Economic

US funds Rocket Lab $23.9 million for space semiconductor production

On Tuesday, the US Commerce Department announced plans to award Rocket Lab $23.9 million to significantly boost the production of compound semiconductors used in satellites and spacecraft. This funding aims to increase the production of space-grade solar cells by 50% over the next three years, bolstering the supply chain for critical space technologies. The funds come from the Biden administration’s $52.7 billion chip manufacturing and research subsidy program, benefiting major companies like Samsung, Intel, and TSMC.

In addition to federal support, the State of New Mexico has committed $25.5 million in financial assistance and incentives to help Rocket Lab expand its Albuquerque facility. Rocket Lab, founded in 2006 by New Zealander Peter Beck, specialises in producing highly efficient, radiation-resistant space-grade solar cells. These solar cells are essential for powering various US space programs, including missile awareness systems, the James Webb Space Telescope, and NASA’s Artemis lunar explorations.

Commerce Secretary Gina Raimondo emphasised the importance of solar cells in maintaining communication and space technology operations. The $23.9 million award will help Rocket Lab meet the growing demand for these components from the US military, NASA, and the commercial space industry. The expansion in Albuquerque is expected to create over 100 manufacturing jobs and enhance the company’s capacity to support US space missions.

Rocket Lab has secured numerous federal contracts worth hundreds of millions of dollars for satellite production and spacecraft launches. The proposed investment, which could be adjusted after further review by the Commerce Department, will also allow Rocket Lab to claim up to 25% in investment tax credits for qualified capital expenditures, part of the broader benefits provided by the Chips Act.

China releases draft rules to promote ‘cross-border’ e-commerce

China’s Ministry of Commerce has announced draft rules aiming to expand e-commerce businesses that trade across borders, including promoting the construction of overseas warehouses. E-commerce companies will be supported by national ministries and government departments, helping them ‘go global’, the ministry said. Beyond spreading its reach outwards, the draft rules aim to regulate inbound trade by improving data management and optimising export supervision as well.

Why is this important?

These draft rules come at a crucial point when local e-commerce has been facing a more general macroeconomic slow down, and when cross-border trade has been growing exponentially. That same growth has pushed regulators beyond China to consider stricter rules for large e-commerce firms. The EU has recently done so against online marketplace Temu. 

Chipmaker Intel reportedly halts $25 billion Israel plant

In a significant development for both the technology and geopolitical landscapes, Intel has reportedly halted its plans to expand a factory in Israel, a project initially valued at $25 billion. That decision, first reported by Israeli media, comes as a blow to the Israeli tech industry and raises questions about the future of major international investments in the region.

Intel, one of the world’s leading semiconductor manufacturers, has a longstanding presence in Israel, with multiple facilities that play a crucial role in the company’s global operations. The proposed factory at Intel’s Kiryat Gat site was intended to be a crucial component of Intel’s strategy to strengthen the global supply chain, complementing investments in Europe and the United States. Intel’s Kiryat Gat plant, known as Fab 28, currently produces 10-nanometer chips, labeled as Intel 7 technology. The new Fab 38 plant was slated to open in 2028 and operate through 2035. Intel employs nearly 12,000 people in Israel, and the suspension of this project raises concerns about future employment and economic stability.

While Intel has not officially confirmed the reasons behind the halt, several factors are believed to have influenced the decision, such as geopolitical tensions, economic considerations, and regulatory environment. Despite the halt, Intel emphasized its ongoing commitment to Israel, stating that ‘Israel continues to be one of our key global manufacturing and R&D sites and we remain fully committed to the region.’ The company acknowledged that managing large-scale projects in the semiconductor industry requires flexibility in timelines, driven by business conditions, market dynamics, and responsible capital management.

Why does it matter?

Israeli officials have yet to comment on the reports, but there is likely to be considerable concern over the potential economic and reputational impacts. Efforts to negotiate and address Intel’s concerns might be on the horizon to revive the project or mitigate the fallout. For Intel, this move might be part of a broader strategic realignment. The company has been undergoing significant changes under the leadership of CEO Pat Gelsinger, focusing on boosting its manufacturing capabilities in the US and other regions. The shift could reflect a more cautious approach to international investments, prioritising regions with more predictable political and economic climates.

