Brian McCullough (0:00)

Foreign welcome to the Techmeme write home for Monday, February 17, 2025. I'm Brian McCullough. Today the Vultures are circling Intel. If that's not too aggressive an analogy, OpenAI's board officially rejects Elon's bid. Zelle is quietly the biggest player in P2P payments. Everybody wants to go after robotics as the next big thing and why over a thousand tech unicorns are in trouble. Here's what you missed today in the world of tech. Here's something we've not spoken about in a while. Intel wither intel literally. Sources this weekend were saying TSMC is considering taking a controlling stake and fully running Intel's US Factories after a Trump administration request to do so, quoting Bloomberg. The arrangement may involve having major American chip designers take equity stakes, according to the person, along with support from the US Government. That means the venture wouldn't solely be owned by a foreign company. TSMC is the go to chip maker for Apple, Nvidia and other companies developing semiconductors that power AI algorithms. Still, the possible partnership could run into political hurdles not unlike those that have hamstrung a proposed acquisition of United States Steel by Japanese maker Nippon Steel Corp. A White House official said that the president is unlikely to support a foreign entity operating Intel's factories, end quote. Meanwhile, the Journal's sources say Broadcom Broadcom has informally explored a bid for Intel's chip design and marketing unit, but only if it could secure a partner for Intel's foundry business. Nothing has been submitted to intel, the people cautioned, and Broadcom could decide not to seek a deal. Separately, TSMC has studied controlling some or all of Intel's chip plants, potentially as part of an investor, consortium or other structure, according to people familiar with the discussions. Broadcom and TSMC aren't working together, and all of the talks so far are preliminary and large, largely informal. But the potential deals would have been unthinkable until Intel's recent struggles made it an acquisition target. The end result could be a breakup of intel after the American icon spent many decades dominating the business of making central processors for both personal computers and data centers. Splitting the company would also bring it in line with an industrial shift in recent decades towards specializing in either manufacturing or designing chips, but not both. Frank Yeary, the interim executive chairman of intel, has been leading the discussions with possible suitors and Trump administration officials who are concerned about the fate of a company seen as critical to national security, people familiar with the matter said. Yuri has been telling individuals close to him that he is most focused on Maximizing value for intel shareholders, the people said. So this is basically essentially what was feared, folks circling to pick off whatever parts of intel they find most attractive. And you know, this is why among the things the Journal points out, Intel's foundry business, the business they are trying to spin up to save themselves, lost over $13 billion on just $17.5 billion in revenue in 2024. Compare that to TSMC, which generated $41.1 billion in operating profit on $90 billion in revenue over the same period. OpenAI's board has formally rejected the $97.4 billion bid by Elon Musk and a consortium of investors to take over the nonprofit, saying they reject, quote, Musk's latest attempt to disrupt his competition. So I guess take that whole maybe they have a fiduciary duty to go with the highest bidder possibility off the table. Quoting the New York Times in a statement, Brett Taylor, the chairman of the OpenAI board, said OpenAI is not for sale and the board has unanimously rejected Mr. Musk's latest ATT disrupt, his competition. Mr. Taylor was referring to Mr. Musk's own AI company, Xai. OpenAI sent a letter on Friday to Mark Toboroff, the lawyer representing Mr. Musk and the investors making the bid, saying the offer was not in the best interest of OAI's mission, which is to build artificial intelligence that benefits all of humanity, Mr. Toboroff said in a statement to the New York Times. This comes as no surprise given that Sam Altman and Board Chair Taylor already rejected Musk's $97 billion bid while stating they had not yet received it. But we are surpr to see the board, which has strict fiduciary duties to carefully consider the bid in good faith on behalf of the charity. Use the same kind of deflective double talk Altman used in testifying to the senate, end quote. Mr. Toboroff insisted that OpenAI was indeed putting the nonprofits assets up for sale. They're just selling it to themselves at a fraction of what Musk has offered enriching board members, he said, rather than the charity. In a classic self dealing transaction, he added, will someone please explain how that benefits all of humanity, end quote? Saw this over the weekend and found it interesting. I'll see your square cash, I'll see your Venmo, I'll see your PayPal and I'll raise you Zelle, the peer to peer payment platform put together by a consortium of old school banks. Zelle's payment volume crossed $1 trillion in 2024 the most ever for a peer to peer platform, as its user base jumped 12% year on year to 151 million accounts and the total dollars sent grew 27% year on year. So again, another not often ballyhooed corner of the tech world quietly killing it. Quoting CNBC. Zelle, which was launched in 2017 in response to fintech platforms such as Venmo, PayPal and Cash App, has some key advantages over those players. EWS