>>> Weekend Papers Summary

FINANCIAL TIMES
-Allies of Donald Trump and Elon Musk have urged the US president and his billionaire backer to repair their relationship to limit the political and commercial damage from the recent split over the president's signature tax bill. The fissure threatens to derail the White House's legislative agenda and wreck a hard-won alliance between Silicon Valley and Washington. Texas Senator Ted Cruz expressed disappointment and hope for a reconciliation. Tesla CEO Elon Musk responded positively to hedge fund manager Bill Ackman's urging to "make peace for the benefit of our great country." Trump claimed he was not even thinking about Elon and urged the Federal Reserve to cut interest rates.
-Cyber crime and espionage have become a significant security and economic threat due to the revolutionary capabilities of artificial intelligence. Cybersecurity companies, police, military, intelligence services, and think-tanks have issued warnings about the dangers of a lax approach to network security, but the message can fail to reach the public due to cost or complacency. Recent hacks against Marks and Spencer, the Co-op, and Harrods have generated attention and concern, but cyber security professionals have been frustrated that Synnovis, a blood testing and transfusions company, did not receive the same scrutiny. Marks and Spencer is expecting a £300M reduction in annual profits due to the cyber-attack, while Synnovis suffered a ransomware attack in June.
-Donald Trump has announced a new round of high-level trade talks between the US and China in London, following a phone call with Chinese President Xi Jinping. The talks will be attended by Treasury secretary Scott Bessent, commerce Howard Lutnick, and US trade representative Jamieson Greer. The meeting is expected to go well, as the Chinese embassy in Washington did not respond to a request for comment. The talks come two months after Trump's "liberation day" tariffs escalated levies between the world's largest economies, reaching as high as 145%.
-Palestinians, desperate for supplies after Israel's over two-month blockade, have been forced to seek food from GHF. The Israeli army has used tanks, quadcopter drones, and snipers to attack Palestinians waiting for the distribution site. Telecoms worker Ehab Jomaa and five friends took cover in the ruins of a bombed-out beach hotel before being shot by a quadcopter. Witnesses reported that the run down the final stretch to the distribution site began around 5am, and many Palestinians found all the food gone. Many Palestinians have tried to reach the site several days in a row, despite the killings, as they are hungry after Israel's siege.
-FT's network of correspondents has analyzed the biggest global movers since the inauguration to identify which are struggling and which are triumphing under Donald Trump's policies. European defense companies and Chinese technology giants are among the winners, while Silicon Valley has some winners and many losers.
-The OECD annual meeting in Paris brought together world trade ministers for the first time since Trump imposed his "liberation day" tariffs. The collective challenge was clear, as governments seemed busier than ever cobbling together deals with Washington. The US message was clear: "We have a big trade deficit we need to deal with; what matters is unilateral power, which we have." This is the way the world is going to look, so you better get used to it. When a clutch of ministers later met to discuss reforming the World Trade Organization, the 30-year-old global body that has become increasingly marginalized, the conversation was no easier.
-St Louis Fed president Alberto Musalem has predicted that Donald Trump's trade war could lead to a sustained inflation burst at "50-50". He warned US rate-setters would face uncertainty through the summer, with Trump's levies potentially boosting inflation for a quarter or two. However, the impact of tariffs on prices could last longer. The Trump administration has already raised US tariffs on trading partners to the highest level in almost 90 years, threatening to fuel higher inflation and slow economic growth. Policymakers have adopted a wait-and-see approach after cutting interest rates by 1 percentage point in the second half of last year.
-Gemini, a cryptocurrency exchange run by the Winklevoss twins, has filed to list in the US to capitalize on the increasing demand for digital asset companies. The company filed confidential paperwork with the Securities and Exchange Commission for an initial public offering, following the double-digit increase in stablecoin operator Circle. The US election of President Donald Trump has rekindled investor enthusiasm for crypto assets, with Gemini being one of the beneficiaries. Cameron and Tyler Winklevoss, who founded Gemini in 2014, were vocal critics of the regulatory clampdown on digital asset companies and became active supporters of Trump. They are also among the largest personal holders of bitcoin, with about 70,000 coins. Bitcoin is currently trading at about $105,000, just shy of its record high.
-South Korean solar cell maker OCI Holdings is boosting production in the US despite President Trump's push to cut clean energy subsidies. The company plans to invest $1.2B to increase its Texas plant's annual cell-making capacity to 10GW by 2027, equivalent to 10 nuclear power plants. The increased energy demands from data centres in the US will fuel demand for solar power, and South Korean makers could fill the gap, especially as Chinese groups face tariffs. OCI's chair and co-chief executive, Woohyun Lee, believes that the US has big growth opportunities due to tight energy supply and the need for solar power to meet rising energy demand.
NEW YORK TIMES
-Kilmar Armando Abrego Garcia, who was mistakenly deported to El Salvador, has been flown back to the US to face charges of transporting undocumented migrants. The Trump administration's decision to bring him back could end the most high-profile court battle over President Trump's authority to seize and deport immigrants. The decision to pull Garcia out of El Salvador and put him on trial in an American courtroom could provide an offramp for the Trump administration, which had opposed court orders requiring the government to return him after his wrongful removal in March. The 10-page indictment filed in Federal District Court in Nashville may also be an effort to save face, as it may avoid a broader legal confrontation.
-Cybercrime and espionage have become a significant security and economic threat due to the revolutionary capabilities of artificial intelligence. Cybersecurity companies, police, military, intelligence services, and think-tanks have issued warnings about the dangers of a lax approach to network security, but the message can fail to reach the public due to cost or complacency. Recent hacks against Marks and Spencer, the Co-op, and Harrods have generated attention and concern, but cyber security professionals have been frustrated that Synnovis, a blood testing and transfusions company, did not receive the same scrutiny. Marks and Spencer is expecting a £300mn reduction in annual profits due to the cyber attack, while Synnovis suffered a ransomware attack in June.
-The Supreme Court has granted Elon Musk's Department of Government Efficiency access to sensitive records of millions of Americans held by the Social Security Administration. The Trump administration sought the data to combat waste and fraud and modernize operations. Two labor unions and an advocacy group sued to block access, arguing that the information was deeply personal and protected by privacy laws. The court allowed DOGE access to the necessary records, allowing the agency to continue its work.
-The Trump White House has raised concerns about potential security threats from Chinese Communist Party visitors to the US. However, the administration has allowed a Chinese government group member to access the president and the White House through a plan to sell memecoins. President Trump launched memecoins just before his inauguration, and his business partners created a contest in April offering top buyers a tour of the White House and a private dinner with Trump at his Virginia golf club. One buyer, He Tianying, is a member of the Chinese People's Political Consultative Conference.
-Vice President JD Vance's practice of blocking Biden administration nominees for U.S. attorney during his tenure in the Senate has been cited by a senior Democrat as a precedent for insisting on the same standard for President Trump's federal prosecutor nominees, potentially jeopardizing their confirmation. Senator Richard J. Durbin of Illinois plans to adhere to the Vance precedent for Trump prosecutors unless Republicans offer some concessions. U.S. attorney nominees typically pass through the Senate expeditiously once they clear an FBI background check and scrutiny by the Judiciary Committee. Durbin noted that Democrats had followed this practice in agreeing to confirm scores of prosecutors in Trump's first term.
-President Trump has suggested that he might eliminate Elon Musk's federal contracts to save money in the budget. However, this is not as easy as Trump suggests, as the Pentagon and NASA are heavily reliant on SpaceX for orbiting and moving government data. Trump could use his ability to instruct federal regulators to intensify oversight of Musk's business operations to punish him. This would reverse a slowdown in regulatory actions that benefited Musk's businesses after Trump was elected. Steven L. Schooner, a former White House contracts lawyer and professor at George Washington University, believes that selectively ramping up oversight would be difficult in an administration that has defined itself by reducing regulation and oversight.
-On June 6, 2025, federal agents in tactical gear threw flash-bang grenades during an immigration raid on a clothing wholesaler in Los Angeles's Fashion District. The operation was part of three immigration sweeps in Los Angeles, including one at a Home Depot where day laborers gather for work. The raid began at 9:15 a.m. and involved dozens of agents wearing helmets and green camouflage, some carrying riot shields and others with rifles and shotguns loaded with less-than-lethal ammunition.

