TheChek News Flow

One crew member airlifted to a hospital in Graz by helicopter

An Airbus AIR -0.57%decrease; red down pointing triangle jet operated by Swiss International Air Lines made an emergency landing in Austria due to engine problems and smoke in the cabin and cockpit, the airline said.

Flight LX1885, a narrow-body Airbus A220-300 flying from Bucharest to Zurich with 74 passengers and five crew members onboard, diverted to Graz after experiencing engine issues and smoke, the Lufthansa Group LHA -0.19%decrease; red down pointing triangle subsidiary said late Monday.

One crew member was airlifted to a hospital in Graz by helicopter, while the remaining four crew members received medical care. Twelve passengers were also treated for medical issues, the airline said.

Swiss stated that it is in close contact with authorities and is working to determine the cause of the incident. The aircraft has been removed from the runway, the airline added.

Saks Finalizes $2.7 Billion Deal to Buy the Neiman Marcus Group

The deal creates a luxury retail empire in the U.S. and also raises questions over possible consolidations, executive changes and relationships with vendors.

A new luxury retail empire has been created.

Late Monday afternoon, Saks Global disclosed that it has finalized its acquisition of Neiman Marcus Group for a total enterprise value of $2.7 billion, as has been expected. The agreement by Saks to buy the Neiman Marcus Group was revealed in July 2024.

Saks Global now includes Neiman Marcus, Bergdorf Goodman, Saks Fifth Avenue and Saks Off 5th, and represents a total volume of approximately $10 billion.

Richard Baker, executive chairman of Saks Global, said in a statement, “This milestone transaction marks a transformative moment for Saks Global and the luxury retail industry. By uniting Neiman Marcus, Bergdorf Goodman and Saks Fifth Avenue, we have created an unparalleled multibrand luxury portfolio with tremendous growth potential. With data and innovation at our core and a portfolio of prime real estate, we aim to redefine the luxury shopping experience.”

Along with the announcement of the closing, Saks disclosed several fundamental changes in how Saks Global will operate and integrate the Neiman Marcus Group, as well as a flurry of executive changes at the top rungs of the enterprise and executive departures.

Saks and Neiman Marcus will be managed by one team, whereas Bergdorf Goodman will be managed separately, according to Marc Metrick, who takes on the role of chief executive officer of the Saks Global Operating Group.

Also, Ian Putnam will serve as CEO of Saks Global Properties & Investments. Both Metrick and Putnam will report to Baker.

Emily Essner, forrmerly chief marketing officer at Saks, has been promoted to a new role – president and chief commercial officer, in which she will oversee the merchandising, marketing, commercial analytics and e-commerce for Saks and Neiman Marcus. “She’s got all things consumer related,” Metrick told WWD in an interview Monday evening. “Her team will be supporting the Saks and Neiman’s stores and websites.”

Tracy Margolies, who was chief merchandising officer for Saks, has been appointed president of Bergdorf Goodman. She succeeds Darcy Penick. Margolies, who before joining Saks worked at Bergdorf’s, has been “a key partner of mine,” Metrick said. “Tracy’s deep expertise and track record of leading results-driven strategies will propel Bergdorf Goodman into the future while honoring its unique legacy. I am confident she is the right person to lead this storied business’ next chapter and look forward to what Bergdorf Goodman will accomplish under her leadership.

“We are going to do things very differently,” Metrick added. “You will not see some of the same traditional roles, like chief merchant. Saks Global plans to break the mold in how we go to market and how its business runs.”

Metrick also underscored that Saks Global will adopt AI “in the right places for greater personalization and to maximize the customer experience.”

Others leaving Neiman’s as a result of the acquisition include Geoffroy van Raemdonck, NMG’s CEO; Ryan Ross, president of Neiman’s and head of NMG customer insights; Lana Todorovich, chief merchandising officer at Neiman’s, and Katie Anderson, NMG’s chief financial officer.

“The big takeaway first is that we believe there is a ton of talent at Neiman Marcus Group,” Metrick said. “When we get into the integration as we move forward, there will be a lot of cross pollination between the companies.”

