SoftBank wants a piece of the AI pie
en
January 31, 2025
TLDR: Apple beats Wall Street expectations, SoftBank negotiates a potential $25bn investment in OpenAI, European Central Bank cuts interest rates, and concerns raised about China's hukou system affecting consumption.

In this episode of the FT News Briefing, we dive into significant developments in the tech and economic sectors, focusing on Apple’s quarterly results, SoftBank's ambitious investment in AI, and the implications of China's hukou system on its citizens and economy.
Key Highlights
Apple Quarterly Results
- Apple reported impressive quarterly revenues of over $124 billion, surpassing Wall Street predictions.
- The company's services sector, including App Store, iCloud, and Apple Pay, achieved record highs.
- However, iPhone sales stagnated, and revenue in China has seen a downturn.
- This has raised concerns as China is a critical market for Apple amid increasing competition from local brands like Huawei.
SoftBank's AI Investment
- SoftBank is in negotiations to invest up to $25 billion in OpenAI, potentially positioning itself as the leading financial backer of the AI giant.
- This investment aligns with SoftBank's intent to become a significant player in the AI industry, capitalizing on recent technological advancements.
- CEO Masayoshi Son aims to secure a foothold in the AI sector after years of seeking opportunities in this market.
- If successful, this deal would elevate SoftBank above Microsoft in terms of investment stature within OpenAI.
- Alongside this, SoftBank is also contributing to a $500 billion AI infrastructure project named Stargate, with significant financial commitments.
- Notably, OpenAI will not be contributing financially to Stargate, benefitting from SoftBank's investment without direct costs.
Potential Risks and Challenges
- The recent emergence of Chinese company DeepSeek, which has developed efficient AI models using fewer resources, poses potential risks to SoftBank’s strategy and the broader industry.
- U.S. companies relying on extensive hardware for AI advancements may need to reevaluate their expenditures following this development.
- Masayoshi Son's approach to investing is characterized by high-risk, high-reward decisions, drawing parallels to past ventures with varied outcomes.
European Central Bank Rate Cut
- The European Central Bank (ECB) announced a quarter-point interest rate cut to 2.75%, marking the lowest rate in two years.
- This strategic move comes as the Eurozone economy struggles with weak growth, as highlighted by stagnant economic performance in late 2024.
- Consumer confidence remains low, with households hesitant to increase spending despite rising real incomes.
- Markets may anticipate additional rate cuts later in the year as the ECB navigates these economic challenges.
China's Hukou System
- The hukou system, established in the 1950s, creates a rigid framework dictating citizens' access to services based on their registered birthplace.
- Individuals born in rural areas often face significant barriers in accessing quality education and healthcare in metropolitan cities.
- Over 300 million migrant workers are affected, often forced to return to their hometowns for educational opportunities, which disrupts their children's education and career prospects.
- This systemic issue contributes to greater consumer savings but shrinks domestic demand, posing a challenge for sustained economic growth.
- While the Chinese government acknowledges the need for reform, significant changes are not expected soon, as hukou continues to be a tool for population control.
Conclusion
This episode illustrates the rapid changes happening within the tech landscape, particularly with SoftBank's drive into AI and the economic challenges in Europe and China. As these narratives unfold, the implications for consumers, investors, and global markets will be profound. SoftBank's aggressive positioning in AI and the critical examination of economic policies may set the tone for future technological and economic advancements.
By understanding these dynamics, businesses and consumers can better navigate the complexities of the current market, anticipating shifts driven by technological investments and global economic policies.
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