Philippa Kaur

“A FLOTATION is like your own funeral. You usually do it only once,” deadpans the chief financial officer of a software company that recently staged a blockbuster initial public offering (IPO). Some compare a listing to a wedding, requiring much frantic preparation and ending with a big celebration and bell-ringing. Others liken it to an 18th birthday, marking the moment a young company is launched into the harsh realities of adult life. Whichever metaphor you choose, going public combines mixed emotions, much complexity and myriad idiosyncracies. Despite that, and undeterred by recent wobbles in equity markets, startups have been listing in droves. So far this year tech firms have raised $60bn, according to Dealogic, a data provider, more than at the height of the dotcom bubble in 2000. Include all types of business and the figure is close to $250bn (see chart 1). One headhunting agency is said to have more than 50 searches under way for finance chiefs at startups hoping to go public soon. This week alone will see a handful of blockbuster flotations. They include Amplitude, a data-analytics company most recently valued at $4bn, Olaplex, a hair-care-products firm seeking a valuation of $10bn, and Warby Parker, a maker of spectacles popular among hipsters that could be worth nearly $3bn. Investors can’t get enough of the fresh blood. Despite a sharp drop in the first half of the year, recently listed firms are back in favour, and have handily outperformed the stockmarket as a whole since the start of 2020 (see chart 2). Besides being more numerous than earlier cohorts, the current generation of floaters enjoy greater choice in how to go about it. Holders of stakes in Amplitude and Warby Parker will sell their shares directly to public investors without raising fresh capital, as is the case in an IPO. Last year a record number of companies listed via reverse mergers with special-purpose acquisition companies (SPACs). Even the classic IPO is getting a reboot. To make sense of it all, we spoke to bosses and chief financial officers of companies that have recently listed or are about to, as well as venture capitalists, bankers and brokers, most of whom spoke on the condition of anonymity. The result is a rough-and-ready guide to everything that is new in what one chief executive dubs the “key moment in capitalism”.Party poppersA conventional listing goes something like this. Banks distribute newly created shares, on average 10% of a firm’s total, to public investors, and pocket 7% of the money raised as fees. Though this should incentivise them to price the shares highly, the bankers also work for the buyers, who are often their long-term institutional clients rather than one-off customers like the listing startup. Pleasing those regulars often means setting a lower price. That in turn all but ensures a share-price “pop” on the first day of trading, generating a quick profit for the public investors at the expense of the private ones. In the past decade the pop averaged 21%, according to an analysis by Jay Ritter of the University of Florida. And the first-day surge can be much bigger. Snowflake, a cloud-based data platform which went public last year, popped by 112%, adding nearly $40bn to its market value. As a result, its private investors may have left nearly $4bn on the table.The good news for startup bosses, their early backers and staff, who are often paid in stock, is that banks’ power over the process is waning. Faced with alternatives such as SPACs and direct listings, the bankers have become more flexible with the terms they are willing to accept, at least for bigger, high-quality deals aiming to raise $500m or more. The 7% is now negotiable. Strict 180-day lock-ups, which bar pre-IPO investors from selling their shares too soon, have given way to staggered ones. Employees of Coursera, an online-education platform which went public in March, were allowed to sell 25% of their holdings 41 days after the IPO. Management could do the same, but only if the share price stayed at least 33% above the IPO price for 10-15 trading days. That makes the IPO look a bit more like a direct listing, which by definition has no lock-ups. Direct listings, meanwhile, are becoming more like IPOs. Last December the Securities and Exchange Commission (SEC) approved a rule change that allowed companies listing directly on the New York Stock Exchange (NYSE) to raise capital—something that had been prohibited. In May the markets regulator waved through a similar change for the tech-heavy Nasdaq exchange. For the time being, startups eyeing direct listings simply raise money ahead of the flotations, as Databricks, a data-management firm eyeing a listing, has done in two rounds this year that brought in $2.67bn. But the ability to raise new capital may in time make direct listings appealing to companies with less cash than the tech darlings that have taken the direct route, like Spotify (in music-streaming) or Slack (office-messaging). Then there are the SPACs. These have been around for decades, as has their reputation for dodginess (born of laxer requirements than the more traditional avenues to public markets). After a frenzy in late 2020 and earlier this year, this reputation may have caught up with them. Having raised around $100bn between January and March, the SPAC fever