He pointed out that Bill Bine, NMG’s former chief supply chain officer, will fill the new role of chief transformation officer of Saks Global. “A highly strategic, results-oriented executive, Bill’s significant experience leading large-scale business transformation and operations in retail will be instrumental to our integration journey,” said Metrick.

Also, some changes in how the deal to buy Neiman’s ended up being structured were disclosed. Sources had said that Baker was rushing to button down financing for the deal, even within the last few weeks. Part of the issue was the high interest rate being charged on the initial loans Baker was being provided in the deal – sources said it was initially set at 11 percent and with interest rates coming down he was anxious about finding cheaper financing.

Earlier this month, Saks issued a $2.2 billion bond, replacing the higher rate financing that would have come from private equity giant Apollo. But Amazon and Salesforce continue as investors, along with Authentic Brands Group as well as G-III Apparel Group, which more recently came in as investors. Saks did not specify how much each of the four companies contributed.

Saks, for several seasons now, has been delinquent on payments to many vendors. But Metrick told WWD that the transaction “recapitalizes the company and puts us in a much better cash position and much better position operating the business.”

Metrick also said that starting in January, “We will begin the process to work through the delayed payments. It will begin the first week of January. That’s when the process starts.”

Sources said Saks in some cases is months behind in payments and that in many instances major vendors would ship merchandise to the retailer only if they received some payment, or payment up front. While most of the leading luxury brands operate at Saks under concessions, other companies in fashion and beauty were facing pressure. Some beauty companies declined to ship to Saks stores, only agreeing to ship to orders from Saks.com.

In his memo to the team on Monday, a copy of which was obtained by WWD, Baker wrote: “I’m pleased to share that with the closing of the transaction, Saks Global has greater financial stability with less leverage and a newly-funded revolving line of credit, providing significant levels of available liquidity. This financial structure enables us to make investments to better serve our customers and be a better partner to our vendors.

“With the closing of the NMG transaction, HBC’s Canadian business has been recapitalized as a standalone entity, separate from Saks Global, with significantly reduced leverage,” Baker wrote. “HBC will continue to operate Hudson’s Bay stores and TheBay.com, as well as continue to own or lease a 2 billion (Canadian) dollar real estate portfolio, either entirely or with its joint venture partner, RioCan Real Estate Investment Trust. With a new financial structure, HBC’s Canadian business will be set to execute on its business plan and best serve its loyal Canadian customers.”

Metrick also issued a memo, a copy of which was obtained by WWD, in which he wrote, “Bringing these iconic brands together is a significant step forward for luxury retail. As one company, we have an opportunity to transform the way we serve consumers, blending art and science to ensure each customer’s experience is unmistakably their own. With deep relationships across the industry, cutting-edge personalization and strategic technology partnerships, we are poised to drive innovation and growth. I look forward to working with the many talented leaders and employees from NMG and across Saks Global as we embark upon our journey to bring these businesses together.”

While the deal creates a luxury retail empire in America, it raises various questions about potential consolidations involving functions, stores and personnel. Asked about consolidations, Metrick replied, “This is about transformation, not consolidation. It’s about growth…There are redundant functions that are going to be rationalized. It will be a process we go through over time.”

As previously reported, Saks plans to close its store on Worth Avenue in Palm Beach, Fla., next year, and is closely reviewing the Saks and Neiman Marcus store fleets.

Other Neiman’s executives departing the business are Eric Severson, chief people, ESG and belonging officer; Ann Marie Janke, chief technology and information officer; Tiffin Jernstedt, chief communications officer, and Tom Mattei, chief legal officer, corporate secretary, chief compliance officer.

In January, Metrick is scheduled to host a Saks Global town hall for the newly combined organization. Details will be revealed soon.

