Capacity development

AI-generated Ghibli-style images overwhelm OpenAI servers

OpenAI has imposed temporary rate limits on image generation using its latest GPT-4o model after an online surge in Studio Ghibli-inspired images strained its servers.

The move follows the company’s decision to restrict free users from generating images with the new model due to overwhelming demand. OpenAI’s CEO, Sam Altman, said the rapid increase in image requests was pushing the company’s server capacity, joking that it could be ‘melting’ GPUs.

The restrictions are aimed at optimising system efficiency, with OpenAI working on fine-tuning performance. While some ChatGPT users may experience denied requests, Altman assured that the limitations should be lifted soon.

Free users will eventually regain the ability to generate up to three images per day, but no timeline has been provided.

Despite the restrictions, the internet remains flooded with AI-generated images in the distinctive art style of Studio Ghibli, known for films like My Neighbor Totoro.

The GPT-4o model has proven highly effective at recreating detailed scenes in various artistic styles, further fuelling the trend. The viral phenomenon has also sparked discussions on copyright, fair use, and AI’s role in digital art.

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CoreWeave scales back IPO with lower share price

CoreWeave, the Nvidia-backed AI infrastructure company, has reduced the size of its US initial public offering (IPO) and priced its shares below the initial range, raising concerns over investor interest in AI infrastructure.

The company will offer 37.5 million shares, 23.5% fewer than originally planned, with shares priced at $40 each, well below the lower end of the expected price range.

Despite strong backing from Nvidia, which committed to a $250 million order, the IPO has faced a tepid reception due to concerns about CoreWeave’s long-term growth and capital-intensive business model.

Investors have expressed worries over the company’s reliance on Microsoft’s shifting AI strategy, which could affect demand for its GPU chips. Additionally, CoreWeave’s high debt levels and lack of profitability have raised doubts about its financial sustainability.

The reduced IPO comes at a time when the US IPO market is struggling, with fewer equity deals and lower transaction values in 2024 compared to last year.

CoreWeave’s stock market debut, once seen as a test for the AI infrastructure market, now signals waning investor confidence in AI companies, especially those without a proven profit history.

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US airlines struggle as travel demand drops

Just months after predicting a booming future, US airlines are now grappling with economic uncertainty as rising tariffs and government spending cuts dampen travel demand. Consumers and businesses are cutting back on trips, forcing major carriers to lower profit forecasts for the first quarter.

The industry’s outlook for the rest of the year has also dimmed as fears of slow economic growth and high inflation persist.

The S&P 500 passenger airlines index has fallen 15% this year, with stocks of major carriers like Delta and United dropping around 20%. With demand slowing, airlines have begun reducing flight schedules to avoid fare cuts and protect profit margins.

Several airlines, including Delta, United, and American Airlines, have trimmed their April-to-June capacity, while United’s CEO has warned of further cuts if demand does not recover by late summer.

Adding to the industry’s woes, concerns over airline safety have surged, contributing to the travel slowdown. Meanwhile, US consumer confidence has plunged to a four-year low, and airfares posted their first year-on-year decline in six months.

While airlines remain hopeful that full-year earnings targets will hold, sustained weak demand during the peak summer season could force further adjustments.

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AI chip production to benefit from Rapidus and Quest Global alliance

Japanese chipmaker Rapidus Corporation has announced a strategic partnership with Singapore-based engineering firm Quest Global to develop advanced artificial intelligence semiconductors.

The collaboration focuses on producing low-power, high-performance chips using cutting-edge 2-nanometre technology.

Quest Global will support Rapidus and its clients by designing these next-generation AI chips.

The partnership is also expected to expand Rapidus’s customer reach by tapping into Quest Global’s broad international client base, enabling both companies to deliver new products to established and emerging markets.

Rapidus aims to begin pilot production of the new chips in April at a new facility under construction in Hokkaido, Japan, with mass production planned for 2027.

The move forms part of Japan’s broader effort to revitalise its semiconductor industry amid increasing global supply chain concerns.

Founded in 2022 with investment from major Japanese firms including Toyota and Sony, Rapidus was created to strengthen domestic chip manufacturing and reduce reliance on foreign suppliers in an era of growing geopolitical uncertainty.

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ECB warns Euro zone banks on geopolitical risks

Euro zone banks must remain resilient and prepared for geopolitical shocks, including the risk of liquidity drying up amid volatile financial markets, according to Claudia Buch, the European Central Bank’s supervisory chief.

She highlighted concerns about the potential impact of policy reversals by the US government, particularly under President Donald Trump, which have unsettled investors and created uncertainty about future growth and stability.

Buch also pointed to the ongoing financial and political pressures arising from Russia’s war in Ukraine and the sanctions that followed.

She emphasised the need for banks to maintain sufficient capital, robust governance, and effective risk management systems in the face of potential asset quality deterioration and economic disruptions caused by geopolitical conflicts or sanctions.

Additionally, Buch noted the increasing threat of cybersecurity attacks, which have become more frequent and severe. The ECB’s annual report warned that geopolitical risks could strain liquidity and funding, particularly in foreign currencies, leading to higher borrowing costs and increased use of credit lines.

Buch called for progress in creating a crisis management and deposit insurance framework to protect depositors in the event of bank failures.

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China faces Nvidia chip shortages

Chinese server manufacturer H3C has warned of potential shortages of Nvidia’s H20 chip, the most advanced AI processor still legally available in the country under US export controls.

In a notice to clients, the company revealed that its stock of H20 chips was nearly depleted, citing geopolitical tensions as a major factor affecting global supply chains.

