TheChek News Flow

ON Semiconductor has been hit by falling sales to auto makers and sluggish sales of its industrial chips. That’s about to change—and its earnings picture looks bright.

Chip stocks have been hot, but ON Semiconductor has not. That may be about to change.

The $31 billion Scottsdale, Ariz.–based chip maker hasn’t had an easy time lately. Its customers are mainly auto makers and manufacturers, which have been struggling even as demand for artificial-intelligence chips has increased. ON Semi stock has dropped 31% to $72 from its record high on July 28, 2023, while the S&P 500 index has gained 29% over the same period.

But ON’s moment may finally have arrived. Car makers could see a pickup in demand following a couple of years of lackluster sales. Demand should be helped by Federal Reserve interest-rate cuts, which provide a tailwind for economic growth, while Donald Trump’s election could provide a boost as well. ON Semi may not be Nvidia or even an AI play, but the stock now looks like a buy.

“ON Semi [is] a strong candidate for outperformance once demand rebounds,” writes Charter Equity Research analyst Jack Egan.

For ON, the problem starts with its semiconductors for cars, which make up a little more than half of its total revenue. Sales of auto chips fell to $907 million in the second quarter of this year, down 21% from a peak of $1.16 billion in the third quarter of last year. Following Covid-19 lockdowns, auto makers, fearing a shortage, rushed to buy semiconductors. Now they have too many, especially with car production stagnant, and companies like Ford Motor and General Motors are buying fewer chips, says Morningstar analyst William Kerwin. The weakness, combined with a sluggish market for industrial chips, pushed ON’s gross profit margins down to 45% from 47.3% in the third quarter of 2023, causing earnings to fall 31%.

The good news is that those pressures appear to be in the past—and they should stay there. The economic backdrop should get a boost from the Fed and other central banks cutting interest rates, while Trump’s victory could help the economy and the car business overall, though it could slow electric-vehicle sales, an important business for ON. But even that might be less of a worry than investors fear. “The world is going to come to EVs, and none of the car makers are abandoning EV plans,” says Piper Sandler analyst Harsh Kumar.

As auto makers see strengthening demand, they’ll order more chips to produce more vehicles. That could lead to year-over-year growth in the number of chips ON sells, and lift semi prices because it takes time for semiconductor makers to ramp up their supply. There are early signs of improvement. In the third quarter, ON Semi’s auto sales rose 4.9% to $951 million from that awful second quarter, while margins increased half a percentage point to 45.5%. That suggests that ON has gotten through the worst. “There is an element of chip ordering that’s like flipping a light switch,” says B. Riley Securities analyst Craig Ellis.

An auto recovery would go a long way toward fixing what ails ON, especially if the growth is matched with a rebound in other sectors. Its industrial revenue is expected to grow by 6% annually over the next three years as manufacturers increasingly use automation to make equipment, driving demand for more chips.

All told, analysts expect total revenue to grow by 10% to about $9 billion by 2027, a record that is achievable, given that there are only a few companies focused on the silicon-carbide auto chips ON sells. The company’s only larger competitor is STMicroelectronics, which generates just over $1 billion in silicon-carbide chip sales each year.

That sales growth should be matched with improvements in efficiency. Last year, ON purchased GlobalFoundries’ East Fishkill, N.Y., plant. This facility can produce more chips but at a similar cost to ON’s other plants, which will help drive costs down. Other costs—such as research and employee pay—are expected to rise more slowly than sales, as the company doesn’t need to go on a hiring binge. That should help it reach its target of 53% gross margins, which it reiterated on its third-quarter earnings presentation, though it didn’t specify for which year.

Management also has more than $1 billion in free cash flow, and it plans to use half of each quarter’s cash flow to repurchase shares. Together with its likely sales growth and improving profitability, analysts expect earnings per share to grow by 21% annually to $7.11 by 2027, according to FactSet, from $4.01 this year. Those estimates could be low if the auto business recovers more quickly than expected. “At this point, there’s more risk to the upside,” says Charter’s Egan.

Nor does the stock look expensive. It currently trades at 17 times 12-month forward earnings, well below the S&P 500’s 22 and the average chip stock’s 23.8. Even holding the multiple steady would bring the stock to about $112 by the end of 2026, for a 25% annualized gain from today.

That makes ON Semi stock one to jump on for long-term investors.

The corporate equivalent of blood in the streets is flowing at Volkswagen, Europe’s top auto maker and No. 2 globally. “Decades of structural problems” mean “costs in Germany must be massively reduced,” CEO Oliver Blume recently told the German newspaper Bild am Sonntag.

