Location: Boardroom, Volta SA headquarters (Ivry-sur-Seine).
Date: February 1, 1993.
Viewpoint: Omniscient (Focus on the Board of Directors).
The icy February rain lashed against the bulletproof windows of the Council Chamber, on the top floor of the bunker in Ivry-sur-Seine. Inside, the temperature seemed to have plummeted several degrees. The atmosphere was neither one of triumphant victor's arrogance nor post-crisis relief.
It was one of cold, analytical dissection.
The hum of the overhead projector was the only sound that disturbed the heavy silence of the room. On the large white screen unrolled at the back of the room, the Financial Director of Volta SA, a man in his fifties whose face betrayed months of sleepless nights, had just displayed the final slide of the consolidated balance sheet for the 1992 financial year.
Sitting at the end of the table, with his hands clasped in front of his face, Lazare Bonaparte gazed at the screen with the impassivity of a reptile.
In the Western business press, from the Wall Street Journal to Les Échos, Volta SA was portrayed as a bottomless well of cash, the new dazzling star of global technology. Analysts raved about this imperial conglomerate that dictated its terms to American and Japanese giants.
The illusion of absolute wealth was perfect.
But in the closed setting of this room, facing the accounting lines projected in green characters on a black background, the vertigo was total.
« Gentlemen, » announced the Chief Financial Officer, clearing his throat, « the results of this year-end are… brutal. For the first time since our company was founded, our net cash flow has come dangerously close to the breaking point.
We've had a close call. »
A worried murmur rippled through the assembly of senior executives. Lazarus, however, did not flinch.
The financier pressed the remote control, displaying the details of the capital inflows. The revenue figures were nonetheless monumental, almost unreal for a company whose founder was barely twenty-six years old.
« Let's start with our positive cash flows, which remain historically high, » continued the Chief Financial Officer, pointing a laser beam at the first column. « Our operating income is driven by three massive pillars.
First, our consumer division. The SONG 0.5 graphics chip is a resounding success in Asia. It now powers the vast majority of Japanese arcade machines and has been integrated by Sega and Sony into their core architectures.
The royalties we collect on each unit sold brought us 1.2 billion Swiss francs net this year. »
He paused, letting the figure sink in. One billion two hundred million francs in intellectual property rights alone. It was a windfall that few companies in the world could boast of possessing.
« This cash flow is vital, the financier explained, because it allows us to absorb the enormous research and development costs of our future chip, the SONG-III, which is currently a pure financial drain for our laboratories. »
The laser beam descended a line.
Secondly, the microprocessor division. The exclusive agreement with Compaq to equip their workstations with our VESLA chips is running at full capacity. Shipments generated 2.5 billion francs in revenue.
Finally, our raw materials and rare earth mining subsidiary, which secures our upstream supply chain, is now generating an operating profit of 800 million francs by selling its surpluses on the open market.
The Chief Financial Officer lowered his pointer. The sum of these incoming funds easily exceeded four and a half billion francs. On paper, Volta SA was printing its own currency with formidable efficiency.
It was the war chest of a rapidly expanding empire.
« That's an exceptional volume of receipts, » the financier concluded, his voice suddenly darkening. « And yet, Mr. President... it's not enough. »
He clicked on his remote control. The slide changed, replacing the revenue column with the expenses, capital investments, and operating costs for the year 1992.
The displayed curve plunged towards the abyss with the violence of a plane in a dive.
The executives around the mahogany table paled. The engineer with the coal-black eyes kept his hands folded, knowing full well what the columns would reveal. The war he had waged against the American embargo had demanded an unprecedented financial sacrifice.
He had gambled the survival of his empire on everything, and the bill had just arrived.
The Chief Financial Officer placed both hands on the edge of the lectern. There was no more time for complacency. He had to lay bare the anatomy of an accounting disaster that only the paranoid genius of their CEO could have conceived.
« Our exceptional revenues were literally wiped out by our capital expenditures in 1992, » he declared, his voice echoing in the anxious silence of the Council chamber. « And the primary culprit behind this hemorrhage has a code name you all know: Operation Scavenger. »
Several members of the board swallowed hard. Operation Scavenger was the best-kept secret in Ivry-sur-Seine.