New shipments are expected by mid-April, but future availability remains uncertain due to ongoing trade restrictions and supply disruptions.

The demand for H20 chips has surged, particularly as companies race to integrate AI models developed by Chinese startup DeepSeek.

Major tech firms such as Tencent, Alibaba, and ByteDance have significantly increased their orders, leading to further strain on supply.

H3C stated that future chip distribution will prioritise long-term, high-margin customers under a profit-first approach, raising concerns among smaller buyers about access to the critical technology.

The H20 was introduced after the US tightened export controls on high-performance AI chips in October 2023, blocking Nvidia’s most advanced processors from the Chinese market.

Washington has restricted such exports since 2022, citing national security concerns over China’s potential military applications of AI technology.

Despite these measures, Nvidia has reportedly shipped around one million H20 units in 2024, generating more than $12 billion in revenue. Meanwhile, domestic alternatives from Huawei and Cambricon are emerging as potential substitutes amid the ongoing supply crunch.

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Trump weighs tariff cuts to secure TikTok deal

US President Donald Trump has indicated he is willing to reduce tariffs on China as part of a deal with ByteDance, TikTok’s Chinese parent company, to sell the popular short-video app.

ByteDance faces an April 5 deadline to divest TikTok’s US operations or risk a nationwide ban over national security concerns.

The law mandating the sale stems from fears in Washington that Beijing could exploit the app for influence operations and data collection on American users.

Trump suggested he may extend the deadline if negotiations require more time and acknowledged China’s role in the deal’s approval. Speaking to reporters, he hinted that tariff reductions could be used as leverage to finalise an agreement.

China’s commerce ministry responded by reaffirming its stance on trade discussions, stating that engagement with Washington should be based on mutual respect and benefit.

The White House has taken an active role in brokering a potential sale, with discussions centring on major non-Chinese investors increasing their stakes to acquire TikTok’s US operations. Vice President JD Vance has expressed confidence that a framework for the deal could be reached by the April deadline.

Free speech advocates, meanwhile, continue to challenge the law, arguing that banning TikTok could violate the First Amendment rights of American users.

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Anduril confident in Trump-era defence priorities

Anduril, the AI-powered defence start-up founded by Palmer Luckey, is optimistic about the Trump administration’s approach to defence reform.

Company president Christian Brose said the administration’s focus on innovation aligns with Anduril’s work in low-cost autonomous military systems. The firm recently partnered with OpenAI to integrate advanced artificial intelligence into national security missions.

Brose, a former adviser to Senator John McCain, has long criticised traditional defence procurement processes and believes the administration’s willingness to do things differently presents a major opportunity.

The company is expanding its global footprint, with plans to build manufacturing facilities outside the United States. Australia has emerged as a key market, with Anduril’s AI intrusion detection software being trialled at RAAF Base Darwin, where US Marines rotate annually.

The firm is also bidding to produce solid rocket motors for Australia’s Guided Weapons and Explosive Ordnance Enterprise.

Its Ghost Shark autonomous underwater system, developed in collaboration with the Australian Defence Force, is moving towards large-scale production, with a dedicated facility planned in New South Wales.

Autonomous military technology is a growing focus under the AUKUS treaty, which will see Australia invest heavily in nuclear-powered submarines with the support from the United States and the United Kingdom.

Brose emphasised that both crewed and autonomous systems will play a role in modern defence strategies, with the advantage of autonomous platforms being their faster production, larger deployment scale, and lower cost.

Anduril’s continued expansion highlights the increasing demand for AI-driven defence solutions in a rapidly evolving global security landscape.

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OpenAI unveils new image generator in ChatGPT

OpenAI has rolled out an image generator feature within ChatGPT, enabling users to create realistic images with improved accuracy. The new feature, available for all Plus, Pro, Team, and Free users, is powered by GPT-4o, which now offers distortion-free images and more accurate text generation.

OpenAI shared a sample image of a boarding pass, showcasing the advanced capabilities of the new tool.

Previously, image generation was available through DALL-E, but its results often contained errors and were easily identifiable as AI-generated. Now integrated into ChatGPT, the new tool allows users to describe images with specific details such as colours, aspect ratios, and transparent backgrounds.

The update aims to enhance creative freedom while maintaining a higher standard of image quality.

CEO Sam Altman praised the feature as a ‘new high-water mark’ for creative control, although he acknowledged the potential for some users to create offensive content.

OpenAI plans to monitor how users interact with this tool and adjust as needed, especially as the technology moves closer to artificial general intelligence (AGI).

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Google launches advanced Gemini 2.5 AI

Google has unveiled its new Gemini 2.5 AI models, starting with the experimental Gemini 2.5 Pro version.

Described as ‘thinking models’, these AI systems are designed to demonstrate advanced reasoning abilities, including the capacity to analyse information, make logical conclusions, and handle complex problems with context and nuance.

The models aim to support more intelligent, context-aware AI agents in the future.

The Gemini 2.5 models improve on the Gemini 2.0 Flash Thinking model released in December, offering an enhanced base model and better post-training capabilities.

The Gemini 2.5 Pro model, which has already been rolled out for Gemini Advanced subscribers and is available in Google AI Studio, stands out for its strong reasoning and coding skills. It excels in maths and science benchmarks and can generate fully functional video games from simple prompts.

It is also expected to handle sophisticated tasks, from coding web apps to transforming and editing code. Google’s future plans involve incorporating these ‘thinking’ capabilities into all of its AI models, aiming to enhance their ability to tackle more complex challenges in various fields.

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