NEW YORK POST
-Los Angeles Mayor Karen Bass has been criticized by several Trump administration officials for her opposition to federal efforts to arrest illegal immigrants. Bass stated that she will not stand for this, as police used flash bangs to disperse the violent mob of protesters who descended on the arrest sites. She also stated that her office is in close coordination with immigrant rights community organizations. White House deputy chief of staff Stephen Miller dismissed Bass' declaration, stating that she has no say in this at all and that federal law is supreme and will be enforced.
-The public breakup between Elon Musk and President Trump has sparked concerns about SpaceX's future. Trump relies on Musk's privately owned firm to fulfill the administration's plans for NASA's return to the moon, ongoing operations at the International Space Station, a classified deal with US intelligence to build hundreds of spy satellites, and expanding internet access to rural parts of America. SpaceX, known for building and launching rockets and the Starlink satellite internet network, has approximately $22B in government contracts on the books. Musk threatened to decommission a roughly $5B deal to build the Dragon spacecraft for NASA, which Trump later reversed course on. A Republican consultant connected with Trump said that Trump could cancel most deals and contracts if he wants, but the government may still have to pay them based on contract details. The split likely works in both of their favors, as Elon distanced himself from Trump in a public way to get his businesses back on track.

FT : China fast tracks rare earth export licences for European companies

China fast tracks rare earth export licences for European companies
Beijing has attempted to improve relations with Brussels since Donald Trump returned to the White House

Beijing has agreed to fast-track approvals for rare earth export licences for some European companies after China’s strict controls on shipments of the critical minerals rocked global supply chains.

European officials and industry groups have complained that a new licence system for rare earths and related magnets, introduced in the wake of Donald Trump’s “liberation day” tariffs in April, risked causing widespread factory stoppages.