« When the Soviet Union collapsed in December 1991, » the financier recalled, « Mr. Bonaparte ordered a radical raid on the remnants of the Eastern military-industrial complex. You thought we merely exfiltrated Dr.
Volkov and his twenty-two scientists to establish our Memory Division? That was just the tip of the iceberg. »
The laser pointer circled a line item for expenses classified under an obscure heading of intellectual property acquisitions.
« To ensure that our future RAM wouldn't infringe any American patents, we had to buy up entire sections of Russian research institutes under the table, » he continued, relentless. « We acquired tens of thousands of Soviet patents, authors' certificates, entire archives of the NIIME in Moscow and the LETI in Leningrad.
We had to bribe bankrupt Russian officials, charter unmarked cargo planes to repatriate heavy lithography equipment, and buy the silence of the local mafias that were taking control of Zelenograd. Operation Scavenger cost us nearly two and a half billion francs in untraceable cash. »
Lazare, still motionless at the end of the table, gave a very slight blink. This was the price of raw knowledge. Soviet knowledge, purged of all Western influence, was worth far more than gold.
« But this abyss is nothing compared to our response to the American embargo, » the Chief Financial Officer continued, changing slides. « Operation Memory Shield, orchestrated by Washington last spring, cut us off from our Asian suppliers.
Our President's directive was immediate: total self-sufficiency. And this self-sufficiency has a name. »
An aerial photograph of a huge muddy construction site, located on the banks of the Rhine, appeared on the screen.
« The Strasbourg MegaFab, » the financier announced with a solemnity tinged with dread. « To manufacture our own chips, we had to partner with Siemens and Krupp to build the most advanced cleanroom in Europe.
The capital investments, the famous CapEx, required for this project are colossal. Buying ultraviolet lithography equipment, pouring earthquake-resistant foundations, pressurizing tens of thousands of square meters to Class 10… The total bill comes to nearly eight billion francs.
And we had to pay out more than half of it in 1992 alone, even though the factory won't produce its first silicon wafer until next year! It's a pure and simple financial bonfire. »
The assembly was petrified. The figures piled up, crushing the company's otherwise staggering revenues.
« Add to that the price of our hypergrowth, » the CFO concluded monotonously, as if reading a eulogy. « Our payroll has exploded by 400 percent in a single year. Our R&D labs run around the clock, consuming electricity that would put a medium-sized city to shame.
Maintaining the physical security of this bunker, the armed guards, the hardening of our communication networks… Our structural operating costs have tripled. »
He switched off the overhead projector. The room was briefly plunged into semi-darkness, before the fluorescent lights on the ceiling flickered back on.
The money man turned to Lazare Bonaparte, his gaze betraying a mixture of accounting terror and morbid admiration.
« The calculation is simple, Mr. President. The exorbitant expenses of 1992 swallowed up our entire four and a half billion francs in revenue.
But they also completely depleted our cash reserves accumulated since the creation of Volta SA. Theoretically, if we were to close and liquidate today... this company would show a net deficit of over three billion francs.
We spent money we didn't yet have. »
A heavy, leaden silence fell over the mahogany table. The executives, usually so quick to celebrate the technological victories of their young boss, were becoming aware of the razor's edge on which they were dancing.
Volta SA was not a serene and untouchable empire. It was a warship hurtling at full speed through a minefield, its overheated engines threatening to explode at any moment as it tried to evade American torpedoes.
Pure material independence demanded capital of a destructive nature.
Lazare slowly uncrossed his hands and placed them flat on the cold leather of his blotter. His steely gaze swept over the pale faces of his lieutenants. He saw in their eyes only the fear of financial ruin, the anguish of bankruptcy, and the natural cowardice of the bourgeoisie in the face of debt.
« If we are virtually bankrupt, with a deficit of three billion francs, » one of the vice-presidents asked coldly, his throat tight, « how is it that the bailiffs aren't already at our door? How are we paying for the cement in Strasbourg and this month's salaries? »
The Chief Financial Officer gave a bitter, joyless smile and sat heavily back down in his chair. He looked at Lazare before answering the vice president.
