[aurareturn]

  We have seen plenty of examples in other industries where you can never really stop investing a ton on R&D with diminishing returns (like in semiconductors or pharma), because the moment you stop newcomers overtake you.

In semiconductors, it almost always become a monopoly or dupoly. x86 CPUs - only AMD and Intel left. Discrete gaming GPUs - only Nvidia and AMD left. 5G chips - only Qualcomm left in western market but Apple is about to join the part. In advanced chip node - only TSMC but Samsung and Intel survive due to geopoltics.

I think you're proving my point. Eventually, R&D heavy industries almost always become a monopoly or duopoly. Small/losing players can't keep up and drop out or acquired.

[oersted]

Check their R&D expenditures and profit margins, they are quite poor.

Their revenue has always been sustained by the fact that their technology needs to be constantly replaced because it keeps getting better. The moment it stops getting better, the replacement rates plummet and so do their revenues.

I'm not counting Nvidia because they don't produce semiconductors themselves, they are a different kind of business.

They are indeed an example of those that cater to consumers and/or build popular products based on foundational tech from others, like Apple or Sony, which do tend to be quite profitable.

But the actual deep-tech semiconductor firms? They may be critical to the world economy, but they don't actually make that much money comparatively. I believe AI has a lot of the same characteristics.