However, according to a statement published by China’s commerce ministry on Saturday, Beijing is now “willing to establish a green channel for qualified applications to speed up approval”.

No details were given as to how fast the process would be, or which European companies would be included. One European executive in Beijing, who asked not to be named, warned that manufacturers might still face delays in receiving their rare earth and magnet shipments in the short to medium-term given the “huge backlog” of licence applications.

The announcement followed a meeting between Chinese commerce minister Wang Wentao and Maroš Šefčovič, EU commissioner for trade and economic security, in Paris last week.

Wang urged the EU to “take effective measures to facilitate, safeguard and promote compliant trade of high-tech products to China”.

Beijing has become increasingly concerned that Europe has followed US-led restrictions on sales of semiconductors and chipmaking equipment to China.

On Friday Trump said a new high-level round of trade talks between the US and China would take place on Monday in London, paving the way for further de-escalation in the trade war between the world’s two biggest economies.

Rare earths are just one of many disputes between Brussels in Beijing. The sides have also been in talks over China’s opposition to the bloc’s tariffs on Chinese electric vehicles, as well as Beijing’s tariffs on French cognac.

According to the commerce ministry, discussions on prices of Chinese electric vehicles sold in the bloc have entered “the final stage” but further efforts “from both sides were needed”. China plans to announce the result of its investigation into European brandy imports on July 5.

Beijing has sought to improve ties with Brussels since Trump returned to office but EU officials said that, despite warm words, there had been little compromise on issues of concern until now.

Šefčovič on Wednesday said he had pressed his Chinese counterpart over the rare earth delays, which were slowing deliveries for manufacturers of a wide range of items from cars to washing machines.

The Financial Times reported on Thursday that European businesses had lobbied officials in Beijing to set up a special channel to fast-track export licences for “reliable” companies.

On Friday the European Chamber, a Beijing lobby group, warned that despite Beijing approving urgently needed shipments, progress had “not been sufficient” to prevent severe supply chain disruptions for many companies.

Jens Eskelund, the chamber president, said member companies were “still struggling” with both the delays and the lack of transparency.

WSJ : New York to Paris in Under Four Hours? Inside the Effort to Build the Next

New York to Paris in Under Four Hours? Inside the Effort to Build the Next Concorde
Boom Supersonic CEO Blake Scholl wants to bring back flights that break the sound barrier. Now he just needs to figure out whether airlines and travelers will buy in.

When the Concorde was grounded in 2003, done in by strained economics and a fiery crash on a Paris runway, it appeared to be the end of the line for supersonic travel. Nothing emerged to replace it. In fact, the speed of air travel moved in the opposite direction, with many routes getting slower in recent years as congestion and air-traffic control inefficiencies jammed up the skies.

A former Amazon software engineer named Blake Scholl founded a company to change this. A decade ago, he launched Boom Supersonic, betting that his Denver-based startup could tap in to the allure of ultrafast travel—a desire that has never quite been extinguished despite the financial and practical challenges that ended the Concorde’s nearly 30-year run. Scholl sees a world where round-trip trans-Atlantic business journeys happen in a single day.

“The thinking has been, ‘Supersonic flight would obviously be great, but nobody is doing it so therefore it must be impossible,’ ” the 44-year-old chief executive said during a recent interview. “Not true.”

Earlier efforts, including the Concorde, failed because of ill-conceived business models or other organizational problems as big aerospace companies struggled to shift to making new kinds of products. The technology needed to achieve supersonic flight, he argued, has been available all along.

A self-taught aviation buff, Scholl regularly tangles with critics on social media, vacillating between snark and professorial counterarguments in his rebuttals. “I wish I’d thought about that before starting the company,” he shot back on X to a poster who noted that the Concorde was too expensive to operate.

Scholl’s dream is dividing the aviation industry into two camps: those who think Boom will fail, and those who believe he’s the outsider who can finally revive supersonic travel. Scholl aims to have the company’s first jet, called Overture, flying by 2029. Last year Boom completed construction on a factory in Greensboro, N.C., where it plans to build the jet. It’s begun manufacturing a prototype of the engine that will power Overture.

His fans include prominent startup investors, social-media throngs and Elon Musk and President Trump, who posed earlier this year with a model of the Overture jet. United, American and Japan Airlines have made preliminary orders for future planes. He’s backed by famed Silicon Valley accelerator Y Combinator, former United CEO Oscar Munoz, OpenAI founder Sam Altman. Former Boeing CEO Phil Condit sits on Boom’s board.

But Boom has recently scrambled to raise money. Its valuation, once close to $1 billion, was around $500 million at the end of last year, and the company has slashed its fundraising goals. Last fall it laid off roughly half its 260 employees. Boom has yet to begin building a full-size jet.

Delta CEO Ed Bastian is among Boom’s doubters, calling the jet “a very, very expensive asset” for the roughly 75 travelers it is expected to carry—a fraction of a typical wide-body jet. He said he remembers the Concorde as a cool experience, but one he partook in only through free upgrades, never with his own money. He has no plans to buy Overture jets. “I wish them well,” he said.