He is demanding 10% across-the-board pay cuts and, smashing German taboo, the closure of three domestic factories.

That means time to buy, says Michael Field, European equity strategist at Morningstar. “If VW can get the factory closures signed off, it could have a V-shaped recovery,” he argues. He sees a whopping 65% upside in the stock, which has plunged nearly 40% over the past six months.

Field is also piling into VW’s compatriots, Mercedes-Benz Group, BMW, and Stellantis, which combines the old U.S. Chrysler with European stalwarts such as Fiat, Peugeot, and Citroën.

Not everyone is so bullish.

“On paper, all these stocks look incredibly cheap,” says Daniel Schwarz, head of Europe automotive research at Stifel Financial. “But no one knows what tomorrow will bring.”

The current backdrop has already brought the collapse of a business model based, at least for the German houses, on fat profit margins in a voraciously growing China.

Local competition has slashed Europeans’ share of the Chinese luxury car market to 40% from 90% before the pandemic, says Sasha Kachanova, a sector analyst for asset manager abrdn. And the market is shrinking due to China’s property-driven malaise.

Chinese upstarts like BYD have raced ahead of their European elders in affordable electric vehicles, pushing the European Union to slap import tariffs on them of up to 35%. “Europe developed demand for EVs, and the Chinese are coming in to fill it,” Field comments.

What’s looming next is the threat of U.S. tariffs from an incoming Trump administration. Europe exports twice as many autos to the U.S. as it imports from there, Field notes.

More certain is a tightening of European Union carbon-emissions standards in 2025, which are imposed on auto makers on a fleetwide basis. VW could face up to four billion euros ($4.3 billion) in fines based on its current lineup, Schwarz estimates.

The crunch from Brussels may accelerate Europe’s own EV efforts, though. New electric models in VW’s upscale Audi and Porsche families will roll out 15% cheaper next year thanks to an improved drive train platform, Schwarz says.

Peugeot and Citroën, meanwhile, tried to upstage the Chinese at last month’s Paris Auto Show with new compact EVs priced around €20,000.

“The Chinese have first-mover advantage in EVs, but that can quite easily be replicated,” Field says.

Abrdn’s Kachanova begs to differ. “European manufacturers need to create a whole new infrastructure for EVs,” she says. “Chinese competitors are close to the supply chain and can stay capital-light.”

Her house owns Mercedes stock nonetheless because…it’s Mercedes. “We still hold onto Mercedes because it’s a strong, premium brand,” Kachanova says.

There’s plenty of brand value left in Volkswagen cars, too, if Herr Blume can make them cheaper, Schwarz says. “The main problem is not the product, but the cost,” he says.

Blume is far from having a free hand. The Volkswagen Law of 1960 enshrined a 20% voting stake for the government of Lower Saxony state. Union board members could in theory veto plant closures.

Are the times desperate enough for him to force through his desperate measures anyway? Investors should watch closely.

CEO Elon Musk pulled off a windfall for the auto maker. Now the stock’s fundamentals need to catch up to its heady price.

Elon Musk created the perfect hedge for Tesla stock with his support of Donald Trump.

The president-elect isn’t a friend of electric vehicles. He has said they are a risk to the U.S. auto industry and promised to eliminate tax credits on EV purchases as well as emission “mandates” necessitating that auto makers build battery-powered cars. The potential impact was obvious to the market, which knocked Lucid Group stock down 5.3%, Polestar Automotive Holding down 8.2%, and Rivian Automotive down 8.3% on the day after the election. The moves seem appropriate, given that the changes probably mean lower U.S. sales for the EV start-ups.

Tesla was the exception. Its stock rose 14.8% on Wednesday and added $119 billion in market cap, more than any single stock except Nvidia, which is worth four times as much.

Such a rise was far from preordained. But by aligning himself closely with Trump after a failed assassination attempt in July and spending some $130 million to help get him elected, Musk greased the wheels. There is little reason to doubt the Tesla CEO’s sincerity. Still, Tesla would have lost $66 billion in market value if it had dropped 8% like Rivian, so its one-day swing works out to $185 billion in market value—exceeding the amount that Musk donated by more than 1,400 times. His net worth increased by some $25 billion the day after the election.

Clearly, the market is betting that Musk bought a great deal of protection for Tesla shares.

“Musk made a bet for the ages,” says Wedbush analyst Dan Ives, who rates Tesla a Buy and has a $300 price target on the stock, up just 1% from Thursday’s close of $296.91.

Now the company’s fundamentals need to catch up with its share price.