is owned by seven of the biggest US Banks, including JP Morgan, Chase, bank of America and Wells Fargo, and Zell allows for instant money transfers made within the apps of thousands of member institutions. Its growth rate last year exceeded that of PayPal, which reported that total peer to peer payments volumes reached more than $400 billion. Zelle's meteoric rise comes amid accusations that the network and the three biggest US Banks on it failed to properly investigate fraud complaints or give victims reimbursement. The company has introduced measures to reduce fraud and has said that 99.95% of transactions are free of fraud and scams. Growth Growth is being driven as bank customers increasingly use Zelle instead of cash or checks and as small businesses adopt the payment option, said Leonard. People are using Zelle in order to do things like pay the rent or paying the nanny, leonhard said. We want to continue to be top of mind for those consumers to be able to use this every day, leonhard added. End quote and while Shein and Temu have gotten the headlines, an analysis of credit and debit card data shows TikTok shop recently passed Shein and Temu in U.S. sales in January 2025, growing 153% to Shein's 26% and Temu's 28% growth. Of course, TikTok makes headlines for other reasons, but still, quoting Bloomberg, the popular video app which brought in App Shopping to its millions of American users in 2023, continues to surpass and PDD Holdings Temu in January, according to Bloomberg's second measure, which analyzes credit and debit card data that builds on its 2024 performance when it saw faster sales growth throughout. Data also showed the TikTok shopping feature has been snagging greater market share from Shein than it did from Temu. TikTok Shop's share of transactions valued at over $25, considered more of Shein's market, grew 16 percentage points in January from a year ago, compared with an increase of 7 percentage points in the less than $25 segment, which is Temu's sweet spot, according to Hung's research. A strong shift from shein customers toward TikTok shop was also observed over the past year. Losing market share to rivals could deal another blow to Shein. The fast fashion retailer is under pressure to cut its valuation in a potential London initial public offering to around $30 billion, Bloomberg News reported, citing people familiar with the matter. End quote if someone would have told me that there are science backed ingredients that could help me feel 15 years younger in a matter of months, I wouldn't have believed it. Then I tried Qualia Senolytic Cause as we age, everyone accumulates senescent cells in their body. 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Its bigger ambition is to make the underlying AI sensors and software for robots that will be manufactured and sold by a range of companies, said the people, who asked not to be identified because the initiative hasn't been announced. Meta has started discussing its plan with robotics companies, including Unitree Robotics and Figure AI, at least initially. It doesn't plan to build a Meta branded robot, something that could directly rival Tesla's Optimus, but it may consider doing so in the future, the people added. Meta confirmed the creation of the new team to employees Friday, telling them it will be led by Mark Whitten, who resigned as chief executive officer of General Motors Cruise self Driving car division earlier this month. He was previously an executive at gaming company Unity Software and Amazon. The core technologies we've already invested in and built across Reality Labs and AI are complementary to developing the advancements needed for robotics, andrew Bosworth, Meta's chief technology officer, wrote in a memo reviewed by Bloomberg News. He mentioned the company's advancements in hand, tracking computing at low bandwidth and always on sensors. End quote. Which brings me back to Gurman's Apple Scoops, quoting his most recent newsletter. Apple has its own designs on robots, though it will likely go after the category differently. The iPhone maker prefers products where it controls all the inputs, hardware, software and more. And it's exploring a machine where it could do just that. The idea would be a humanoid that spotlights Apple's AI and tightly integrated technology. Apple has advanced AI research teams within its larger machine learning group focused on developing robotic technologies. There's also a home hardware engineering group interested in the space in the near term, the company plans to launch a tabletop device that essentially attaches a robotic limb to a display. It would be a higher end version of a smart home hub that Apple expects to release this year. There's also exploratory work being done on a mobile robot, something akin to the Astro from Amazon Incorporated. An Apple humanoid remains several years away, but it could end up being a rival to Tesla's Optimus. That device will see limited production this year, according to Chief Executive Officer Elon Musk. He believes the product could ultimately cost $30,000. A key issue for Apple is if it can catch up with rivals in artificial intelligence. After all, if it can't compete in AI for phones and tablets, how could it make a robot? On Friday, I reported that the company has hit snags with its latest Siri features, and they could be delayed. If Apple does want to be a player in robotics, it adds that much more pressure to regain lost ground in AI. Apple's decade spent developing a self driving car could have some pay payoff, though the company may have scrapped that project last year. But