has broken. According to one reckoning, new SPACs that had merged with their target by mid-February have lost a quarter of their combined market capitalisation since then, wiping out $75bn in shareholder value. Still, there may be room for SPACs in the pool of flotation options, especially now that regulators and investors alike are waking up to the iffiness. The SEC is taking a closer look at the practice, fearing that SPACs mostly benefit the vehicles’ founders (who customarily get 20% of a SPACs shares as a fee, or “promote”), their bankers and lawyers. This month its advisory panel recommended that SPACs disclose more information about things like promoters’ financial incentives and conflicts of interest, merger due diligence and risks. In August the SEC objected to one novel SPAC format proposed by Bill Ackman, a hedge-fund billionaire, because it looked too much like an investment fund.Closer scrutiny should help clean up the industry. And even before any new rules are enacted, many SPACs are already offering more generous terms as they hunt for promising startups to merge with, which they must do within two years. Some SPAC sponsors are accepting lower “promotes” than the customary 20%. In one SPAC last year Mr Ackman forwent the promote altogether and settled for warrants that allow him to buy shares in the merged entity.SPACs’ sponsors are also sticking around for longer rather than flipping shares quickly, which gives them a reason to nurture longer-term success. In the record $40bn SPAC deal involving Grab, South-East Asia’s biggest super-app, due to be completed this year, founders of the shell company, Altimeter Growth, vowed to hold on to their shares for at least three years, rather than the customary 12 months. Other parts of the listing process look a bit more familiar. A CEO must find a trusted finance chief, and IPO-hardened ones remain a scarce commodity. Startups also continue to rely on investment bankers to take on legal liability, provide underwriting (as “stabilisation agents” vowing to support the share price should it tank) and act as a marketing department for the listing. Chief executives should still try to talk to the more taciturn members of the sales team pitching a bank’s offer (they do more work than the talkative types) and forge close relations with brokers that will follow their firms’ public fate (as the saying goes, “you date the banker but marry the analyst”). And firms in Silicon Valley still have only three real choices for the two “lead” banks: Goldman Sachs, JPMorgan Chase and Morgan Stanley. If a tech startup picks some other bank as the lead, investors will wonder what is wrong with its offering. Bankers beware But here, too, change is afoot. Improved access to information and investors lets bosses play the big three banks, and the ten or so others in the prospectus that provide additional distribution of shares and analyst coverage, off against each other. Banks are responding by throwing in ever more extra sweeteners, such as offering to manage a founder’s future wealth, or loans in exchange for collateral in the form of privately held stakes. Some startups that make business technology, like SimilarWeb, which provides tools to analyse website traffic, require that banks which want to vie for the contract purchase their wares. Once the syndicate is in place, it is time to sell a story. This has grown in importance as technology offered by startups has become more complex and their business models more unusual. Few companies these days leave the prospectus entirely to the bankers. The middlemen can deal with the financial disclosures and other legal boilerplate. But the opening letter to shareholders is virtually always written by the founder CEO. “It helps clarify the essence of what you do as a company,” says Daniel Dines, the boss of UiPath, which sells automation software and raised $1.3bn in an IPO in April that valued it at $29bn. Nowadays many companies file their prospectus, or s-1 in SEC-speak, confidentially, allowing them to modify the document in response to queries by the regulator without the embarrassment of having to refile it publicly. The “road shows” that make up the other part of the sales pitch have also become more of a back-and-forth process. Some firms start meeting investors before they file their s-1. After the filing, they do another round of meetings to hone the presentation and the accompanying pitch deck. Only then comes the road show proper, which gets cracking after the s-1 is made public. As a result of the pandemic this arduous process involves fewer actual roads. Investor presentations have mostly gone virtual, sparing bosses visits to a dozen cities in ten days, including a handful overseas. And the tedium of talking on Zoom for hours on end is at least now punctuated by instant gratification. After each presentation investors put in their bids, which pop up instantly in an app provided by the banks. These enable all manner of fancy analytics, including drawing demand curves for an offering. Nevertheless, actual share allocation and pricing still requires “man-to-man combat”, in the words of a (female) banker. If a bank senses no pushback, the client startup will find many hedge funds on the investor list. Most startups do try to push back, however, demanding that all their future