Under the combined organization, Metrick has 11 senior officials reporting to him, including Bine, Margolies, and Essner as well as Kim Miller, president of Saks Off 5th; Rob Brooks, chief operating officer; Larry Bruce, president of stores for Saks and Neiman’s; Sarah Garber, chief people officer; Sarah Garber, chief people officer; Mike Hite, chief technology officer; Caroline McMurray, vice president of strategy; Jeff Pedersen, chief financial officer, and Andrew Woodworth, chief legal officer.

The Seattle-based retailer revealed that the Nordstrom family and Liverpool will acquire the company shares they do not already own.

Nordstrom Inc. is going private.

As expected, the Seattle-based retailer said Monday that it signed a definitive agreement under which the Nordstrom family and Mexican retailer El Puerto de Liverpool will acquire all of the outstanding shares of Nordstrom not beneficially owned by the Nordstrom family and Liverpool. It’s an all-cash transaction with an enterprise value of about $6.25 billion.

The announcement confirms a Dec. 18 report in WWD that the deal was imminent.

Nordstrom common shareholders will receive $24.25 in cash for each share of common stock they hold. The deal represents a premium of about 42 percent to the company’s unaffected closing stock price on March 18, which was the last trading day prior to media speculation about the potential transaction.

Nordstrom’s board has approved the buyout. Nordstrom Inc. is led by brothers Erik and Pete, chief executive officer, and president and chief brand officer, respectively, as well as their cousin Jamie, who serves as chief merchandising officer.

“For over a century, Nordstrom has operated with a foundational principle of helping customers feel good and look their best,” said Erik, in a statement. “Today marks an exciting new chapter for the business. On behalf of my family, we look forward to working with our teams to ensure Nordstrom thrives long into the future.”

“We’re grateful to the employees, customers and shareholders who have shaped Nordstrom into the company it is today,” Pete said in a statement. “Since our founding in 1901, we have been committed to providing our customers with the best possible service — and to improving it every day. We look forward to building on that commitment in this next phase of the company’s evolution.”

“Nordstrom is one of the worldwide leaders in department store retailing, and we’re thrilled to be investing in a company that has meaningfully shaped the industry for nearly 125 years,” said Graciano F. Guichard G., executive chairman of the board of directors of Liverpool. “We are honored to partner with the Nordstrom family and the company’s talented team as they continue to deliver outstanding service to customers.”

The board approved the deal upon the recommendation of a special committee of independent directors that conducted a review of the transaction proposal submitted earlier this year. The transaction is expected to close in the first half of 2025, subject to regulatory and other conditions, including approval of holders of two-thirds of the company’s common stock and the holders of a majority of the shares of the company not owned by the Nordstrom family or Liverpool or their respective affiliates and the company’s directors, and Section 16 company officers who are those required to disclose their beneficial ownership of the company’s equity.

The transaction will be financed through a combination of rollover equity by the Nordstrom family and Liverpool, cash commitments by Liverpool, up to $450 million in borrowings under a new $1.2 billion ABL (asset-based lending) bank financing, and company cash on hand. The company’s $2.7 billion principal amount of existing senior notes and debentures are expected to remain outstanding following the transaction. Following the closing of the transaction, Nordstrom will be 50.1 percent owned by the Nordstrom family and 49.9 owned by Liverpool.

“The special committee of the Nordstrom board of directors reviewed this proposal against the company’s stand-alone prospects for growth,” said Eric Sprunk, chairman of the special committee, in a statement Monday. Sprunk said the deal offers “greater value for all public shareholders at a significant premium to the unaffected share price.”

Also, common shareholders will receive a special dividend of up to $0.25 per share based on cash on hand at the close of the transaction. Nordstrom stock closed Friday at $24.53.

The third generation is taking the helm as Michael Chalhoub has been named chief executive officer of the Middle East luxury giant; Patrick Chalhoub will become executive chairman, effective Jan. 1.

DUBAI — Chalhoub Group has revealed that Michael Chalhoub, 37, will take over as chief executive officer from his father, Patrick Chalhoub, effective Jan. 1. The transition represents a pivotal moment for one of the Middle East‘s biggest luxury retail groups as Patrick moves into the role of executive chairman after more than two decades of leading the company.