« Because we're not a normal company, » he replied in a low voice. « We've become a matter of national importance. And the state has decided we're too big to fail. Too vital to sink. »
Location: Boardroom, Volta SA headquarters (Ivry-sur-Seine).
Date: February 1, 1993.
Point of view: Omniscient (Sliding focus on the Board of Directors and Lazare Bonaparte).
The silence that followed the Chief Financial Officer's announcement was as thick as stone. The very idea that Volta SA, Europe's technological flagship, was showing a theoretical deficit of three billion francs plunged the vice-presidents into a chilling stupor.
« Too big to fail, » one of the senior executives repeated slowly, as if trying to grasp an alien concept. « You're telling us the French state is covering our losses? »
Lazare Bonaparte, who hadn't blinked since the beginning of the presentation, finally spoke. His voice, deep and monotonous, swept away the anxious murmurs with the force of an icebreaker.
« The state is not just absorbing our losses. It is buying its own survival, » corrected the young CEO, fixing the assembly with his obsidian eyes.
He stood up from his seat, his dark silhouette standing out against the screen of the switched-off overhead projector.
« Don't let the red ink on these balance sheets intimidate you, gentlemen. This deficit isn't a commercial loss. It's the price of dominance.
François Mitterrand is applying strict Gaullist logic: France has no friends, only interests. By forcing us to design the cryptographic architecture of the European interbank network and the future Carte Bleue, the Élysée Palace has tied the continent's financial destiny to our servers.
We are the Republic's vault. Consequently, the State has given clear instructions to BNP and Crédit Lyonnais. Our lines of credit are unofficially unlimited. »
Lazare stepped towards the oval table, placing his hands flat on the varnished wood.
« We spent billions on Operation Scavenger, yes. We drained our own coffers to build the Strasbourg MegaFab and circumvent the American embargo of Operation Memory Shield. But look what we bought with that money.
Look what's being prepared on level -2 of that same building. »
Karim Belkacem, seated to Lazare's right, gave a thin, predatory smile. He knew perfectly well what the Russian researchers were hatching in the sterile laboratories.
« Dr. Yuri Volkov and his twenty-three ex-Soviet scientists, recruited from the ruins of the USSR Academy of Sciences, are not being paid to contemplate emptiness. They are writing the history of microelectronics. »
Lazare turned to a large whiteboard and grabbed a marker. With a swift gesture, he wrote a code name that would soon terrorize Silicon Valley: CELLA-64M.
« America thought it could suffocate us by buying up the Taiwanese and Japanese factories. It only forced us to adapt. The money we burned financed the Volta Memory Division. »
« Our tech spies have audited the work of the Volkov team, » Lazare explained, sketching a rudimentary diagram of a chip. « The dynamic memory they're finalizing is a masterpiece.
A 64-megabit synchronous DRAM, clocked at 66 MHz, designed with a native BBI interface for burst communication with our VESLA-III processors. Western industry won't adopt this synchronous standard for years. »
The Finance Director, forgetting for a moment his accounting woes, raised his head, captivated by the promise of this total material monopoly.
« But the most important thing isn't speed, » Lazare continued, tapping the board with the cap of his marker. « It's the intrinsic structure of the silicon.
Thanks to the money we invested, Volkov adapted a purely Soviet technology: the deep-trench memory cell. A capacity of 25 femtofarads, etched 7 micrometers deep into the substrate. This technology doesn't infringe on any IBM, Intel, or Texas Instruments patents whatsoever.
Zero US patents. We are completely free of any foreign intellectual property. »
A thrill of excitement ran through the boardroom. Possessing a memory free from American courts was the Holy Grail of European industry.
« Furthermore, » added Karim Belkacem, taking over the discussion, « this chip will integrate a SECDED error corrector directly on the die. In 1993, the industry required an external controller and additional chips to correct parity errors.
The CELLA-64M will do this natively, making our military and banking servers virtually impervious to data corruption. »
Lazare put down the marker. He looked at his executives, letting the silence absorb the magnitude of their technological achievement. The virtual bankruptcy was merely a ruse.
Volta SA had just bought itself an armor of invincibility. The acquired companies in the East were already beginning to be restructured and would soon be paying dividends to the parent company, gradually wiping out the deficit.