shareholders are long-term and blue chip. CrowdStrike, a cyber-security firm which went public in 2019, had confronted its bankers with a spreadsheet of some 400 investors that management had already vetted. Some firms are offering shares to their users. In its IPO Uber set aside 3% of its stock for drivers. Its ride-hailing rival, Lyft, did something similar. In July Robinhood, a day-trading app, reserved up to a third of shares in its IPO for its users. Once the price is set and the allocations decided, the last task for the exhausted boss is to ring the bell on the opening day of trading. Besides being the culmination of a protracted process it also remains a marvellous marketing opportunity. So when the bell chimes on the NYSE or the Nasdaq, bosses should smile, wave and watch traders spring into action to start delivering their wildest capitalist dream. More

FOR MOST people, coming into work is about more than picking up a pay slip. Not everyone aims to change the fate of humankind at the office. But even a sense that one’s employer is making a useful product helps escape the lure of the duvet in the morning. Bosses hype this up. It has become fashionable to claim that the pursuit of purpose in the service of “stakeholders” matters more than pleasing shareholders. The outcome of a takeover battle shows how removed from reality the rhetoric is.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

WHEN YOSHINO AKIRA, a Japanese chemist, worked on rechargeable batteries in the 1980s, it was with a view to powering portable devices. His Nobel-prizewinning research led to the first commercial lithium-ion (Li-ion) battery. These now power everything from smartphones to electric vehicles (EVs). But the Japanese firms that, building on Mr Yoshino’s work, dominated the Li-ion business early on have lost their edge. CATL, China’s battery giant, and the energy arm of LG, a South Korean group, have eclipsed Japan’s Panasonic as the world’s largest suppliers of EV batteries. Others are catching up in the production of materials and components.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

CONVENTIONAL WISDOM has it that the capital of Europe’s most powerful economy is poor, bolshie, chronically indebted and utterly reliant on subsidies from richer states. The debacle of the construction of the Berlin-Brandenburg airport, completed in 2020 nine years late and more than €4bn ($4.7bn) over budget, confirmed every prejudice about the city. A political storm is brewing over property firms and rents.Reputations are hard to shed. But Berlin’s business circles are trying. During the tenure of Klaus Wowereit, mayor from 2001 to 2014, no firm in the DAX, the index of Germany’s bluest chips, called Berlin its home. After the DAX’s expansion on September 20th from 30 to 40 companies, five have headquarters in the city. Zalando (an online fashion retailer) and HelloFresh (a pedlar of meal kits) joined three other Berliners, Deutsche Wohnen (one of the beleaguered real-estate firms), Siemens Energy (a spin-off from the engineering giant) and Delivery Hero (a food-delivery darling), themselves recent additions. Berlin’s share of Germany’s total market capitalisation has risen since 2000 (see chart).Before the second world war Berlin was a cradle of mighty firms such as Daimler and Siemens. After the city’s partition by the victorious allies, many companies moved their offices and factories to West Germany. Banks moved to Frankfurt, publishing houses to Hamburg and industry to southern Germany. The exodus intensified after the erection of the Berlin wall in 1961. After East and West Germany reunified in 1990 these businesses had little reason to move back. Instead the city attracted artists and aspiring club owners, lured by low rents and countless abandoned factories and warehouses that made for fabulous studios and party venues. These new, cool residents had lots of fun, made little money and paid hardly any tax. In 2003 Mr Wowereit described his city as “poor but sexy”.It is that sexiness that now helps explain Berlin’s business revival. The young and hip it attracted brought fresh talent, including entrepreneurs and techies. In August Google announced that a chunk of its €1bn investment in cloud-computing infrastructure will go to Berlin (alongside Hanau, near Frankfurt). Amazon Tower, a skyscraper in Berlin’s Friedrichshain district named after its biggest occupant, will house 3,500 of the online giant’s workers. In the first half of this year Berlin-based startups received €4bn in venture capital, half the German total. In spring Olaf Koch, the former boss of Metro, a retailer, set up a food-tech investment fund in the city with the aim of raising €500m.Between 2017 and 2020 Berlin’s digital economy expanded by 30%, ten times faster than its overall output. Last year, as the pandemic put a premium on all things digital, employment in Berlin tech increased by 8.5%. Ramona Pop, Berlin’s economy minister, expects jobs in the city’s digital industry to double in the next few years to 200,000. “Berlin is spearheading the digitisation of the entire German industry,” she proclaims. After making Germany poorer for decades Berlin is making it a little richer: in 2019 the city’s GDP per person was slightly above the national average. ■This article appeared in the Business section of the print edition under the headline “Berlin Inc” More