Chalhoub Group manages a network of 773 retail stores and 65-plus e-commerce platforms, with more than 16,000 employees across the Middle East and North Africa. The company serves as the regional distribution and joint venture partner for hundreds of global fashion, luxury and beauty brands including a portfolio of LVMH Moët Hennessy Louis Vuitton labels: Louis Vuitton, Christian Dior, Fendi, Celine and Sephora. In addition, the group is the regional partner of Puig, Christian Louboutin, Versace, Jimmy Choo and Jacquemus, among others.

This transition marks a new chapter for the luxury retail and distribution group, which has been led by the Chalhoub family for 70 years. In an exclusive joint interview with WWD ahead of the handover, father and son shared their vision for what lies ahead for the family-owned company.

Patrick — who has served as CEO for more than two decades, succeeding his own father Michel Chalhoub, who founded the business — has been preparing for this moment for several years. The group set in place a rigorous succession planning process with an internal and external search, which included nonfamily members. “I’ve always said I wanted this moment to come between my 65th and 67th birthdays. Now I am turning 67, so we are on track,” he said.

“There is a cycle in the lifetime of a business plan — the period where you learn, the period where you do and the period where you teach,” Patrick explained. “I wanted to make sure that I could control the period when I let go, to ensure an efficient and well-planned transition.”

He emphasized the importance of an “orderly transmission” of leadership, ensuring a smooth handover to the next generation. The planning process involved restructuring the company’s advisory board, transitioning longtime employees into nonoperational roles, and building a younger, more collaborative executive committee. “It all began three years ago when we started changing our board, who were ultimately in charge of taking the decision on who the new CEO would be,” Patrick said.

He went on to explain that it wasn’t a presumption the role of CEO would be given to a family member; in fact, the fact group went through a systematic process to ensure it had the right candidate and the roles and responsibilities were clearly defined. “We worked with a headhunting company on the process to recruit, on how we define the role of the executive chairman, the role of the CEO,” he explained.

He added the board considered 21 internal as well as external candidates, who went through several rounds of reviews.

“This process was so very important and reassuring for both the group, for the family and for Michael himself,” Patrick said.

The succession comes after Michael’s four-year tenure as head of joint ventures for the group as well as president of strategy, growth, innovation and investment. He successfully expanded the group’s portfolio, adding new key category partnerships like EssilorLuxottica while driving digital transformation and innovation initiatives.

“Taking on the management of our joint ventures was a way for me to directly address one of the key priorities that was keeping my father up at night,” said Michael, who explained he worked within the company in two different periods of his professional life, the first time running Michael Kors in the region. At the time he said he left because he didn’t “always see eye to eye” with the top management, including his father.

When he rejoined the group in 2020, he said: “I focused on streamlining and strengthening critical partnerships, and I think I was able to demonstrate my ability to navigate the complexities of the luxury landscape and create value for our business.”

Michael, who holds an MBA from Harvard Business School and also successfully launched his own sports media business in Dubai, brings a forward-thinking approach to his new role as CEO. While he aims to pioneer change and future proof the business, he acknowledged the legacy created by his father and grandfather.

“I feel incredibly lucky to be in this position, and I’m humbled by the responsibility that comes with it,” he said. “My focus will be on continuing to create value for our consumers, partners and employees, while also driving innovation and fostering a collaborative, inclusive culture.”

When asked if he grew up thinking he might be fit for this role some day, the younger Chalhoub replied: “I did think that there was a probability that I would try to succeed Patrick. Obviously, this business has stayed led by a family member for the last 70 years. And so it would be deaf for me not to think that there was a chance that this would happen.”

The Chalhoub Group’s story began when Patrick’s parents, Michel and Widad Chalhoub, established their first venture in Damascus, Syria, in 1955 after securing the first regional distribution rights for Christofle, which is now owned by Chalhoub Group. This first partnership laid the foundation for what would become the Middle East’s premier luxury retail and distribution group.