India’s EU-inspired antitrust law raises concerns among tech giants

India’s recent legislative push to implement antitrust laws like those in the EU has stirred significant concern among technology giants operating within the country, like Google, Meta, Apple and Amazon. That move, aimed at curbing the dominance of big tech companies and fostering a more competitive market environment, was met with a mixed reception, particularly from those within the technology sector.

The proposed antitrust law draws inspiration from the regulatory framework of the EU, which has been at the forefront of global antitrust enforcement. The EU’s regulations are known for their rigorous scrutiny of large tech corporations, often resulting in major fines and operational restrictions for companies that violate competition laws. Adaptation of this model in India signals a shift towards more assertive regulatory practices in the tech industry.

The Indian government is examining a panel’s report proposing a new ‘Digital Competition Bill‘ to complement existing antitrust laws. The law would target ‘systemically significant digital’ companies with a domestic turnover exceeding $480 million or a global turnover over $30 billion, along with a local user base of at least 10 million for its digital services. Companies would be required to operate in a fair and non-discriminatory manner, with the bill recommending a penalty of up to 10% of a company’s global turnover for violations, mirroring the EU’s Digital Markets Act. Big digital companies would be prohibited from exploiting non-public user data and from favoring their own products or services on their platforms. Additionally, they would be barred from restricting users’ ability to download, install, or use third-party apps in any way, and must allow users to select default settings freely.

Both domestic and international tech firms have voiced concerns about the potential impact of these regulations on their operations. A key US lobby group has already opposed the move, fearing its business impact. The primary worry is that the new laws could stifle innovation and place difficult compliance burdens on companies. That sentiment echoes the broader global debate on the balance between regulation and innovation in the tech sector.

Why does it matter?

  •  Market Dynamics: These laws could significantly alter the competitive landscape in India’s tech industry, making it easier for smaller companies to challenge established giants. 
  • Consumer Protection: Robust antitrust regulations are designed to protect consumers from monopolistic practices that can lead to higher prices, reduced choices, and stifled innovation. Ensuring fair competition can enhance consumer welfare.
  • Global Influence: By aligning its regulatory framework with that of the EU, India could influence how other emerging markets approach antitrust issues.
  • Investment Climate: Clear and consistent regulatory standards can attract foreign investment by providing a predictable business environment. However, the perceived stringency of these laws could also deter some investors concerned about compliance costs and regulatory risks.

Musk vows to ban Apple devices if they use OpenAI tech

Elon Musk, the billionaire CEO of Tesla, SpaceX, and the social media company X announced on Monday that he would ban Apple devices from his companies if Apple integrates OpenAI technology at the operating system level. Musk called this move an ‘unacceptable security violation’ and declared that visitors would have to leave their Apple devices in a Faraday cage at the entrance to his facilities.

The statement followed Apple’s announcement of new AI features across its apps and operating platforms, including a partnership with OpenAI to incorporate ChatGPT technology into its devices. Apple emphasised that these AI features are designed with privacy at their core, using both on-device processing and cloud computing to ensure data security. Musk, however, expressed scepticism, arguing that Apple’s reliance on OpenAI undermines its ability to protect user privacy and security effectively.

Industry experts, such as Ben Bajarin, CEO of Creative Strategies, believe that Musk’s stance is unlikely to gain widespread support. Bajarin noted that Apple aims to reassure users that its private cloud services are as secure as on-device data storage. He explained that Apple anonymises and firewalls user data, ensuring that Apple itself does not access it.

Musk’s criticism of OpenAI is not new; he co-founded the organisation in 2015 but sued it earlier this year, alleging it strayed from its mission to develop AI for the benefit of humanity. Musk has since launched his own AI startup, xAI, valued at $24 billion after a recent funding round, to compete directly with OpenAI and develop alternatives to its popular ChatGPT.

Trump positions himself as ‘crypto president’ at San Francisco fundraiser

At a San Francisco fundraiser, Republican presidential candidate Donald Trump positioned himself as a strong supporter of cryptocurrency and criticised Democrats’ regulatory efforts. The event, held at tech venture capitalist David Sacks’ home, raised $12 million. Trump declared he would be the ‘crypto president,’ according to tech executive Trevor Traina, but did not detail his policy plans.