FOR A MAN who wants to live for ever, Peter Thiel has already done enough in his 53 years to leave mere mortals exhausted—and mostly frustrated. The venture capitalist, techno-Utopian and scourge of the liberal left is a myriad of contradictions.He co-founded PayPal, a payments platform that, as a young libertarian, he hoped would undermine the world’s monetary system. Instead it gave him the money to bestride Silicon Valley, a place he disdains. He was the earliest outside investor in Facebook, a tech giant on whose board he remains, though he mocks social media. As a hedge-fund manager, he bet on an economic meltdown in America ahead of the financial crisis of 2007-09, but called the bottom of the market too soon. He was one of the most prominent financiers to throw his weight behind Donald Trump’s bid for the presidency in 2016. Yet his efforts to populate the Trump administration with radical-thinking acolytes failed.Max Chafkin, who trawls through this litany of inconsistencies in a new book, “The Contrarian”, writes fluently. But he fails to find an explanation that ties the threads together. At his most charitable, he praises Mr Thiel as a creator of immense wealth because of the tech firms he has backed (besides PayPal and Facebook, they include sharing-economy giants such as Airbnb and Lyft, plus a host of other blitzscaling platforms). At his most damning, he portrays his subject as a tax-avoiding “nihilist” whose right-leaning ideology is mostly aimed at increasing his wealth and power.And yet strangely Mr Chafkin, a business writer, only obliquely refers to the most intriguing business story. Between the lines, a picture emerges of an erratic visionary whose work, however creepy, isn’t done. Mr Thiel is applying the radicalism that inspired PayPal to cryptocurrencies and decentralised payment platforms. The “Make America Great Again” schtick that drew him to Mr Trump has led to investments in military, surveillance and space technology that have helped double his net worth in the past year. His yearning to reclaim Silicon Valley from software-loving peaceniks and return to its roots in the cold-war military-industrial complex is bearing fruit—and spreading beyond California.In short, his peculiar brand of libertarianism appears to have a new lease of life. With one hand, he wants to free individuals from government shackles by enabling them to create their own currencies. With the other, he is selling technology to a strong security establishment so that it can protect them from potential enemies. It is enough to make Silicon Valley’s mixture of hippies and yuppies hyperventilate on their yoga mats.It is not the first time a man described by Mr Chafkin as socially awkward has built a movement of like-minded people bent on shaking up the tech industry. The PayPal mafia that he helped bring together at the turn of the century continues to flourish. Besides him, its best-known member is Elon Musk, whose SpaceX rocket company is backed by Mr Thiel’s Founders Fund, a venture-capital (VC) firm. Last valued at $74bn, on September 18th it returned the first-ever civilian crew from orbit. It is in the vanguard of America’s re-energised aerospace industry.Others, too, have stuck by Mr Thiel for decades and share his security obsessions. Palantir, a data-analytics firm worth $52bn, is used by the American armed forces, immigration authorities and numerous police departments. It was co-founded by Mr Thiel in 2003 and is run by an old friend, Alexander Karp (who used to sit on the board of The Economist’s parent company). In the run-up to its initial public offering last year, Mr Karp told potential investors the company, though born in Silicon Valley, shared few of its values. “Our software is used to target terrorists and keep soldiers safe…we have chosen sides,” he said.Anduril, a startup defence contractor also backed by Mr Thiel, is building pilotless drones for military surveillance. Marc Andreessen of Andreessen Horowitz, a VC firm (who is also a Facebook director), has written of the emergence of a new generation of Silicon Valley-style defence companies. “There are some in our industry who view serving such agencies and missions as controversial. We do not,” he wrote in 2019, announcing a co-investment with Mr Thiel’s Founders Fund in Anduril. It was last valued at about $4.6bn.Even without Mr Trump, Mr Thiel continues to mix business and politics. This year he joined forces with Narya, a vc fund led by J.D. Vance, the author of “Hillbilly Elegy”, to invest in Rumble, a video platform popular among right-wingers. He is backing Mr Vance in the Republican Senate primary in Ohio. Blake Masters, Mr Thiel’s co-author on “Zero to One”, a bestseller published in 2014, hopes to represent the Republicans in the Arizona Senate race. The New Yorker has speculated that “The Rise of the Thielists” could provide the Republican Party with a post-Trump ideology.The cryptokingIf that is the case, it would probably involve continued pillorying of big-tech firms, especially Google, which Mr Thiel has long accused of being a monopoly. The new ideology would be anti-China, a country Mr Thiel portrays as using artificial intelligence (AI) to centralise control over the economy. “If AI is communist, crypto is libertarian,” he wrote last