As political tensions rose in Syria in the 1960s, Michel demonstrated the resilience that would become a hallmark of the family business, relocating operations to Lebanon in 1965 and later to Kuwait in 1975 following the outbreak of civil war in Lebanon. The company’s ability to adapt and thrive during challenging times became part of its DNA, embodied in Michel’s oft-quoted philosophy: “We are des battants, fighters. The enemy is not competition, hard times or new ways…what we fight against every day is complacency.”

Patrick’s journey with the company has mirrored the group’s own evolution across the Middle East. After relocating through Beirut and Kuwait, he joined the family business in 1979, eventually settling in Dubai in the early 1990s. In 2001, he was appointed co-CEO alongside his late brother Anthony, marking the beginning of an era of unprecedented expansion for the group.

Under Patrick’s stewardship, what began as a regional distribution business has evolved into the Middle East’s leading luxury retail and distribution group. The company has built an extensive portfolio of joint ventures with the world’s leading luxury houses across fashion, accessories, watches, jewelry, eyewear and home categories. This expansion extended the group’s footprint beyond the traditional Gulf markets of the UAE, Kuwait, Saudi Arabia, Qatar and Bahrain into countries like Egypt and Jordan.

The handover comes at a pivotal time for Chalhoub Group, which continues to adapt to rapid changes in retail. Michael shared he would like to further expand into new markets and territories like Latin America and the U.S. The group has invested heavily in digital transformation, creating an omnichannel experience across its large network of stores and online platforms. Their future-focused approach includes investments in retail tech, data analytics, and innovative retail concepts through their Greenhouse incubator program.

In his new role as executive chairman, Patrick will focus on long-term strategic partnerships and guiding the group to thrive sustainably in an evolving regional and global landscape. He will continue to oversee the company’s sustainability and ethics initiatives, as well as the audit function, ensuring the organization maintains its vision and mission while upholding its foundational values. The company has made significant strides in sustainability and inclusion, with women comprising 61 percent of its workforce and 41 percent of management positions and is on track in its commitment to reach net zero emissions by 2040.

Additionally, Patrick will serve as the interface between the board and the executive team, providing guidance and support without being involved in day-to-day operations. “It’s important that we build trust and not try to prove ourselves by doing the opposite of what the CEO is doing,” Patrick said. “My role will be to support Michael, while allowing him and his team to lead the business.”

Michael is committed to creating a collaborative culture at the company as its new leader. “One of my biggest achievements even in the last few years is fostering a culture of innovation by building an inclusive culture around me where people are not afraid to speak their mind, to debate, to share some of their experiences,” he said. “I value surrounding myself with people that have incredibly diverse backgrounds, whether it’s the industry they come from, years of experience, gender. There is a lot more diversity, and those people are not just there to say yes, but they’re there to share their mind, and to have very heterogeneous conversations when we’re in the boardroom.”

As Patrick steps away from daily operations, he acknowledged feeling very comfortable in the carefully executed succession plan that ensures continuity as the company evolves, while staying true to its family values and heritage.

“I really feel very relaxed and very content in the way things have been done.”

He also shared he is looking forward to the road ahead. “In February I’m taking a course related to sustainability at Stanford, which I’m very much looking forward to having the time to do,” to which Michael responded with surprise, laughing: “Oh, that’s the first I’m hearing of this.”

“We’re not getting rid of you, Patrick,” Michael joked, acknowledging the guidance and support his father will continue to provide.

The Takeaway

• Meta could follow other open-source AI developers by selling Llama directly to customers

• It’s probably a matter of time before Google and OpenAI start developing humanoid robots themselves

• Don’t be surprised if Microsoft and Amazon develop wearable AI devices.

Nvidia, a chip giant, says it can develop a cloud services and software business to rival Amazon Web Services. OpenAI, an artificial intelligence developer, has been developing server chips and a browser to reduce its dependence on Nvidia and Google, respectively. And Elon Musk hired a data center team to build one of the biggest supercomputing server clusters for developing conversational AI.