Scholl is unfazed. He blames the lack of supersonic travel on an aerospace industry dominated by a pair of entrenched players, Boeing and Airbus, unwilling to shake up long-held business models.

The company earlier this year flight-tested a smaller prototype and is working to ready a full-size production model for flight tests by 2027.

At the test flight in January, Scholl stood by the control tower of the Mojave Air and Space Port north of Los Angeles in a crowd of around 200 people, including employees, investors and customers, as the sleek white XB-1 demonstrator took off. Then the group watched a livestream of the flight on a giant outdoor monitor as the single-seat plane zipped over the Southern California desert.

The speed reading ticked up bit by bit before hitting Mach 1, or around 750 miles an hour, the speed required to break the sound barrier.

At the controls was Boom’s chief test pilot, Tristan Brandenburg, a graduate of the U.S. Naval Test Pilot School who also helped train participants in the Navy’s elite fighter-tactics program, known as Top Gun.

“I’m not sure my brain’s fully caught up with me yet,” Brandenburg said after the flight. “I think it might still be flying supersonic.”

As for the window-rattling sonic boom that occurs when a plane travels faster than the speed of sound—and served as a cheeky inspiration for the name of Scholl’s startup—the CEO said the company has figured that out.

Boom plans to quiet the sonic boom using a technique called Mach cutoff, though the approach has limitations and not all experts are convinced it’s possible to dampen the sound enough to keep it from being a nuisance. What’s more, the company’s business model doesn’t rely on flights over inhabited land, since it expects its planes to initially shuttle between New York and London or Paris.

President Trump signed an executive order on Friday directing the Federal Aviation Administration to repeal a five-decade-old ban on supersonic flight over land in the U.S.

Where a round-trip ticket on the Concorde cost upward of $10,000 in the 1990s, Boom says it will bring down the per-seat cost on Overture to that of a regular business cabin, which runs about $1,700 one way between New York City and London, though it will be up to airlines to set fares. He said Boom’s interiors will have business-class amenities and space, where Concorde was known more for being fast—and cool—than for being a comfortable ride.

The concept behind the Concorde was buzzy in the 1960s, when the plane was designed and built under a French-British treaty. But supersonic flight’s heavy fuel usage became a liability by the time the plane made its debut in the 1970s, after an oil shock jolted jet-fuel prices higher and environmental worries were on the rise.

Airlines backed out of orders. British Airways and Air France were the only takers, and were heavily subsidized by their governments. Only 14 of the needle-nosed planes were built for commercial use.

By the end, Concorde was expensive to operate and maintain. Its glitz faded in comparison to more luxe amenities in regular-speed first-class cabins. Declining demand after a fatal crash in 2000 and the travel slump after the 9/11 attacks led to the jet’s retirement.

The Concorde’s fall from grace long fascinated Scholl. A lifelong aviation enthusiast, he spent years poring over textbooks on the science and engineering behind flight and, in his 20s, earned his private pilot’s license.

“We’re not working with new technology here,” he said.

Boom can succeed financially, he says, by offering only business-class seats. Boeing’s effort to develop a supersonic plane failed in the early 1970s, he said, because the company was trying to create a jet that could fly passengers at all price points.

Other companies have tried to develop supersonic business jets and small passenger planes since the Concorde was retired in 2003. Boeing took another try by backing a startup called Aerion that closed in 2021 after running out of money. The ventures stalled due to high costs, technical challenges and lack of demand, as speed simply hasn’t been a top priority for airlines.

Other players are working on superfast flight, for both military and commercial applications. Lockheed Martin has paired with the National Aeronautics and Space Administration to develop a supersonic jet that flies without creating a deafening sonic boom. Atlanta-based startup Hermeus, which is working on a jet that would fly at hypersonic speed, five times the speed of sound, said this month that it successfully tested an unmanned prototype. Meanwhile, China’s state-owned Comac has said it aims to build a quiet supersonic jet.

Until Scholl started Boom in 2014, he jumped between startups for years after leaving Amazon in 2006, eventually landing a job as a midlevel executive at Groupon after selling his latest venture, an online-shopping software provider called Kima Labs, to the discount-coupon provider in 2012.

“There is nothing like working on internet coupons to make you yearn to build something you truly love,” he wrote on LinkedIn.

Scholl started floating his theory—that supersonic technology is well within reach but the business model just needed work—to investors, airline executives and Condit, the former Boeing chief who was at the jet maker when it killed its supersonic-plane program in the early 1970s after the U.S. government, daunted by high costs and technological hurdles, cut off funding for the project.

Scholl founded Boom from his basement when he was living in the San Francisco Bay Area. He moved to Denver a year later and soon set up Boom’s first hangar at tiny Centennial Airport. A crew of employees plucked from other aerospace startups and small aviation companies began to tinker.

Boom designed its plane using carbon-fiber composite materials not in wide use when the Concorde was developed. Engineers used digital simulations rather than a physical wind tunnel to create the plane’s aerodynamic design. Boom’s Overture has a needle-nosed design similar to the Concorde’s. It relies on external cameras to ensure the pilots’ view.

