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Talk about a nervous market! Shares of Nvidia fell 5% on Monday on news of a $500 billion partnership the AI chip giant struck with South Korean conglomerate SK Group, along with a Wall Street Journal report that Nvidia was separately in talks to help OpenAI finance a $500 billion data center campus in Ohio. Investors should take a chill pill: Neither of these deals was actually news. Nor were they fully fleshed out.
For instance, Nvidia and SK have only signed letters of intent to formalize a partnership, they said on Friday. Letters of intent are not worth the paper they’re written on. Remember, Nvidia and OpenAI signed a letter of intent last September for what they called a “landmark strategic partnership,” only to abandon the idea a few months later.
Moreover, the SK Group–Nvidia announcement from Friday was mostly a reprise of two other announcements from early June. In one, Nvidia and SK Telecom (a part of SK Group) had announced plans to build a “gigawatt-scale AI Cloud in Korea” using Nvidia’s DSX technology. (Funnily enough, while Friday’s press release linked to that announcement, the latest update doubled the scale of the AI cloud in Korea to 2 gigawatts.) In the other, Nvidia and SK Hynix (another part of SK Group) announced a memory chip partnership. As to details of the $500 billion, such as which company is putting up how much, Nvidia isn’t saying. My colleague Phoebe Liu reported on Friday that executives at a press briefing wouldn’t talk about those details.
Then there’s the OpenAI-Nvidia Wall Street Journal report that drew attention on Monday, which wasn’t news: It was outlined in a report in The Information in early June! As was the case back then, the details aren’t clear. It does imply Nvidia would take on a lot of risk to back OpenAI. But given the history of OpenAI and Nvidia, there’s no guarantee this deal will get done.
Nvidia likes to make announcements. We got two more today, with news that it is investing in Ilya Sutskever’s AI startup, Safe Superintelligence, and helping launch an open-source software cybersecurity alliance. Keeping track of what’s new and meaningful about AI isn’t easy, and the media’s reporting often makes things more confusing by recycling different versions of the same news. But before investors panic about Nvidia’s financial commitments, they need more details about what’s real and new and what’s not.
Amazon’s Cellular Ambitions
If only Amazon hadn’t abandoned the Fire phone! The e-commerce and cloud conglomerate took a big step toward launching its planned satellite-delivered mobile phone service: It applied to the Federal Communications Commission for permission to launch 5,105 satellites to deliver the direct-to-device service it announced on Monday.
Amazon had signaled its intention to launch such a service—which will compete with one already offered by SpaceX—when it agreed to buy Globalstar in April (here’s what we wrote then). Globalstar already offers some satellite-to-cellphone services, including satellite connectivity available on Apple’s iPhones. The new service also builds on Amazon’s yet-to-launch Leo broadband service, which will compete with SpaceX’s Starlink.
Amazon isn’t advertising this cell service as a competitor to Verizon or T-Mobile, to be sure. It said today the new service would “complement existing mobile networks, filling coverage gaps.” That’s a strategy similar to what SpaceX is pursuing. So how big a business could that be? It’s hard to tell. But one thing is for sure: It won’t be as profitable a business for either SpaceX or Amazon once they’re both in it.
In Other News
• Microsoft on Monday announced a new AI security product called Project Perception, powered by new homegrown AI models specialized for cybersecurity tasks. The company framed the product as a cheaper alternative to Anthropic’s Mythos model, which similarly uses AI models to find vulnerabilities in software.
• China’s Ministry of Commerce on Monday struck back against Washington’s recent accusations that Chinese AI firms are stealing U.S. intellectual property by distilling American AI models, saying the claim has no factual basis or legal support.
• Shares of Dutch company ASML, which produces chipmaking tools, dropped after The Information reported that a Chinese state-backed company is mass-producing important chip manufacturing equipment for the first time. ASML’s shares slid as much as 6.6% and ended the day down about 5%.
• ChangXin Memory Technologies, China’s leading memory chip maker, jumped 472% in its Shanghai trading debut on Monday, as investors bet it will benefit from growing demand for AI.
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