Transcript
Brian McCullough (0:04)
Welcome to the TechMe Ride Home for Monday, May 12, 2025. I'm Brian McCullough. Today looks like China tariffs are back off Question mark But not soon enough for some deals. OpenAI and Microsoft are trying to work out how to get to an IPO Saudi Arabia. The country makes a big AI play Why you might want to take out AI insurance and did the Pope choose his name because of the AI moment? Here's what you missed today in the world of tech. The US And China have announced a deal to lower tariffs for the next 90 days, a sign of easing tensions in this hottest part of the trade war. The US will cut tariffs on Chinese goods to 30% from 145%, which, that's good. It's still 30%. That still cuts into margins and could lead to noticeable price raises. And again, this is still just for 90 days. Do we have to go through all this again in the summer? Quoting the FT China will reduce duties on U.S. imports to 10% from 125%. China said it would also suspend or cancel non tariff measures taken against the U.S. the agreement marks a step toward reaching a more permanent deal and the first sign of tension easing between the two economic superpowers. Tai Hui, APAC chief market strategist at JPMorgan Asset Management, said the size of the tariff cut was larger than expected. This reflects both sides recognizing the economic reality that tariffs will hit global growth and negotiation is a better option, they said. The US Will cut the additional tariffs imposed on Chinese goods during Trump's second term to 30% from 145%, while Chinese retaliatory duties on US imports imposed since April 2 will fall to 10% from 125%, the two countries announced on Monday. The consultancy Capital Economics calculated that because of duties that predated Trump's return to power this year, total US tariffs on China will come down to about 40% after the agreement, while Chinese tariffs on the US would be about 25%. Well, fair enough, but this news might not be soon enough to stop some concerns. Sources are telling Bloomberg that SoftBank and OpenAI's $100 billion Stargate investment has hit significant snags over tariff fears. Apparently, talks with dozens of lenders starting earlier this year have thus far yielded no deals. Quote preliminary talks with dozens of lenders and alternative asset managers from Mizuho to JP Morgan to Apollo Global Management to Brookfield Asset Management kicked off earlier this. But no deals have ensued as financers reassess data centers in the wake of growing concerns of economic volatility and cheaper AI services, according to people familiar with the matter, who ask not to be named as the information is not public. President Donald Trump's aggressive trade policies have thrown a wrench into financial projections for AI. Higher capital costs with lenders and debt investors shunning high risk bets and fears about how a possible global recession might SAP data center demand are bogging down discussions, the people said. Complicating matters is the emergence of a flurry of cheaper AI models, such as Chinese startup Deepseeks, and questions over how they might affect long term profitability of projects linked to OpenAI. Uncertainty is weighing on talks, with tariff discussions on the table for everything from server racks to cooling systems and chips. Data center build costs may raise by 5 to 15%, with some operators facing even higher prices, according to TD Cohen analysts led by Michael Elias. Prospective Stargate investors are also holding back as fears of overcapacity spike. Tech providers have been allocating billions of dollars to data centers to power AI, but now Microsoft is pulling back on data center projects around the world, and Amazon is adjusting its data center strategy, analysts said, while Amazon Web Services reported its slowest growth in a year. End quote finally, this is sort of related Apple is apparently considering raising the prices for this fall's iPhone lineup. But they want you to know, they stress, this won't be about tariffs, wink quoting the Journal. Company executives are wary of blaming increases on tariffs. When a news report in April said Amazon might show the impact of tariffs to its shoppers, the White House called it a hostile act and Amazon quickly said the idea was never approved and is not going to happen. These circumstances have led Apple to look at what supply chain insiders described as the least bad choice raising prices on the new iPhones to preserve profit and finding reasons other than tariffs to explain the move. It couldn't be determined what new features Apple may offer to help justify price increases. Apple traditionally rolls out new models of its iPhones in the fall. If it follows convention, this fall's models will be known as the iPhone 17 lineup. Current iPhone models range from the base model iPhone 16, which starts at $799, to the iPhone 16 Pro Max, which costs $11.99 and up. This falls lineup is expected to include a thinner model that would stand in the place of the current iPhone 16 plus, which retails for $899 in the U.S. end Quote Foreign sources are telling the FT that OpenAI is negotiating with Microsoft to enable a future IPO. Microsoft is offering to cut its equity stake in order to maintain access to OpenAI's tech beyond the year 2030 quote Microsoft, OpenAI's biggest backer is a key holdout to the $260 billion startup's plans to undergo a corporate restructuring that moves the group further away from its roots as a nonprof with a mission to develop AI to benefit humanity. A critical issue in the deliberations is how much equity in the restructured group Microsoft will receive in exchange for the more than $13 billion it has invested in OpenAI to date, according to multiple people with knowledge of the negotiations. The pair are also revising the terms of a wider contract drafted when Microsoft first invested $1 billion into OpenAI in 2019. The contract currently runs to 2030 and covers what access Microsoft has to OpenAI's intellectual property such as models and products, as well as a re share from product sales. Three people with direct knowledge of the talk said Microsoft is offering to give up some of its equity stake in OpenAI's new for profit business in exchange for accessing new technology developed beyond the 2030 cutoff. That deal is critical to OpenAI's restructuring efforts and could dictate the future of a company which has been in the vanguard of tech groups building large language models, a transformative technology that is beginning to disrupt global industries. Negotiations begin between OpenAI and Microsoft are complicated by a cooling between the companies, according to multiple people with direct knowledge of their relationship. The groups remain close collaborators. Microsoft has embedded OpenAI's technology into its software products while providing it with huge amounts of computing power to train AI models. But OpenAI's ambitions have increased competition with its biggest benefactor. The startup has targeted enterprise customers with AI products while seeking partners such as Japan's SoftBank and Larry Ellison's Oracle to build its own vast computing infrastructure, dubbed Stargate. The friction comes partly due to style. OpenAI says to Microsoft, give us money and compute and stay out of the way. Be happy to be on the ride with us. So naturally this leads to tension, said one senior employee at Microsoft. To be honest, that is a bad partner attitude. It shows arrogance, end quote. One person close to OpenAI said Microsoft still wants this conversation to succeed. It's not like it's all gone to hell and it's open warfare. There's a tough negotiation, but we're confident we'll get it done, end quote.