“I think of this as a company that’s not just building a cheaper supersonic plane,” Condit said. “But rather bringing a modern, Silicon Valley approach to disrupting aerospace in the way Tesla did in the automotive industry.”

Condit grew most concerned about Boom’s future in 2022, after Rolls-Royce, which was supposed to provide Overture’s engines, said it was backing out of the deal because supersonic flight was no longer a priority.

Scholl had a contingency ready by the time the breakup was official: Boom would piece together its own engine from the ground up, making some parts in-house and sourcing others from various suppliers.

With the design set and an engine plan in place, Boom is now working to lock down the parts and factory tooling.

Some airlines have put in orders, but their deposits are relatively small. Japan Airlines invested $10 million in the company in 2017. United and American made smaller down payments, according to people familiar with the deals. More funds from customers won’t flow until the planes are closer to being delivered, and the agreements were carefully crafted so airlines still have the option not to take them, the people said.

After initially saying Boom needed to raise $6 billion to $8 billion to get Overture into production, Scholl now aims to raise $1 billion to $2 billion, which he says is enough to get the project to the stage where customer payments begin funding operations. Boom has raised $600 million so far.

Munoz, the former United CEO and Boom investor, said he was impressed with how the company was able to streamline and stay focused when it ran into fundraising challenges last year, which he described as typical startup growing pains. He has helped make introductions to new potential backers.

“The funding thing was the scary thing that happened,” Munoz said. “The product itself, not scary.”

Scholl shrugs off the challenges.

“There’s this belief in the industry that to do these kinds of things requires billions of dollars, requires an army of people,” he said, referring to the recent layoffs. “And I sort of made the mistake of wanting to play into that.”

“He has kind of an iron will and he believes so much in the mission that he never doubts that he will find a way through,” said Jared Friedman, a partner at Y Combinator, the Silicon Valley accelerator that’s among Boom’s investors. “He started from basically no professional network in the space and a year or two later he’d come up with a thoughtful plan.”

WSJ : Musk’s xAI Is Trying to Borrow $5 Billion While His Relationship With Trum

Musk’s xAI Is Trying to Borrow $5 Billion While His Relationship With Trump Blows Up
Bankers worry the fight will affect an ongoing deal to raise money for xAI’s data centers

Key Points
  • Elon Musk’s fight with President Trump has bankers worried about xAI’s ongoing deal to raise $5 billion.
  • Morgan Stanley is hoping to sell the debt at around 100 cents on the dollar.
  • Morgan Stanley may need to offer discounts or higher interest rates due to the Musk-Trump spat affecting X’s debt value.

On Thursday afternoon, Morgan Stanley had gathered a group of executives from xAI, Elon Musk’s artificial-intelligence company, to pitch Wall Street on why they should lend billions of dollars to a cash-burning, high-growth startup.

During the call, the xAI executives spoke about the company’s data centers and Grok, its AI-powered chatbot. While they presented, investors were following Musk’s attacks on social media against President Trump. That afternoon, Musk accused the president of covering up his ties to disgraced financier Jeffrey Epstein and for being ungrateful for his help in winning the election. Investors followed the fight on their screens as the xAI executives talked about their hopes for the company’s future.

Now, bankers worry the blown-up relationship between Musk and Trump will affect xAI’s $5 billion debt deal.

For nearly 2½ years, Wall Street didn’t know what to make of Musk’s control of X, the social-media site previously called Twitter. Musk’s takeover of the company spurred an exodus of advertisers, tanking its main source of revenue. Its uncertain future made it impossible for banks to sell the loans they had made to finance Musk’s buyout. Then Musk’s alliance with Trump during the presidential campaign last year changed everything.

After Trump was elected, investors were hungry for any type of trade that would benefit from the new administration’s policies. As Musk slashed expenses and began to lure back advertisers, X’s outlook began to brighten, helped further by a stake that it held in xAI that had surged in value.

That created an opening for the lenders. Morgan Stanley was able to sell some $11 billion of X debt between January and April without incurring major losses. X’s recently announced merger with xAI was another selling point, given the latter’s enormous growth potential.

Investors are now weighing how the social-media and AI company could be affected if the White House points its cannons at Musk’s sprawling business empire. Tesla’s stock is down around 7% since midday Thursday, and Trump has threatened to eliminate government subsidies and contracts for Musk’s businesses.

The spat is the latest headache for Morgan Stanley, which has been caught off guard by Musk’s battles before. The bank is in the middle of selling around $5 billion in debt for xAI, which would be used to help build out data centers that the company needs to train Grok, its large language model that draws on real-time platforms like X to answer users’ questions.

Morgan Stanley is hoping to sell the debt at around 100 cents on the dollar. But after the Musk-Trump fight, X’s outstanding debt traded down several points Thursday at around 95 cents on the dollar. As of Friday, the loans had moved closer to 97 cents, a trader said.