But the Builder's mask remained impassive. This was no time for celebration. Arrogance was a fatal weakness.
« The CELLA-64M will enter volume production in our MegaFab in Strasbourg in March 1994. At that time, our self-sufficiency in computing and RAM will be total. »
Lazare walked around the table, his dark silhouette casting a menacing shadow over the scattered financial statements.
And it is precisely at this moment that the White House will realize its embargo has failed. When they see the Ivry Ogre etching its own 0.4-micron memories onto the banks of the Rhine, panic will grip the Pentagon and Silicon Valley.
They will inevitably seek a new point of leverage. They will look for the next artery to sever to halt our growth.
He stopped at the end of the table, both fists firmly planted on the leather. His dark gaze, filled with a long-term strategic vision that frightened his own colleagues, swept across the assembly.
« You design a processor so that a computer can think. You add RAM so that it can calculate in real time. But all of that is just an empty shell if the machine cannot remember once the power is cut off. »
The young CEO allowed the truth to emerge.
« Storage, gentlemen, » Lazare declared in a deep, metallic voice. « Magnetic hard drives. Non-volatile memory. It's the Achilles' heel of our sovereign architecture. »
The executives exchanged worried glances. Until now, Volta SA had equipped its IMPERATOR servers with hard drives purchased from Anglo-Saxon or Asian suppliers, simply encrypting the data end-to-end via VoltaOS.
But the hardware itself was beyond their complete control.
« If the Americans decide to classify high-density hard drives as strategic military equipment and block their export to our factories, our servers won't boot anymore, » Lazare explained, dissecting the anatomy of their impending crisis.
« Without mass storage units, VoltaOS has nowhere to install itself. Our customers, from the DGA to Japanese conglomerates, will be left with unusable aluminum bricks. »
« But the hard drive market is incredibly complex, » protested an engineering director timidly. « It involves extremely high-precision mechanics, magnetic platters spinning at thousands of revolutions per minute, microscopic read/write heads… It's an overwhelming monopoly held by Seagate, Western Digital, and IBM.
We don't have the patents or the engineers to compete with thirty years of electromagnetic expertise! »
Lazarus glared at the engineer.
« We didn't have the patents for RAM last year. We didn't have the lithography plants for our processors three years ago. I'm not interested in mechanical excuses. »
He straightened up, the aura of the ruthless operator radiating into the air-conditioned room.
« Listen to me carefully, and adjust your budget forecasts accordingly, » ordered the CEO of Volta. « The development of the CELLA-64M will consume all of Yuri Volkov's lab's resources for the next year.
I refuse to dilute their efforts. RAM is the top priority for 1993. But as soon as the first silicon memory wafer rolls off the MegaFab furnaces in 1994, we will launch Operation Leviathan. »
Lazare spoke directly to the Human Resources Director and the Finance Director.
« As soon as RAM is finalized, I want you to open the recruitment floodgates with unprecedented aggressiveness. We will go back to scouring physics institutes around the world. If it means poaching IBM engineers in San Jose with millions of francs, do it.
If it means buying up the patents of bankrupt Japanese companies specializing in giant magnetoresistance, sign the checks. »
The specifications for the coming decade had just been set in stone by the board of directors.
« After RAM, permanent storage will be our next target for annihilation, » Lazarus declared, his voice as cold as steel. « We will design our own hard drives, our own input/output controllers, and we will launch research into solid-state flash memory data storage.
I want the entire data lifecycle, from its execution in the processor to its final archiving, to take place exclusively on hardware bearing the seal of Volta. »
The Finance Director closed his balance sheet. The three billion deficit was suddenly nothing more than a historical anecdote. Lazare Bonaparte wasn't looking back on the past year; he was already orchestrating the war of the next decade.
« So we close the 1992 financial year in the red, » the financier summarized, regaining his composure in the face of his boss's iron will. « But we open 1993 as a royal industrial powerhouse. »
« Exactly, » Lazare concluded. « This deficit is the price of our shield.
France paid so that we wouldn't be strangled by Washington. Now, get back to work. The Russians need every penny available to finalize CELLA before next spring. »