It seems like every major competitor in the AI field is moving into the territory of its rivals or customers. They’re trying to either take a piece of the growing market for consumer and enterprise AI services, including server hardware and personal devices, or create a new industry, such as humanoid robots. In many other cases, especially when it comes to AI server chips, companies are trying to lessen their dependence on key suppliers to save money.

As the two charts below show, several large tech companies are competing neck and neck to develop an AI hardware and software “stack,” while others are trying to catch up. In the below chart, the darker the square, the more advanced the company’s business or technology is in that field. Blank squares or lightly colored squares show the gaps these companies have in developing core components for AI, which they might fill through new internal efforts or an acquisition.

For instance, OpenAI began exploring developing its own AI chips to lessen its reliance on Nvidia barely a year after launching its first major business, ChatGPT, in late 2022. It has continued that effort with the help of Broadcom, a longtime chip designer, and plans to launch sophisticated chips by 2026. Apple also recently embarked on development of its first AI server chip with Broadcom’s help as Apple barrels into consumer AI services for the iPhone.

Llama Cloud Service?

Meta Platforms, meanwhile, runs a major open-source AI model, Llama, but doesn’t have a way to distribute it directly to businesses. Meta could follow in the footsteps of other open-source AI developers by hosting the Llama software in its own data centers and selling it to businesses as a cloud service, as well as providing extra security and other features such buyers might want.

Meta already is going outside its traditional comfort zone by developing a web search engine so its AI chatbot can answer questions about current events without needing help from Google and Microsoft.

The frenzy in AI mirrors the expansion Google, Amazon, Apple and Microsoft have made over the past 15 years to compete with one another in selling cloud services, mobile devices and video—with varying degrees of success.

In AI, however, the attempted land grabs have happened faster, as leaders in the field don’t know which businesses or technologies will be most valuable in the long run.

OpenAI recently took control over the planning of a data center in Abilene, Texas, because it felt that Microsoft, which is supposed to be its exclusive data center provider, wasn’t moving fast enough to set it up. OpenAI also has been developing a web browser so it can have more control over the way people interact with ChatGPT. And through a separate company, OpenAI CEO Sam Altman has been developing an AI-powered personal device that could possibly use OpenAI software.

OpenAI technically doesn’t own or control the Abilene facility, but don’t be surprised if it gets more involved in setting up data centers and supercomputing clusters for AI down the line. Chief Financial Officer Sarah Friar has already talked with colleagues about the company’s ability to raise debt for such facilities.

Meanwhile, Nvidia, which was feeling some heat after customers such as OpenAI and Amazon ramped up development of their own custom AI chips, has been expanding a cloud and software business that could compete with Amazon Web Services. Nvidia has typically sold products through intermediaries, so its shift to direct sales may not be smooth.

AWS, for its part, is making a big push with its own AI chips, which it hopes will eat into Nvidia’s share of the market, though that’s far from guaranteed. And AWS recently launched its own large language models, similar to OpenAI’s, so it doesn’t have to entirely rely on Anthropic. AWS resells Anthropic models to cloud customers and uses them to power new Amazon AI products and features.

Then there’s Musk, who unexpectedly developed an advanced data center to aid his startup, xAI, as he felt that cloud providers such as Oracle wouldn’t move fast enough to set up such a facility. The bold and risky bet appears to be paying off and has set into motion a scramble among rivals including OpenAI to catch up. Some of them have even felt compelled to spy on the facility from the air.

Chip Flop

Not all the companies’ new moves have gone well. Microsoft last year finally launched an AI chip to potentially lessen its reliance on Nvidia, but the chip hasn’t performed as well as the company hoped. Microsoft isn’t selling it to cloud customers yet, though it is continuing to develop new versions.

Where companies have weaknesses, they have turned to partners. The most famous example in the AI bunch is Microsoft’s reliance on OpenAI models, though it is trying to develop comparable ones on its own and has been striking deals to use models from other providers such as Anthropic. Apple is also partly relying on OpenAI to power features for Apple Intelligence.