Because of the slide in prices, investors say they expect Morgan Stanley may need to offer a discount on the xAI bonds, a hike in the interest rate or other sweeteners to close the deal.

Morgan Stanley had originally hoped to sell some of the loans and bonds with a 12% interest rate, a sign the debt carries a high level of risk. The deal isn’t scheduled to close until later in the month.

xAI is also arranging the sale of $300 million in stock, in a transaction that values the company at $113 billion, people familiar with the matter said.

On Thursday’s call, Morgan Stanley shared financials with investors that showed xAI is rapidly burning through cash. The company reported a loss of $341 million before interest, taxes, depreciation and amortization for the first quarter, but predicted that it will break even in a matter of years.

Bankers are worried market turmoil could also trouble the debt sale. So far, buyers who showed initial interest haven’t backed off, people familiar with the matter said. Indeed, demand for both the debt and the equity sales has actually increased since Thursday, one adviser to the company said.

xAI is also arranging the sale of $300 million in stock, in a transaction that values the company at $113 billion, people familiar with the matter said.

On Thursday’s call, Morgan Stanley shared financials with investors that showed xAI is rapidly burning through cash. The company reported a loss of $341 million before interest, taxes, depreciation and amortization for the first quarter, but predicted that it will break even in a matter of years.

Bankers are worried market turmoil could also trouble the debt sale. So far, buyers who showed initial interest haven’t backed off, people familiar with the matter said. Indeed, demand for both the debt and the equity sales has actually increased since Thursday, one adviser to the company said.

WSJ : United Switches Off Starlink Internet on Regional Jets After Static Proble

United Switches Off Starlink Internet on Regional Jets After Static Problem
Airline said SpaceX’s satellite-internet service generated interference after being installed on a couple dozen regional jets

Key Points
  • United Airlines disabled Starlink Wi-Fi on some planes due to static interference issues.
  • The airline is working with Starlink to fix the issue, which United said isn’t a flight-safety concern.
  • United expects service to be restored soon and remains on track to have Starlink on all two-cabin regional jets by the year’s end.

United Airlines started rolling out free Starlink Wi-Fi last month with fanfare. But it has had to disable the service on roughly two dozen planes to address problems with static interference.

United said Friday that it is working with Starlink to address “a small number of reports” about the problem, which it said isn’t a flight-safety issue. While it is being fixed, the Starlink-equipped regional jets have been operating with the Wi-Fi turned off.

“We expect the service to be back up and running on these aircraft soon,” United said. The fix will be deployed during routine maintenance and the airline doesn’t anticipate any impact to flight schedules.

SpaceX didn’t respond to a request for comment. The issue was previously reported by The Points Guy.

Such problems are fairly common with any new in-flight internet provider, United said. Similar static interference issues have cropped up with other new Wi-Fi technology because of the number of antennas on planes.

United plans to outfit its entire fleet with Starlink, a division of Elon Musk’s SpaceX that provides internet connections using a fleet of thousands of satellites located relatively close to earth. United has touted what it said is Starlink’s faster, more reliable service, aiming to allow customers to use devices just as they do on the ground.

Starlink has driven revenue growth at SpaceX and the company has been pushing into the airline industry, striking agreements with Hawaiian Airlines and Air France. SpaceX surprised many satellite-industry executives by winning the fleetwide Starlink deal with United last year.

The problem emerged after Musk this week engaged in a war of words with President Trump, creating new risks for his companies.

United had previously accelerated its timeline to roll out Starlink. It said it remains on track to have Starlink available on all of its two-cabin regional jets by the end of the year.

The Information : The Big Read : The Big Read

The Big Read
Why Eric Schmidt and Jeff Bezos Are High On Space Data Centers
Soaring demand for electricity to power data centers is creating buzz around the idea of putting them into orbit, where they can tap into uninterrupted solar energy.

If all goes as planned in August, a startup called Starcloud from Redmond, Wash., will load a rocket bound for space with a refrigerator-sized satellite, the first to contain an Nvidia H100 chip. Normally, that chip is at the heart of the sprawling data centers back on Earth that run the latest artificial intelligence models.

Compared to existing data centers, the Starcloud satellite will be almost comically under-powered: It may have only enough computing muscle to run less demanding versions of Google’s Gemini and OpenAI’s GPT models, according to Starcloud CEO Philip Johnston. Still, the satellite will be the most powerful computer in orbit, with 100 times more processing power than the International Space Station and other satellites, according to Johnston, whose company raised $21 million out of Y Combinator in 2024, one of the year’s largest rounds from the incubator.

And, ultimately, Starcloud wants to build the first gigawatt-scale data center in space, with bays full of AI chips powered by a massive solar array spanning 4 kilometers by 4 kilometers.

Hot on Starcloud’s tail fins is another space company, Axiom Space, which plans to launch two orbital data center nodes with a mix of CPU and GPU chips capable of “running some low grade AI” by the end of the year as part of a network of communications satellites for military and commercial clients, according to Jason Aspiotis, Axiom’s global director of in-space data and security. And it’s not just startups that want to put cloud computers above the clouds—some of tech’s most influential billionaires buy into the idea too.

