good - which it seems like they are given reports that their gross margins are at 60-70%.
And they will be 800 trilion ARR in a couple of years, following that same rate! 8 quadrillion by 2029!
> When you are growing so fast, you don't need to make a net profit. You just need to make sure your unit economics are good - which it seems like they are given reports that their gross margins are at 60-70%.
If their margins were anywhere near this good, they wouldn't need to raise so much money so often.
If you create a machine that turns 1 dollar into 3 dollars, you don't dillute your ownership of the machine, you use your fabulous profits to expand your machine's capabilities.
If their margins were anywhere near this good, they wouldn't need to raise so much money so often.
Your $200 subscription is a major net loss for them. The vast majority that pays for that would cancel in a heartbeat the moment they had to pay API prices. Which may or may not be profitable, I am not entirely sure. But for the sake of argument, let's assume that it is.