As of Thursday’s close, Tesla’s stock trades at 93.8 times 12-month forward earnings, its highest since April 5, 2022, when EV deliveries were growing 40% year over year. Tesla deliveries aren’t expected to grow at all in 2024, although Musk believes that growth will return in 2025. It’s also well above its three-year average of 62.9.

It’s an expensive valuation. Barron’s estimates that Tesla’s car and energy-storage businesses are worth about $200 a share based on expected growth over the next decade. Paying more than that would require Tesla’s earnings to grow faster. Accelerating growth could come from better car sales. (Tesla is expected to launch a lower-priced model in early 2025.) Or it could come through new artificial-intelligence revenue. (Tesla plans to launch a fleet of AI-trained self-driving taxis in late 2025.)

Or it could be a bet on benefits arising from Musk’s relationship with Trump. In his victory speech, Trump singled out Musk for praise, calling out SpaceX’s midair rocket catch last month and crediting Starlink’s space-based Wi-Fi service for saving lives when North Carolina was hit by Hurricane Helene in late September.

“Let me tell you, we have a new star. A star is born—Elon,” Trump said. “[Musk is] a character, he’s a special guy, he’s a super-genius. We have to protect our geniuses—we don’t have that many of them.”

The two have even discussed a position for Musk in a second Trump administration, with Musk looking at ways to reduce government waste and inefficiency. In typical Musk fashion, he dubbed it the Department of Government Efficiency, or DOGE. Normally, investors might worry about Musk being stretched too thin. He runs multiple companies, after all, and apparently uses his downtime to become a top-ranked player of the videogame franchise Diablo.

Investors, though, appear to have gotten used to Musk’s multitasking—and they may be pricing in some upside to Musk’s involvement with Trump. With Trump in office, Musk and his car company are likely to receive less scrutiny from the Securities and Exchange Commission and Department of Justice, which are looking into Tesla’s driver-assistance technology and other issues. If Musk is put in charge of reducing government spending, he could target the National Labor Relations Board, which would take some power from labor unions, even if none represent Tesla’s U.S. employees.

But it’s more likely that investors are starting to price in better fundamentals. While the elimination of EV tax credits would harm the industry as a whole, Wedbush’s Ives believes that Tesla has the scale to be profitable without tax credits—as it has in the past. Fewer government incentives also mean less competition from traditional auto makers, leading to a larger market share for Tesla. In all, those changes could be worth $40 to $50 of value per share, Ives says.

BofA Securities analyst John Murphy is even more bullish. Tesla should be “indifferent” to new EV policies from a second Trump administration, he writes, and could benefit from fewer regulations dealing with self-driving cars. On Thursday, he raised his target price by $85, to $350 a share, the highest among major brokers tracked by FactSet. Murphy’s target values Tesla at about $1.1 trillion, or 106 times consensus 2025 earnings estimates aggregated by FactSet.

That target may prove to be too pessimistic. Tesla’s recent gains sent the stock above recent resistance—a term used by technical stock market analysts who look at stock charts to get a sense of levels where investors have bought and sold stocks in the recent past. It now has a “bullish chart pattern,” says CappThesis founder Frank Cappelleri. If shares can stay above $270 in the coming days, he thinks $400 could be in play in the coming months, up 35% from Thursday’s close and near its record high.

Maybe investors have gotten ahead of themselves, but it’s also possible that the market is sniffing something out. Either way, earnings growth has to accelerate for Tesla stock to maintain recent momentum into 2025 and beyond—no matter who is in the White House.

Iranian Agents Plotted to Kill Donald Trump, Justice Department Says

Failed plot highlights attempts to target U.S. officials

Iranian agents plotted to assassinate Donald Trump before he was re-elected as president, the Justice Department revealed Friday in a case that underscores the barrage of security threats Trump faces even before he takes office.

An Iranian operative told law enforcement that an official in Iran’s paramilitary Revolutionary Guard directed him in September to set aside his other duties and assemble a plan to surveil and ultimately kill Trump, federal prosecutors in Manhattan said in court papers.

The operative, identified as Farhad Shakeri, warned the official that crafting such a plan would cost a huge amount of money. In response, the official said, “we have already spent a lot of money…money’s not an issue.” The official in October told Shakeri if he couldn’t pull together a plan within seven days, they would put the assassination plot on hold until after the election, believing Trump would lose and it would be easier to kill him then, the complaint says.