Acquisitions are another option. As Nvidia has increasingly developed a nascent cloud and software business to complement its chip largesse, for instance, it has made several small startup acquisitions to buttress those newer products.

Anthropic, OpenAI’s biggest startup rival, remains a potential acquisition target for companies such as Amazon or Apple that don’t have state-of-the-art LLMs that can compete with those of OpenAI.

Of all the companies in our charts, Google has established its technology or business bona fides in nearly all of the software and hardware categories in our chart, so it seems the least likely to pursue a major acquisition or partnership. And now it's looking to leverage major strengths in some areas, such as consumer apps like search, to point its billions of users to Gemini, a chatbot that competes with ChatGPT, The Information reported last week.

However, Google has been pushing to break apart the Microsoft-OpenAI cloud deal so that Google Cloud might host OpenAI models in its data centers and resell them to cloud customers. Right now, only Microsoft can do so, meaning Google and other non-Microsoft clouds are missing out on potential revenue.

In the area of wearable AI devices or robots powered by LLMs, a lot could happen in the coming year as Musk parades around his nascent Optimus robot prototypes and talks about them as a $1 trillion-per-year revenue opportunity. More rivals undoubtedly will get in the game.

The Robots Are Coming

For instance, Google on Friday announced it would provide AI software to humanoid robot startup Apptronik. Google previously owned and later shut down or sold numerous robotics firms, including Boston Dynamics. But now, some of the AI that powers services like ChatGPT can help robots understand objects around them. It’s probably a matter of time before Google and OpenAI—which earlier this year said it restarted its robotics software division—start developing humanoid robots themselves.

Meta sells smart glasses that it is pairing with its Llama AI so the wearer could verbally ask the AI about their surroundings or request other information, getting responses through speakers positioned next to their ears. Meta has also considered developing earbuds resembling Airpods, but with an outward-facing camera that can “see” and analyze the person’s surroundings.

Apple and Google are incorporating AI into mobile phones to perform functions similar to those of the glasses, and Apple could also make its mixed reality Vision Pro device a hub for AI assistants and apps. Google has also said it has developed prototype glasses for AI.

Microsoft and Amazon haven’t announced any new AI devices or robots based on LLMs, but the chart suggests we shouldn’t be surprised if they do. Microsoft is no stranger to wearable hardware, given its experience developing Hololens, and an Amazon Alexa team last year discussed developing a new AI-powered device.

Venture funding into Europe is heading for a flat year, but this may obfuscate the fact that European AI startups are thriving.

According to VC firm Balderton Capital and Dealroom, 25% of VC funding into the region — approximately $13.7 billion — went to AI startups this year, compared to 15% four years ago, resulting in several new unicorns, such as Poolside and Wayve.

For Balderton Capital general partner James Wise, the most important takeaway is that “you can raise hundreds million euros, even billions euros, as a very early-stage AI company if you’ve got a breakthrough technology in Europe, just as you can in the U.S.”

This counters what he sees as a “relatively negative narrative” around Europe: Collectively, European AI companies have doubled in value in just four years, reaching $508 billion. Per these new figures, this category now represents nearly 15% of the entire tech sector in value, up from 12% three years ago.

This means there’s funding available to AI startups, whether at early or at later stages, although it may not always come from Europe itself. In addition, American AI companies also see Europe as a talent pool to tap into.

“We’re still probably a derivative of the U.S. market, we’re still reliant on it, but it’s not like nothing’s happening here. It’s actually a really buoyant ecosystem,” Wise told TechCrunch.

This may not be news to TechCrunch readers already familiar with European AI rising stars such as Mistral AI and Photoroom, but also newcomers like Dottxt. What’s less expected, however, is Dealroom’s finding that 349,000 people were employed by AI companies in Europe this year, a 168% increase since 2020.

This may sound surprising, as many AI teams are on the smaller side; but for Wise, this is in line with the thesis of his recent book, “Start-up Century: Why we’re all becoming entrepreneurs — and how to make it work for everyone.” Says Wise: “You’re going to see a rise in hundreds of small, very productive companies, rather than one large, medium productive company.”