In April, when a journalist on X suggested that former Google CEO Eric Schmidt bought a controlling interest in a rocket company, Relativity Space, with the goal of putting data centers into orbit, Schmidt replied with one word: “Yes.”

Meanwhile, Jeff Bezos has long said that he started his rocket company, Blue Origin, to make it possible to move pollution-belching industries off Earth. According to a person who has discussed the subject with him, data centers are among those industries that he believes belong in space long term. That’s telling coming from the guy who did more than anyone to kick off a frenzy of data center building when he ran Amazon, which operates the No. 1 cloud computing provider, Amazon Web Services.

Still, to say that the concept of orbital data centers has its doubters would be a bit of an understatement. There’s a head-spinning array of technical and financial impediments to making them work—from guarding their computers against radiation, to maintaining them, to affording the expense of getting all that hardware into orbit in the first place. Sure, maybe a company can stick a few computers running lightweight AI models in space, but launching and operating AWS-sized data centers in orbit is science fiction, skeptics say.

“Show me the calculations that suggest this is even feasible,” said Oren Etzioni, the former CEO of the Allen Institute for AI and a professor emeritus of computer science at the University of Washington.

It isn’t likely there’d be much talk of sticking data centers in orbit if there wasn’t a borderline freakout back on Earth about how to power them all. In the U.S., data centers are forecast to consume 12% of total U.S. electricity by 2028, up from 4.4% in 2023, according to a U.S. Department of Energy report last year.

Electricity-hungry AI models are expected to be the biggest factor in that surge. Already, power companies are struggling to keep up with the demand, and electricity bills are rising for consumers. Big data center operators like Amazon, Microsoft, Google and Meta Platforms, meanwhile, are plowing money into nuclear power, geothermal and other sources of clean energy to meet their future needs—though it’s too soon to say whether and when those investments will pay off.

Orbital data centers have a tantalizing answer to the power problem: uninterrupted access to solar energy, without the hindrances of weather, night time and seasons. That means they could enjoy dramatically lower operating costs while also combatting climate change by reducing the reliance on fossil fuels, which currently account for 60% of total U.S. energy consumption. That’s the theory, at least.

This isn’t the first seemingly wacky plan to put data centers in an exotic location for environmental and cost reasons. In 2018, Microsoft researchers dropped a data center encased in a steel tube to the seafloor near Scotland’s Orkney Islands, which allowed them to tap into the cooling effect of the ocean’s chilly subsurface waters. After two years of testing, Microsoft plucked the data center from the water and called the experiment a success, but it hasn’t put another one back in down there.

Other countries are also eyeing orbital data centers, which could prompt competition with the U.S. to build them first. Last month, China launched a dozen satellites that will eventually be a part of an orbital computing constellation of 2,800 satellites that can run AI models and perform other computing chores.

Orbital data centers are starting to pick up buzz in Washington. In April, during the Hill & Valley Forum, a gathering of tech and political luminaries in the city, Republican Senator Mike Rounds of South Dakota told an audience that U.S. control of AI won’t happen unless it can solve the energy problem it’s creating—and that it has to consider the option of putting data centers in space.

“I know it sounds crazy,” said Rounds, who serves on the Senate Armed Services Committee. “We’ve got to be talking unique and innovative ways as we move forward into the future.”

Jack Clark, co-founder of the AI startup Anthropic, who was sitting next to Rounds at the event, responded: “You don’t sound crazy at all. We’re big fans of putting the computers in space.”

On Earth, new data centers often meet with fierce opposition from homeowners, preservationists and other groups. In space, there’s a different kind of hostility to them.

Like anything in orbit, data centers will be constantly bombarded by radiation from solar flares, cosmic rays and Earth’s magnetic field. Experts say that radiation could disrupt the performance of the densely packed rows of AI chips inside orbital data centers. This will require backup chips, ample shielding and other robust materials, all of which will add weight to those systems. Every additional ounce will make for a more expensive launch.

That’s not all. There are collisions with satellites and space debris to worry about, requiring tracking and coordination to dodge those objects. And then there’s the challenge of how to keep all those computer chips from overheating, a task that terrestrial data centers normally handle by circulating large quantities of fresh water around their equipment.

While the frigid temperatures of space provide an obvious way to cool those machines, orbital data centers will still require radiators to dissipate waste heat—very, very big radiators.

In one analysis of space-based computing last month, former NASA administrator Dan Goldin estimated that a 100-kilowatt data center would need a radiator larger than a tennis court. (Typical large data centers consume at least 100 megawatts, or 1,000 times more). A one megawatt data center would need something more like a soccer field.

Starcloud, for one, believes it can figure out these issues, even though no one has ever shown it can be done at scale before. In a mock-up video, Starcloud shows a hypothetical 5-gigawatt orbital data center with a stem-and-leaf design featuring a vast array of solar panels. A radiator on the backside of the solar panels will dissipate heat.