The failed plot, revealed just days after Trump defeated Vice President Kamala Harris, highlights what officials have described as ongoing attempts by Iran to target Trump, a top enemy of the regime. Federal prosecutors in August charged a Pakistani man with ties to Iran with plotting to kill Trump, prompting officials to bolster his security while on the campaign trail. And in September, the Justice Department charged three Iranian operatives with trying to hack Trump’s campaign in an effort to undermine his election prospects.

Officials have long warned about Iran’s efforts to retaliate for the January 2020 U.S. drone strike that killed Qassem Soleimani, leader of the Quds Force, the group responsible for Iran’s covert military operations abroad. Trump ordered the strike, which occurred in Baghdad, while he was in the White House. U.S. ties with Iran are expected to be even more strained during his second term, as Trump plans to increase sanctions as part of an aggressive strategy to undercut Tehran’s support of violent Mideast proxies and its nuclear program, the Journal reported.

Officials have been concerned in recent months that Iran appears to be escalating its attempts to commit violence against government officials, dissidents and political figures on U.S. soil.

“There are few actors in the world that pose as grave a threat to the national security of the United States as does Iran,” Attorney General Merrick Garland said.

The newly unsealed complaint also says authorities disrupted another plot to kill Masih Alinejad, an activist and writer living in Brooklyn who has been vocally critical of Iran’s human-rights abuses, discrimination against women and use of imprisonment and torture against political opponents. She has been the target of several assassination plots thwarted by U.S. authorities.

Iran “has been conspiring with criminals and hit men to target and gun down Americans on U.S. soil, and that simply won’t be tolerated,” Federal Bureau of Investigation Director Christopher Wray said.

Shakeri, 51, and two others—Carlisle “Pop” Rivera, 49, of Brooklyn and Jonathan Loadholt, 36, of Staten Island—were charged in what prosecutors described as a network of criminal associates tasked by Iran to further assassination plots on targets including Trump. The three were each charged with murder-for-hire and other related crimes. Court records don’t indicate who is representing the three.

Rivera and Loadholt were arrested and appeared in federal court Thursday; Shakeri remains at large in Iran. An Afghan national, he immigrated to the U.S. as a child and was deported around 2008 after serving 14 years in prison for robbery.

Prosecutors said Shakeri had recently recruited Rivera and Loadholt, whom he met in prison, to help participate in assassinations against other targets.

Investigators learned of the plot against Trump in a series of voluntary telephone interviews with Shakeri between late September and early November, according to court papers. Shakeri said he was in Tehran, and agreed to be interviewed in an effort to get a reduced sentence for another federal defendant serving time in the U.S. He spoke to agents on the phone at least five times, the document said.

He told agents in one of the conversations he didn’t intend to propose a plan to kill Trump within Iran’s tight time frame, according to the complaint.

Selecting which Trump trades turn into Trump investments is just as difficult this time around as it was in his first term. The right bets might seem obvious now, but they did back then, too.

The Trump trade is over. Now markets are thinking about the Trump investments.

The challenge is to split out what he really plans to do, and in what order, from what was merely campaign rhetoric. Before the 2016 result, the Atlantic wrote that Donald Trump supporters take him seriously, but not literally, while his critics take him literally, but not seriously.

Markets are currently putting everything they like into the seriously camp, and dismissing all the bad stuff as literal, mere campaign rhetoric. This smacks of too much optimism, the same mistake they made last time.

After taking office in January 2017, Trump prioritized things that markets didn’t like. He moved fast on immigration, especially from Muslim countries, pulled out of the Trans-Pacific Partnership trade deal and renegotiated trade with Mexico and Canada, then wasted energy trying to ditch Obamacare.

He didn’t literally make Mexico pay to build a border wall, but he was serious about reducing illegal immigration. Investors had to wait until the end of the year to get the tax cuts they anticipated, while regulatory easing took a long time too.

This time the same four big policies are in play. Again two are broadly bad for investors, and two broadly good. Clampdowns on immigration and high tariffs would hurt the economy, while lower corporate taxes and less regulation would help economic growth and stock prices.

The order they come will be critical, and remains entirely unknown. Yet investors have been piling on the happy thoughts as they buy U.S. stocks, especially smaller companies, and dump Treasurys. The bet is on higher growth and less red tape.

This might be merely a trade. Already the most obvious—and deeply flawed, in my view—Trump trade has imploded. Trump Media and Technology Group, or DJT, the money-losing social-media operation which he part-owns, had plummeted on Friday morning to half the value it hit during bets on him winning in late October, before a partial rebound. It is down 30% from its high the day after the election. The initial surge in banks and the dollar and the plunge in the Mexican peso all had big reversals.

