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Yea, it's already happened to some extent in the life science industry. It's part of the reason our biotech industry is in shambles. Many of the companies I wor
by Avicebron 6y ago
Yea, it's already happened to some extent in the life science industry. It's part of the reason our biotech industry is in shambles. Many of the companies I work with dream of "going virtual", doing research at an unaffiliated lab, taking credit, moving that research to a massive CMO, then dissolving any physical assets, layoffs, and then there is a just a board, execs and profit. It's totally destructive to actual human progress.
- narrator 6y agoI don't think outsourcing manufacturing is destructive of human progress. You got huge companies like AMD and NVIDIA , who certainly contribute to human progress, who outsource all their manufacturing to TSMC because only a few companies worldwide can make those kinds of semiconductors.
- dbuder 6y agoBad example, cutting edge semiconductors are not like anything else. Even drug research.
- HarryHirsch 6y agoBack then, Commodore had an advantage over the competition because they had MOS Technologies as a subsidiary and could rapidly iterate on hardware design. Same in the life sciences business. Nothing is easier than dreaming up a compound, but then you encounter reality, some compounds may be difficult to access synthetically, there are unexpected interactions, and these issues are best sorted out when synthetic chemistry, crystallographic support and the life sciences people are all in the same building. Fabless just doesn't work well outside semiconductors.
- azinman2 6y agoWhich is why the trend with Apple is to do everything in-house (SoC, etc). Tight vertical integration facilitates difficult software-hardware technologies.
- narrator 6y agoThis reminds me of Standard Oil back in the 19th century. They had so much cash floating around that they could build big integrated refineries, railroad and pipeline infrastructure which contributed heavily to efficiency. The price of Kerosene dropped 80% during the history of the company.
- crispyambulance 6y agoAdmittedly there's something to be said for outsourcing MFG to someplace like TSMC. But they still employ engineers to design the chips and maintain deep technical talent. I was thinking more along the lines of companies that are little more than a layer of product managers and operations folks just managing vendors and service providers that do ALL the work.
- sjg007 6y agoBiotech startups are usually formed around a drug or biological to hedge the risk of preclinical and early trial work. These are usually developed with some kind of novel process. Usually you get a small early IPO if things work out at that stage to raise working capital. This happens because most traditional VCs won’t fund this type of biotech. That’s changing somewhat. Then the company sells to a major pharma or biotech if the product works out.