EBB for 21 January: Can Europe’s tech scene survive Trump 2.0?

By Terry Boyd

(Editor’s note: This Eindhoven Business Briefing focusing on the return of Donald Trump is part of our Tech Tuesday series. Dispatches covers tech because so many of our highly skilled internationals are engineers and entrepreneurs.)

So, yesterday, Donald Trump returned to the White House, a man who’s stuck in the 1980s yet is now president of the United States of America in the 21st century. A man with neither the temperament nor the intellectual capacity to be president.

That’s not going to end well.

In dealing with Trump, the European Union’s biggest disadvantage is that it is rules-based—inherently process-oriented Chaos agent Trump has no rules and no use for regulations, norms or convention. He’s erratic and fixated on who likes him, bonding with strong men Putin and Xi. Trump lacks a sophisticated world view, a grasp of how global markets actually work and any real understanding of technology.

As Associate President Elon Musk knows, that makes Trump easy to manipulate.

Before he’d even taken the oath of office, Trump announced plans to take Greenland from ally Denmark by force if necessary. This is a guy who has no moral compass, hawking gold sneakers, cryptocurrency and cheap watches from the White House to his gullible base.

The funny thing is, Europe sells more to the US than the US sells to Europe, with a trade surplus of about 15 billion euros due at least in part to those 400 million euro tools Eindhoven-based ASML sold to Intel. Which will likely put ASML and Eindhoven on the radar of Trump’s likely trade czar, Robert Lighthizer.

Trump himself only thinks in binary terms. Winners and losers. “He simply doesn’t believe in win-win partnerships,” former German Chancellor Angela Merkel told BBC Europe editor Katya Adler. Trump is famous (infamous) for saying he “doesn’t want to see any Mercedes-Benz on the streets of New York.” Of course, when he said that, he didn’t understand those Mercedes come from a huge plant in Alabama employing about 6,000 Americans.

Tech will be front of mind with Trump, with the US having a commanding lead in software, hardware, and now artificial intelligence. It’s likely he’ll go on a shopping spree, encouraging tech bros Musk, Jeff Bezos, and Mark Zuckerberg to acquire Europe’s most promising tech companies. The American dominance in risk capital makes Europe a bargain basement for Sand Hill Road.

So far, European leaders have never figured out they have to form a united front to deal with the sheer size of the US economy and the ruthless ambitions of people such as Trump and Musk. Trump is deeply and tragically flawed, and ultimately his second presidency will implode just like the first. Which will again knock the world off its axis. But it will present Europe with an opportunity to lead if it’s ready.

HIGH TECH CAMPUS EINDHOVEN INVESTOR HOWARD MARKS WARNS ON US STOCKS

If anything can render Trump impotent, it’s economic collapse because so much of his self-generated haigography portrays him as a brilliant billionaire businessman. The reality is, his business history is largely one of failures and bankruptcies. That doesn’t keep him from making wild claims about how he’ll fix everything, including the Biden economy, which is of course actually robust.

The man who basically owns Eindhoven’s giant R&D campus has issued a warning that we’re guessing Trump will never see. Back in 2022, in a partnership with Singapore sovereign fund GIC, Howard Marks and his L.A.-based Oaktree Capital acquired High Tech Camus Eindhoven. Marks built his massive asset management firm by being a keep observer of markets and in January 2000, he predicted the Dot.com bubble.

Now, Marks sees a bubble forming in the S&P 500, the major equities market for tech stocks. His concern is that just a handful—the Magnificent Seven, including Apple, Microsoft and NVIDIA—have dominated the S&P 500 in recent years, responsible for a highly disproportionate share of its gains.

According to his newsletter:

• the market capitalization of the seven largest components of the S&P 500 represented 32 to 33 percent of the index’s total capitalization at the end of October;
• that percentage is roughly double the leaders’ share five years ago; and
• prior to the emergence of the “Magnificent Seven,” the highest share for the top seven stocks in the last 28 years was roughly 22 percent in 2000, at the height of the TMT bubble.

Marks’ tests for a bubble are:

? a temporary stock mania à la the 1920s.

? outright adoration of the subject companies and a belief they can’t miss. ( He’s looking at you, Apple fans.)

? and investors motivated by a massive (and irrational) fear of being left behind, aka FOMO.

Most concerning, Marks said, is the attitude that “there’s no price too high,” leaving behind all price-to-earnings ratios. He’s looking at you, NVIDIA investors.

