A (3:49)

Some founders seem to argue that this could just be another venue for innovation, another way that AI is helping us do things differently. How skeptical should we be?

B (3:58)

Well, investors did say that it is a brave new world out there that they are trying to navigate. You know, this is what startups do. This is what Silicon Valley is famous for, trying new things, throwing ideas against the wall and seeing what sticks. So it wasn't all couched to me in a bad way. Yes, investors are going to was through a lot of the uncertainty, but they're all in agreement that they believe AI has a lot to offer. Now the trick is finding what the right revenue model is.

A (4:26)

So how are investors responding generally and how long until we see what looks like maybe some sketchy or creative accounting grow into something darker or ultimately prove that these companies have been truly great all along?

B (4:40)

One thing that's important to note is much of the AI bubble concerns have focused on the largest AI startups out there in the public markets as well. This is an interesting case of very early stage startups grappling with an unclear environment about the return on investment. And it is very telling that investors are very unsure about how to gauge the revenue of some of these startups because that really feeds into the broader concerns about AI and when some of these companies are going to start to return on the massive amounts of investment that are getting pumped into them.

A (5:22)

That was WSJ reporter Mark Vardabedian. Do you think we're in an AI bubble? If you're a listener on Spotify, be sure to let us know in this episode's poll or leave us a comment with your thoughts. Coming up, the dream of Trump industrial parks may become a reality. Only time and potentially a few hundred billion dollars from the Japanese government will tell. That's after the break.

C (5:52)

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A (6:28)

Last year, presidential candidate Donald Trump proposed the idea of Freedom Cities to host manufacturing infrastructure on federal land. Now SoftBank CEO Masayoshi San wants to help him make it happen in partnership with the Japanese government, which this year agreed to invest $550 billion in the US in exchange for lower tariffs. Journal reporter Elliot Brown writes that the current plan is to build clusters of factories that will make the fiber optic cables, data center equipment, and ultimately computer chips that companies like Meta and OpenAI need to power their products. So, Elliot, let's talk about exactly what Masayoshi san is proposing here with what he calls Crystal Land.

D (7:11)

Yeah, so this started as this dream of this mega industrial city a number of months back when SoftBank CEO pitched the President on it. But since it's evolved in concert with the Trump administration, where they want to make these sort of super industrial parks scattered around the country. And the idea is to have hundreds of billions of dollars of investment go in to make giant factories aimed at the AI and energy space where they're cranking out fiber optic cable and electric transformers and sort of other things that go into this chunk of the economy that's growing really quickly.

A (7:49)

This sounds like a huge undertaking. Can we talk about the major hurdles of which there are many.

D (7:55)

Yeah, there's a lot. So SoftBank, the main company sort of pushing this, is a tech company and this is in physical manufacturing of goods. So there's one, but probably bigger is this would be using big chunks of federal land, which, you know, require a bunch of approvals and public notices. You have the actually building these factories, finding things that are actually going to work there, and then ultimately having a demand for the product, because it's easy to say, let's build a factory, but ideally you have to have somebody buying the mounds of additional fiber optic cable and electric transformers that come with this.

A (8:30)

It also made me think whether our infrastructure can even support something like this. I mean, I feel like we're already stretched out.

D (8:38)

Yeah, I mean, I think it would be spread around the country, but we don't really know details about what, where and how, which is another challenge to the plan, is figuring out exactly what this is. But at the broad level, Masayoshi son from SoftBank is just a sort of big dreamer, a big tech optimist, and likes to take these big swings. And, you know, he sees space to get in big early on, the sort of physical side of the AI revolution, and also sees an opportunity to try to use a large chunk of the $550 billion that have been earmarked as part of the Japanese trade deal, where essentially Japan or putting up money or loan guarantees to effectively help finance this.

A (9:21)

Yeah, that gets to the next big question, because we're talking hundreds of billions of dollars. That, that wouldn't come directly from San himself. The idea is that it would come from the Japanese government and Japanese tech companies, but that the US Federal government would ultimately own the project and get like 90% of the profits.

D (9:38)

Yeah. So this goes to the details of the trade deal were negotiated to give Japan sort of relief on tariffs from the rate that had been set by Trump. And so as part of that deal, the government agreed to $550 billion of financing for something. And the way that the administration is currently looking at it, as we understand it, is to then direct a lot of that money toward this. And then, yeah, the terms of that agreement call for the US to be able to pick the sites and uses for the funding. And Japan has the ability to say no, but if they say no, then the US has the ability to ratchet the tariffs back up and then precisely how it would be financed or these grants or these loans. Is there additional money that needs to come from SoftBank or any of the companies it's working with? That's all yet to be seen.

A (10:33)

It seems like a potentially fragile deal because so much of the initial agreement focused again on reducing tariffs, and there's so much uncertainty around those tariffs still with them scheduled to go before the Supreme Court. So how much could that play into the future of this proposal?

D (10:49)

I've spent a lot of years writing about really big plans, and the general rule is the bigger the plan, the less likely it is to happen. On the other hand, there is a piece of paper out there saying Japan needs to commit to $550 billion, and most projects don't have that. This is still a pretty conceptual stage, so I wouldn't go expecting it to pop up tomorrow.

A (11:11)

So why is Sohn trying to do.

D (11:14)

This at a broad level? He gets really excited when markets get really hot in tech. He also, for the past 10, 15 years, has been really excited about AI, constantly seeing it as like the AI revolution on the Horiz, and he's sort of been punished by the market by wasting a lot of money prematurely making that bet. But now the stars seem to be aligning in that the market has also embraced this idea that there's an AI revolution imminently. And so his stock has tripled just since April. A lot of his investments are going up in value, and so he sees it as a really good time to make a huge bet again, something on a big scale.

A (11:57)

That was WSJ reporter Elliot Brown. And that's it for Tech News Briefing. If you're a listener on Spotify, be sure to take this episode's poll or leave us a comment. Today's show was produced by Julie Chang. I'm your host. Patrick Coffey. Jessica Fenton and Michael Lavalle wrote our theme music. Our supervising producer is Katie Ferguson. Jessica Fenton is our technical manager. Our development producer is Aisha Al Muslim. Chris Zinsley is the deputy editor and Falana Patterson is the Wall Street Journal's head of News Audio. We'll be back later this morning with TNB Tech Minute. Thanks for listening.

C (12:41)

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