In its design, the data center will consist of dozens of containers filled with networking switches and server racks. After being released from the cargo bay of a rocket, the containers will autonomously dock themselves to a stem that runs between the two sections of Starcloud’s solar array. The data center will use lasers to communicate with existing satellite internet constellations—whether SpaceX’s Starlink or eventually Amazon’s Kuiper—that will transmit data to and from Earth.

In the near term, Starcloud says its data centers will be much smaller than the one shown in its movie—and the cost will compare very favorably to terrestrial equivalents. Johnston estimated it will eventually cost the company about $20 million to build and launch a 40-megawatt data center into orbit—still relatively small by terrestrial standards—compared to hundreds of millions of dollars to build a similar-sized facility on earth and purchase the land beneath it.

Operational costs are where Starcloud’s data center will shine, according to the company. In a Starcloud white paper, it estimates that a 40-megawatt data center on Earth will cost $140 million to power over a decade while one in outer space with a solar array would cost about $2 million.

There are a lot of assumptions built into Starcloud’s cost estimates, though, most notably one envisioning a decrease in the price of rocket launches. Currently, SpaceX charges customers around $70 million to book all of the capacity on a Falcon 9 rocket, but that rocket is too small to put Starcloud’s future 100-ton, 40-megawatt data center into orbit.

It may not be long before those launch prices come down and the capacity to send bigger, heavier objects into space goes way up. SpaceX has done multiple test launches of a gargantuan new heavy-lift rocket called Starship which will eventually allow it to bring bigger payloads to space.

While SpaceX dominates the commercial launch market, Bezos’ Blue Origin in January took an important step in introducing a significant new competitor to the market, when it successfully tested its Starship rival called New Glenn. Rob Meyerson, the former president of Blue Origin, believes more competition in the business will make concepts like orbital data centers more practical.

“You can rethink a lot of the science fiction business plans of the past with the new capacity that’s out there now,” said Meyerson, who is co-founder and CEO of Interlune, which plans to harvest Helium-3 from the lunar surface.

Startups like Starcloud are still going to need a lot more capital than they’ve currently raised to realize their long term visions. Johnston said he recently had a call with SoftBank, which has promised to pour billions of dollars into data center projects with OpenAI, and a representative from the Japanese investment firm asked him: “If you had unlimited resources, could you get a 5-gigawatt data center up within five years?”

“Well, if I had unlimited resources, then yes,” replied Johnston, who said the conversation wasn’t a formal fundraising call. (Starcloud is planning to raise another round after its first launch in August.)

SoftBank representatives didn’t respond to requests for comment.

For now, startups are sidestepping the launch cost issue by sending only the most diminutive data centers into orbit. Starcloud’s first data center going up in August will cost it $2.5 million, including a shared ride on a SpaceX rocket, Johnston said. It will consume a measly 1 kilowatt.

Meanwhile at Axiom, the company planning to launch its own orbital data centers on a partner’s communications satellites by the end of the year, Aspiotis said companies building space-based computing facilities will be lucky to scale to 100 kilowatts by 2030. (Axiom is also building a commercial space station.)

“It’s a decadal business play,” said Aspiotis.

With so little data center capacity expected in orbit in the coming years, don’t expect the world’s leading AI companies to shift their computing workloads into the skies anytime soon.

The most likely initial customers for the first orbital data centers are the ones that are already in space, executives and investors say. Companies, governments and researchers that use satellites to track the weather, missing planes and climate change could process data in orbit more quickly using space-based computers before sending it on to Earth. The U.S. military could do the same for data from the Golden Dome, a new space-based weapons system proposed by President Donald Trump that could take decades and hundreds of billions of dollars to build.

Europe is nosing around orbital data centers too. A few years ago, the European Commission was intrigued enough by their potential environmental benefits that it commissioned a feasibility assessment by a French-Italian space contractor, Thales Alenia Space. The study concluded that orbital data centers were indeed feasible.

Damien Dumestier, a lead researcher on the project, said the next steps in the study are to design a proof-of-concept 50-kilowatt orbital data center by 2030, and to figure out how to use robots to deploy a constellation of them. The European Space Agency is also looking at the possibility of constructing an entirely new rocket on par with Starship to bring the data centers to space, which would add far more complexity and cost to the effort.

If and when large orbital data centers do finally take flight, there’s a good chance large companies with capital and expertise in space could end up dominating the category. Two logical players are SpaceX and Amazon, which could add computing capacity to their Starlink and Project Kuiper satellites for delivering wireless internet to Earth. But skeptics believe there’s little demand for orbital data centers now.

“There’s no market now for a lot of this stuff,” said Clayton Swope, a former policy lead for Project Kuiper at Amazon, who is now at the Center for Strategic and International Studies. “In my mind, it’s very aspirational.”

In the meantime, believers in the future of putting data centers in space urge patience. Christopher Stott, a space veteran whose company Lonestar Data Holdings is building storage computers for the moon, compared the current skeptics of orbital data centers to his former Lockheed Martin colleagues who thought the internet was a passing phase in the 1990s.

These doubters “want to stay in the back of the cave,” Stott said, describing orbital data centers as “absolutely inevitable.”