President Joe Biden’s administration has been working on regulating digital assets to protect consumers, with an executive order in 2022 prompting agencies like the SEC to address crypto risks. White House spokesperson Robyn Patterson stated the administration supports innovation while aiming to safeguard consumers.

Jacob Helberg, an adviser to Palantir, mentioned Trump promised to halt regulatory actions against crypto if he was re-elected as US president. The fundraiser saw attendance from notable crypto figures, including executives from Coinbase and the Winklevoss twins, though representatives from their company, Gemini, did not comment. Sacks and Palihapitiya have been vocal about their crypto investments, particularly in Bitcoin. The event also highlighted the fallout from the FTX exchange scandal, where founder Sam Bankman-Fried was convicted of stealing customer funds to donate over $100 million to political campaigns.

Why does it matter?

The crypto industry is increasingly seeking political influence due to heightened regulatory scrutiny, following major firm bankruptcies in 2022. Despite San Francisco’s liberal leaning, many local venture capitalists and crypto investors back Trump, criticizing what they see as excessive regulation.

LinkedIn disables targeted ads tool to comply with EU regulations

In a move to align with EU’s technology regulations, LinkedIn, the professional networking platform owned by Microsoft, has disabled a tool that facilitated targeted advertising. The decision comes in adherence to the Digital Services Act (DSA), which imposes strict rules on tech companies operating within the EU.

The move by LinkedIn followed a complaint by several civil society organizations, including European Digital Rights (EDRi), Gesellschaft für Freiheitsrechte (GFF), Global Witness, and Bits of Freedom, to the European Commission. These groups raised concerns that LinkedIn’s tool might allow advertisers to target users based on sensitive personal data such as racial or ethnic origin, political opinions, and other personal details due to their membership in LinkedIn groups.

In March, the European Commission had sent a request for information to LinkedIn after these groups highlighted potential violations of the DSA. The DSA requires online intermediaries to provide users with more control over their data, including an option to turn off personalised content  and to disclose how algorithms impact their online experience. It also prohibits the use of sensitive personal data, such as race, sexual orientation, or political opinions, for targeted advertising. In recent years, the EU has been at the forefront of enforcing data privacy and protection laws, notably with the GDPR. The DSA builds on these principles, focusing more explicitly on the accountability of online platforms and their role in shaping public discourse.

A LinkedIn spokesperson emphasised that the platform remains committed to supporting its users and advertisers, even as it navigates these regulatory changes. “We are continually reviewing and updating our processes to ensure compliance with applicable laws and regulations,” the spokesperson said. “Disabling this tool is a proactive step to align with the DSA’s requirements and to maintain the trust of our community.” EU industry chief Thierry Breton commented on LinkedIn’s move, stating, “The Commission will monitor the effective implementation of LinkedIn’s public pledge to ensure full compliance with the DSA.” 

Why does it matter?

The impact of LinkedIn’s decision extends beyond its immediate user base and advertisers. Targeted ads have been a lucrative source of income for social media platforms, allowing advertisers to reach niche markets with high precision. By disabling this tool, LinkedIn is setting a precedent for other tech companies to follow, highlighting the importance of regulatory compliance and user trust.

Apple to showcase AI innovations at developer conference

At Apple’s annual developer conference on Monday, the tech giant is anticipated to unveil how it’s integrating AI across its software suite. The integration includes updates to its Siri voice assistant and a potential collaboration with OpenAI, the owner of ChatGPT. With its reputation on the line, Apple aims to reassure investors that it remains competitive in the AI landscape, especially against rivals like Microsoft.

Apple faces the challenge of demonstrating the value of AI to its vast user base, many of whom are not tech enthusiasts. Analysts suggest that Apple needs to showcase how AI can enhance user experiences, a shift from its previous emphasis on enterprise applications. Despite using AI behind the scenes for years, Apple has been reserved in highlighting its role in device functionality, unlike Microsoft’s more vocal approach with OpenAI.

The spotlight is on Siri’s makeover, which is expected to enable more seamless control over various apps. Apple aims to make Siri smarter by integrating generative AI, potentially through a partnership with OpenAI. The move is anticipated to improve user interactions with Siri across different apps, enhancing its usability and effectiveness. Also, Apple recently introduced an AI-focused chip in its latest iPad Pro models, signalling its commitment to AI development. Analysts predict that Apple will provide developers with insights into leveraging these capabilities to support AI computing. Additionally, reports suggest Apple may discuss its plans for using its chips in data centres, which could enhance cloud computing capabilities while maintaining privacy and security features.