year. It would look favourably on cryptocurrencies and blockchains. He is a big backer of Block.one, a blockchain-software company whose crypto unit, Bullish, is planning to go public via a $9bn reverse merger with a special-purpose acquisition company.All this takes tech investing beyond Silicon Valley into new realms, some of them menacing to many observers. That will not worry Mr Thiel. Palantir is named after a “seeing stone” most often used by Sauron, ruler of J.R.R. Tolkien’s evil empire of Mordor in “The Lord of the Rings”. Evidently Mr Thiel, ever the contrarian, does not view Mordor as harshly as most Tolkien fans do. As he once told a friend: “I’d rather be seen as evil than incompetent.” ■This article appeared in the Business section of the print edition under the headline “The Midas of Mordor” More

IN THE 1800S greeting an associate in the West meant doffing your hat. A hand may have been kissed. But seldom was it shaken—a gesture deemed too pally. The handshake has since become de rigueur even in Asia, which had resisted it in favour of bows. Now Jose Maria Barrero, Nick Bloom and Steven Davis, three economists, find that 19th-century mores are back. As part of a long-running survey of American business practices they find the handshake is out, especially among women: 62% now prefer a verbal greeting, up from less than 30% before covid-19. Whatever the replacement—fist bump, anyone?—Baroness de Fresne’s tip sounds pertinent. Proffering your hand, she wrote in her etiquette manual from 1858, shows “poor upbringing and is liable to be considered an affront”.This article appeared in the Business section of the print edition under the headline “New civility” More

A ROCKSTAR’S WELCOME greeted Universal Music Group when it launched on Amsterdam’s Euronext exchange on September 21st in Europe’s largest listing of the year. Giddy investors all but threw their knickers at the newly public company, whose share price finished the day up by 36%, valuing the world’s biggest record label at €45bn ($53bn).Not long ago Universal looked like a flop. In 2013, as digital piracy ravaged the music industry, SoftBank, a Japanese group, bid €7bn for the label. Vivendi, Universal’s French owner, was thought mad for turning down the offer. In fact the decision was inspired. A streaming boom has since lifted worldwide recorded-music revenues by half. Two-thirds of last year’s sales of $22bn went to the three “major” labels: Universal, Sony Music and Warner Music Group.Investors’ rush owes in part to a dearth of alternative tickets to this hot market. Sony Music is locked inside a conglomerate. Warner went public last June, since when its value has risen by half (including a bump of 12% on September 21st, amid the Universal frenzy), but its catalogue is half the size of Universal’s. The listing of Universal gives investors the chance at last to get their hands on what JPMorgan Chase, a bank, dubbed a “must-own asset”.Now, after their chart-topping run, the majors face the equivalent of a difficult second album. Streaming is nearing saturation-point in the rich world. Three in five American homes subscribe to a service like Spotify, up from one in five in 2016. DIY audio tools are helping unsigned artists take a small but growing share of the business. And regulators are asking whether labels are giving artists a fair share of streaming profits. On September 22nd Britain’s government ordered a competition probe into the music industry.Keeping the hits coming will therefore rely on conquering emerging markets, where revenues are lower (Spotify costs the equivalent of $4 per month in South Africa, less than half what Americans pay), and on licensing music to new forms of media. This year Universal has signed deals with TikTok and Snap, allowing the apps’ users to sample clips from Universal’s back catalogue in their videos. Future deals with gaming, streaming and other entertainment platforms are likely. “Fortnite”, an online game, and Roblox, which lets users make their own games, have already become popular virtual-concert venues. Next year ABBA, a troupe of septuagenarians on Universal’s books, will appear in a series of gigs in London as digital “ABBA-tars”. As the streaming boom slows, labels will need new ways of bringing in money, money, money. ■This article appeared in the Business section of the print edition under the headline “Gimme! Gimme! Gimme!” More

LEUVEN IS PERHAPS best known to the general public as the birth place of Stella Artois. Among chipmakers the Belgian city’s biggest claim to fame sits in a squat building not far from the Leuven Institute for Beer Research. Metal banding lends its facade the glittering look of a silicon wafer etched with microcircuitry. Inside, its lower floors hum with the noise of $3bn-worth of some of the most complex equipment humanity has ever devised. The offices above house hundreds of the planet’s keenest semiconductor engineers dreaming up the future of chipmaking.The building (pictured) is the headquarters of the Interuniversity Microelectronics Centre. IMEC, as it is better known, does not design chips (like America’s Intel), manufacture them (like TSMC of Taiwan) or make any of the complicated gear in its basement (like ASML, a Dutch firm). Instead, it creates knowledge used by everyone in the $550bn chip business. Given chips’ centrality to the modern economy—highlighted by the havoc wrought by current shortages—and increasingly to modern geopolitics, too, that makes it one of the most essential industrial research-and-development (R&D) centres on the planet. Luc Van den hove, IMEC’s boss, calls it the “Switzerland of semiconductors”.IMEC was founded in 1984 by a group of electronics engineers from the Catholic University of Leuven who wanted to focus on microprocessor research. In the early days it was bankrolled by the local Flemish government. Today IMEC maintains its neutrality thanks to a financial model in which no single firm or state controls a big share of its budget. The largest chunk comes from the Belgian government, which chips in some 16%. The top corporate contributors provide no more than 4% each. Keeping revenue sources diverse (partners span the length and breadth of the chip industry) and finite (its standard research contracts last three to five years) gives IMEC the incentive to focus on ideas that help advance chipmaking as a whole rather than any firm in particular.A case in point is the development of extreme ultraviolet lithography (EUV). EUV is a delicate process involving high-powered lasers, molten tin and ultra-smooth mirrors. The bus-sized machines that generate EUV are today all made by ASML and used by TSMC and Samsung, a South Korean chipmaker. It took 20 years of R&D to turn the idea into manufacturing reality. IMEC acted as a conduit in that process. That is because EUV must work seamlessly with kit made by other firms. Advanced toolmakers want a way to circulate their intellectual property (IP) without the large companies gaining sway over it. The large companies, meanwhile, do not want to place all their bets on any one experimental idea that is expensive (as chipmaking processes are) and could become obsolete.IMEC’s neutrality allows both sides to get around this problem. It collects all the necessary gear in one place, allowing producers to develop their technology in tandem with others. And everyone gets rights to the IP the institute generates. Mr Van den hove says that progress in the chip industry has been driven by the free exchange of knowledge, with IMEC acting as a “funnel” for ideas from all over the world.This model has lured ever more contributors. Today “several hundred” are active at IMEC at any one time, the institute says. They range from startups to the stars of the chipmaking firmament, from ASML to TSMC. Pat Gelsinger, Intel’s newish boss, is effusive in his praise for the outfit. Even as their number has grown, individual partners have also become more generous, in part to keep pace with the rising price of all the chipmaking equipment that IMEC must procure (even if it gets a lot of it from collaborators at reduced rates). As a result, IMEC’s revenues, which come from the research contracts and from prototyping and design services, doubled between 2010 and 2020, to €678m ($773m). Its annual takings are already on the order of those of giant charities such as the Ford Foundation or the American Cancer Society, and growing roughly in line with the booming chip business (see chart).The deepening rift between America, home to some of the industry’s biggest firms, and China, which imported $378bn-worth of chips last year, threatens IMEC’s spirit of global comity. China’s chip industry is increasingly shielded by an overbearing Communist Party striving for self-sufficiency, and ever more ostracised by outsiders as a result of American and European export controls. All this limits the extent to which IMEC can work with Chinese semiconductor companies.It is a matter of public record that IMEC has worked with Chinese firms in the past, including Huawei, a telecoms-gear giant with a chip division that has been hobbled by American sanctions, and SMIC, China’s biggest chipmaker. Chinese make up 3.5% of people working at IMEC, the fifth-largest group and ahead of Americans at 1.5%. IMEC has a unit in Shanghai. Still, no Chinese tools are visible in its basement. IMEC would not comment on individual partnerships but says it has “a few engagements with Chinese companies, however not on the most sensitive technologies, and always fully compliant with current European and US export regulations and directives”. Mr Van den hove adds that IMEC has no “major partnerships” with up-and-coming Chinese toolmakers.Less chipmaking know-how flowing to China and less streaming out of it means that Chinese engineers’ ideas can no longer be integrated with the global technology base of which IMEC is the custodian. There is little that IMEC can do about the growing distance between the Western and Chinese techno-spheres. So it is focusing instead on what it does best: pushing the cutting-edge of chip manufacturing.A hulking machine made by SUSS MicroTec, a German firm, scans chips to create a 3D image so that multiple processors can be aligned and affixed—fiddly business at nanometre scales. Elsewhere in the building Peter Peumans, who runs IMEC’s health-tech portfolio, hands over a prototype developed during the pandemic that uses a custom silicon chip to cut DNA-sequencing times from hours to minutes. Xavier Rottenberg is developing semiconductor-based ultrasound sensors that can be printed out using the technology to make flat-screen TVs, which may lead to More