some of the lessons learned will be useful, and it seems like much of the tech industry has concluded that humanoid robots rather than self driving cars will be the ultimate AI project. The difference is one roams on wheels on city streets and the other navigates your living room on legs. The core technologies are much the same, end quote Other Gurman tidbits He says Apple is working on a 27 inch studio display successor to launch by 2026 and remember the Vision Pro quote Apple is planning to add Apple Intelligence to its Vision Pro headset, along with an updated mode for guest users and a spatial content app as it seeks to boost interest in the device. The company aims to roll out the features as part of a Vision OS 2.4 software upgrade targeted for as early as April, according to people with knowledge of the matter. The enhancements will become available in beta for developers as soon as this week, said the people, who asked not to be named, discussing details of the update that aren't yet public. The Vision OS update will a revamped mode for guest users, which is a way for an owner to briefly lend their device to someone else. The company believes such a process could help users excite their friends and family about the Vision Pro and potentially lead to sales. The change will potentially make it easier for multiple users in one home to share the headset. The new mode will allow the user setup process to be controlled via an iPhone. For the first time on the phone, a Vision Pro user can decide which apps they want the guest user to be able to access. This process previously needed to occur on the Vision Pro itself. End quote. Yeah, that focus on the Vision Pro being solely for one user like it's their personal computer was maybe one of Apple's biggest blunders with this thing, since they didn't go all out and actually make it a full fledged computer. Finally today, Silicon Valley continues to hope that this will be the year that the startup logjam breaks. But this data from CB Insights shows why things are getting so desperate. According to them, a record 1200 VC backed unicorns have yet to IPO or get acquired. According to Carta, fewer than 30% of 2021 unicorns raised funding in the past three years. So there are hundreds, literally hundreds of unicorns out there that are in danger of running out of Runway. Quoting Bloomberg. A reckoning that has been looming for years is becoming painfully tangible. In 2021, more than 354 companies received billion dollar valuations, thus achieving unicorn status. Only six of them have since held IPOs, said Ilya Streblev, a professor at Stanford Graduate School of Business. Four others have gone public through SPACs and another 10 have been acquired, several for less than $1 billion. Others, such as the indoor farming company Bowery Farming and AI healthcare startup Forward Health, have gone under convoy. The freight business, valued at $3.8 billion in 2022, collapsed. The following year, the supply chain startup Flexport bought its assets for scraps. Welcome to the era of the zombie unicorn. There are a record 1200 venture backed unicorns that have yet to go public or get acquired, according to CB Insights, a researcher that tracks the venture capital industry. Startups that raised large sums of money are beginning to take desperate measures. Startups in later stages are in a particularly difficult position because they generally need more operate, and the investors who'd write checks at billion dollar plus valuations have gotten more selective. For some, accepting unfavorable fundraising terms or selling at a steep discount are the only ways to avoid collapsing completely, leaving behind nothing but a unicorps. Many startups were built to chase growth with little concern for near term profitability in their early years, assuming they could continue fundraising at increasing valuations. In many cases, that formula no longer works. Fewer than 30% of the unicorns from 2021 have raised financing in the past three years, according to data provided by Cart Financial Technology Co. Working with startups. Of those, almost half have done so called down rounds, where investors value their companies at lower levels than they'd received in the past. Celebrity video greeting service Cameo, for example, once had a valuation of $1 billion, but it raised money last year at a 90% discount, according to a person familiar with the matter who asked not to be named when discussing confidential information. Financial tech company Ramp has raised two sizable rounds since early 2022 at valuations below the $8 billion it got three years ago. Pocketed investment companies, including private equity firms, may buy some of these slow growing startups, but businesses are simply not going to fetch the type of valuations investors were giving them back in 2021, says Chelsea Stoner, a general partner at Battery Ventures, which invests in and acquires startups. The remaining optimists can hope that something will spark a new round of techno enthusiasm, or that a Lina Conless Trump administration will goose the acquisition and IPO markets. But Greg Martin Martin, founder and managing director at Archer Venture Capital, says that for many unicorns, the only, albeit unlikely, hope is for the market to go crazy again. Unless we have another irrational valuation environment created by zero interest rates like we had in the pandemic, he says, many of these zombie unicorns are going to wind up in the graveyard. End quote. That Saturday Night Live 50th anniversary show last night was pretty, pretty, pretty good, if you ask me. Talk to you tomorrow.