The Apple Worldwide Developers Conference (WWDC 2024) will run until Friday, offering developers insights into app updates and new tools. Investors are hopeful that Apple’s AI advancements will drive sales of new iPhones and boost the company’s competitive edge amid fierce global competition.

New York files lawsuit over $1 billion crypto scams targeting immigrants

New York Attorney General Letitia James has filed a lawsuit against NovaTech Ltd and AWS Mining Pty Ltd, accusing them of defrauding immigrant communities, particularly Haitians, out of over $1 billion. The suit alleges that these companies lured investors with promises of high returns, leveraging religious faith to gain trust. Instead of using the funds for legitimate trading, the majority was funneled into pyramid and Ponzi schemes by paying existing investors with funds collected from new ones. AWS Mining and its promoters, Cynthia and Eddy Petion, James Corbett, Martin Zizi, and Frantz Ciceron, promised investors 15 to 20 percent monthly returns, 200 percent returns on investments within 15 months, and bonuses for recruiting new investors.

However, the company failed to generate sufficient returns to pay these promised profits and bonuses, leading to its collapse in 2019 and causing millions of dollars in losses. Following AWS Mining’s collapse, Cynthia and Eddy Petion launched NovaTech, continuing to lure investors with promises of high returns and recruitment bonuses. They targeted minority communities, particularly Haitians, using prayer groups and WhatsApp chats, often advertising in Creole and using religious messages. James said Cynthia Petion branded herself ‘Reverend CEO’ and told investors that NovaTech was ‘God’s vision’, but privately called herself the ‘Zookeeper’ and belittled her investors as a ‘cult’ where ‘they just agree with everything you say.’

NovaTech falsely marketed itself as a registered hedge fund broker, misrepresented its licensing status in the US, and advertised high trading profits. Despite market conditions, NovaTech claimed to pay weekly trading profits, but these were fabricated, with payments coming from new investors’ funds. NovaTech collapsed in May 2023, leaving tens of thousands of investors unable to withdraw their cryptocurrency. Investigation by the Office of the Attorney General (OAG) found that from 2019 to 2023, investors deposited over a billion dollars, but less than $26 million was actually traded. The lawsuit seeks restitution, civil penalties, and a ban on their participation in the securities industry.

Why does it matter?

The following case sheds light on the susceptibility of immigrant communities to financial scams, particularly within the relatively unregulated cryptocurrency sector. James said in a statement that they’re ‘seeing the real dangers of unregulated cryptocurrency platforms with schemes like these.’  By exploiting religious faith and community trust, these fraudulent schemes inflict severe financial harm, often devastating victims’ life savings. The lawsuit seeks to recover the lost funds and hold fraudulent actors accountable, highlighting the need for robust consumer protections and the necessity of enforcing regulations to safeguard vulnerable populations. 

EU banks’ increasing reliance on US tech giants for AI raises concerns

According to European banking executives, the rise of AI is increasing banks’ reliance on major US tech firms, raising new risks for the financial industry. AI, already used in detecting fraud and money laundering, has gained significant attention following the launch of OpenAI’s ChatGPT in late 2022, with banks exploring more applications of generative AI.

At a fintech conference in Amsterdam, industry leaders expressed concerns about the heavy computational power needed for AI, which forces banks to depend on a few big tech providers. Bahadir Yilmaz, ING’s chief analytics officer, noted that this dependency on companies like Microsoft, Google, IBM, and Amazon poses one of the biggest risks, as it could lead to ‘vendor lock-in’ and limit banks’ flexibility. These facts also imply the strong impact AI could have on retail investor protection.

Britain has proposed regulations to manage financial firms’ reliance on external tech companies, reflecting concerns that issues with a single cloud provider could disrupt services across multiple financial institutions. Deutsche Bank’s technology strategy head, Joanne Hannaford, highlighted that accessing the necessary computational power for AI is feasible only through Big Tech.

The European Union’s securities watchdog recently emphasised that banks and investment firms must protect customers when using AI and maintain boardroom responsibility.

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