There’s also a snowball effect, as AI companies make others more productive.

“In our CTO survey, 93% of the companies we work with have said that generative AI tools have significantly changed their workflow in the last year,” Wise said. Among these, some said their engineering teams are now twice as productive, while others see an impact on other functions — averaging out to 20% savings in operating costs.

All of this leads Wise to think that the adoption of AI will continue to increase. Will this be good news for Europe’s AI sector? Perhaps, although Wise and his colleagues now think that “there’s no longer an AI sector.” This would potentially make similar data pointless next year.

Investigation comes just weeks before Biden administration hands over to president-elect Donald Trump

The US has launched a probe into alleged anti-competitive measures by China to support its semiconductor industry, just weeks before the Biden administration hands over to president-elect Donald Trump.

The US Trade Representative’s office said it was investigating “China’s acts, policies and practices related to targeting of the semiconductor industry for dominance”.

The probe will be conducted under Section 301 of the US Trade Act and initially target what the USTR called “foundational” semiconductors, including those used by the automotive, healthcare, infrastructure, aerospace and defence industries.

It marks the latest in a worsening tit-for-tat trade war over semiconductors, sparking fears of serious disruptions to international supply chains.

Potential outcomes of a Section 301 investigation include import restrictions or new tariffs on shipments from China of the kinds of chips used in cars, household appliances and consumer devices — a decision that would fall to the Trump administration.

Washington on Monday accused China of using “extensive anti-competitive and non-market means, including setting and pursuing market share targets, to achieve indigenisation and self-sufficiency”. China’s alleged tactics were designed to achieve dominance of the semiconductor industry in China and on global markets, the USTR said.

After several years of focusing its semiconductor policies on the most cutting-edge processors necessary for creating advanced artificial intelligence, Washington is turning its attention more to the mature end of the market, with chips manufactured using what the industry calls “legacy” production systems.

Makers of advanced chip manufacturing equipment, such as ASML, are already restricted from selling their most sophisticated tools to Chinese chipmakers, holding back China’s advances in AI and curtailing its efforts to build a rival to Silicon Valley-based Nvidia.

However, that has not prevented Chinese chipmakers from making huge investments to scale up production of legacy semiconductors. Some analysts estimate that China is on track to double its chip manufacturing capacity by the end of the decade, boosted by subsidies from Beijing.

The commerce ministry in Beijing said it was “firmly opposed” to the latest 301 investigation, and that action would disrupt global supply chains and hurt the interest of US companies and global consumers.

It noted that US companies dominate the global chip market and the US government has provided “huge” subsidies to its domestic chip industry. Beijing also issued a thinly veiled warning of retaliation, saying China would “take all necessary measures” to defend its rights. 

US and European semiconductor executives have warned that local chipmakers could suffer from the same kind of problems that the flood of low-cost Chinese solar panel imports has caused western producers in recent years. Relying on Chinese suppliers could also create national security issues for the US, officials fear.

Often overlooked amid the hype around AI, the significance of legacy semiconductors became apparent during the Covid-19 pandemic, when factory shutdowns triggered widespread shortages of everyday electronic goods.

A report by the US Department of Commerce earlier this month found that China’s recent increase in production of mature-node semiconductors “has already begun to cause pricing pressure that may weaken US chip suppliers’ competitive positions”.

More than two-thirds of US companies’ products use chips produced in Chinese foundries, the report said.

China has for decades viewed its dependence on the US and other countries as a fundamental national security vulnerability. But it has struggled to shake its reliance on foreign companies for the key design and manufacturing technologies needed to make increasingly sophisticated chips.

Earlier this month, Washington issued new export controls targeting China’s ability to make the most advanced chips, including tougher restrictions on shipping semiconductor manufacturing tools and a ban on exports of advanced memory chips needed in AI hardware.

Beijing swiftly hit back, banning the shipment to the US of key minerals and metals used in chip production. It also opened its own investigation into Nvidia for suspected violations of the country’s anti-monopoly law.