Where this all connects back to Eindhoven is that 英伟达 is an ASML customer, as is every US-based chipmaker. Should the S&P go the way of the Dot.com bubble, that would be bad for Trump AND Europe and illustrates yet another way Eindhoven is overexposed to American economy and politics.

NXP GETS 1 BILLION EURO LOAN FROM EUROPEAN INVESTMENT BANK

恩智浦半导体 is a company we don’t write enough about. Though it’s based at High Tech Campus Eindhoven, it’s run mostly by expats, including CEO Curt Sievers and CTO LarS Reger, both of whom are German. And there’s a lot going on with NXP, which is refurbishing its global headquarters on High Tech Campus while moving some operations into the new Lucis One building a few hundred meters away. And as a crucial player in the European semiconductor ecosystem, NXP just got a huge loan.

This six-year, 1 billion euro loan is the largest loan by the European Investment Bank to a Dutch company. The loan is meant to build the European semiconductor ecosystem and will be used to boost research, development, and innovation (RDI) efforts in Austria, France, Germany, The Netherlands, and Romania, according to the NXP website.

The interest rate is 4.75 percent and with the current prime rate in the Netherlands at about 3.6 percent, we’re not sure why NXP needs what is essentially senior secured debt, though it’s not collateralized. That said, net income for the year ending 30 September 2024 was 2.7 billion euros, down about about 4 percent for the same period in 2023. Another curious part of this story is that the funding comes from a European Union-funded initiative to build startups. NXP is hardly a startup, spun out from Philips back in 2006 and listed on the Nasdaq under the symbol “NXP.”

Last July, the share price hit $296, a five-year high.

Our question, though, is, under Trump, will NXP become the target of a hostile takeover? Because any company that trades on an equity market can be bought up.

LUMO LABS INVESTS 1.6 MILLION EUROS IN TNO SPINOFF SCENEXUS

High Tech Campus Eindhoven-based venture capital firm LUMO Labs just invested 1.6 million euros in Scenexus, which is developing digital twins software. Scenexus is a spinoff from national research lab TNO, also based on campus.

LUMO Labs co-founder Sven Bakkes noted that Scenexus is the inaugural investment from the VC’s new LUMO Rise Fund.

We spoke briefly with Scenexus CEO Jeroen Borst and COO Bart Vuijt, and they told us that what sets Scenexus apart from other digital twin efforts is that it can process in minutes what takes other platforms hours. It also has predictive capabilities to model the future. “It’s a different dimension of complexity,” Borst said.

By creating digital twins of a city or region, decision makers, planners, and engineers use Scenexus to predict the impact of their actions in minutes instead of days.

QUICK HITS

? Alex Karp: Europe has surrendered in the tech wars

In a recent speech, Alex Karp, CEO of big data giant Palantir, asserted that for the first time since the US developed the atomic bomb, Americans have a “massive structural advantage” in their monopoly on artificial intelligence. AI supremacy will let the US dominate everything from work to war. “We’re in the very beginning of a revolution we own,” Karp stated last month at the Reagan National Defense Forum. But he said much more, including that America is the only place in the world to do technology at scale. Europe has decided to regulate its “anemic tech scene” out of production, Karp added. “All those people want to come to America.” See the full video above.

? High Tech Campus Eindhoven and TU/e sign MOU

Eindhoven University of Technology and High Tech Campus Eindhoven signed a Memorandum of Understanding to investigate how they can have a more mutually beneficial relationship. The HTCE and TU/e campuses each are essential to Brainport’s innovation ecosystem and already cross-pollinate, with TU/e producing increasingly viable and innovative startups that are potential campus tenants. The two parties now want to expand that connection even further in order to stimulate open innovation, education and entrepreneurship in Brainport

? Netherlands and US tangle over ASML export controls

The Netherlands once again has tightened export controls to ensure that ASML will have to apply for export licenses with the Dutch government instead of the Americans. These new rules will come into effect on 1 April and are seemingly The Hague’s response to the updated US list of sanctioned equipment.

Bloomberg?reports this includes ASML. This, of course, is all about stopping China from making the latest chips. Chinese leaders have said they don’t need ASML—that they already can make 7 nanometer circuits. Right … they just chose not to. ASML CEO Christophe Fouquet said last month that China is at least?10 to 15 years behind in chipmaking capabilities.

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