Trump trades lasted longer after the 2016 election, but then faded before he entered the Oval Office. Could this week’s jump in stocks be a similar short-term bounce?

One argument is that the gains are what normally happen after an election, but on steroids. There was a lot of uncertainty ahead of the vote, because the polls—which proved deeply flawed—were 50-50, and many investors were concerned that Trump would not concede defeat if he lost. The VIX index of implied volatility hit 23 at the end of October, before plunging to 15. The trope that investors hate uncertainty has some truth to it, and that fall in the VIX almost mechanically pushes up stocks.

Chris Brightman, chief executive of Research Affiliates, says stocks have tended to trend upward after past elections for about 20 trading days as uncertainty is resolved, before the effect fades.

Another argument is that it is much easier for Trump to implement the stuff markets don’t like than to cut taxes and regulation. He can quickly impose tariffs and limit immigration with executive orders, even if he is highly unlikely to follow through literally on using the army to round up illegal immigrants for deportation. Cutting taxes needs Congress—where the House election outcome remains uncertain, although looks likely to go Republican—while regulatory moves are sure to be challenged in court.

Even if we were willing to ignore the timing and invest for his full term, it isn’t obvious how his major policies would interact. Supply shocks from ejecting immigrants and from higher tariffs are in principle inflationary in the short run. But in the long run they slow growth, which should lower stocks and Treasury yields.

Tax cuts are inflationary and pile on even more government debt, which should lift stocks and Treasury yields. Removing bad regulation should raise productivity, which increases growth without inflation and pushes up Treasury yields, while lowering the cost of compliance is great for stocks.

Worse still, we don’t know how far he will go with his policies. Whether Trump should be taken literally about the scale of tariffs, or whether this is just a negotiating tactic as some tariffs proved in his last term, is unclear. Likewise, the current administration has already clamped down on immigration. Trump can do more to secure borders but if he doesn’t literally force millions to leave, the impact on the economy wouldn’t be serious.

On taxes, again it was right to take him seriously but not literally. One example was the estate tax: In 2016 Trump said he would abolish it, then kept it, but with much larger exemptions. The broad direction would clearly be lower taxes and an extension of the 2017 tax cuts, but don’t assume he will follow through on the (very problematic) promise to scrap taxes on tips.

He has said he will make billionaire Elon Musk his “efficiency czar,” which suggests a return to the pre-Nixon days of light-touch regulation. But voters like clean air, clean water, safe vehicles and reliable banks. Picking which rules to ditch and which to keep will require time-consuming assessments, while a slash-and-burn approach to red tape could alienate many supporters.

Selecting which Trump trades turn into Trump investments is just as difficult this time around as it was in 2016. They might seem obvious now, but they did back then, too.

The resulting company would easily be the world’s second-biggest crude producer, after Saudi Arabia’s Aramco, pumping almost three times the output of Exxon Mobil

Moscow is working on a plan to merge its biggest oil companies into a single national champion, a deal that would tighten President Vladimir Putin’s grip on global energy markets and Russia’s wartime economy.

Under one scenario being discussed, state-backed giant Rosneft Oil would absorb fellow state producer Gazprom Neft—a subsidiary of natural-gas exporter Gazprom—and independently-owned Lukoil, people familiar with the discussions said. All three are under U.S. sanctions.

The resulting company would easily be the world’s second-biggest crude producer, after Saudi Arabia’s Aramco. Pumping almost three times the output of Exxon Mobil, the biggest American producer, a combined entity could enable Russia to wring higher prices from customers in places such as India and China.

Talks among executives and government officials have taken place over the past few months. They may or may not result in a deal, and details of any plan could change, the people said.

Speculation about mergers and takeovers periodically sweeps Moscow and St. Petersburg but no big energy deals have transpired in the past decade. Obstacles include opposition from some Rosneft and Lukoil executives as well as the challenge of amassing the funds to pay Lukoil shareholders, some of the people said.

A Kremlin spokesperson said the administration had no knowledge of a deal.

A Rosneft spokesman said that The Wall Street Journal’s reporting was false, based on information available to him. He said in an email that the Journal’s article “may be aimed at creating competitive market advantages in the interests of other market participants.” Asked by phone what information Rosneft considered to be inaccurate, the spokesman said he wasn’t allowed to answer questions.

A Lukoil spokesman said neither the company nor its shareholders were in the process of merger negotiations “with any parties as this would not be in the interest of the company.”

Spokesmen for Gazprom Neft and Gazprom didn’t respond to requests for comment.

The talks underline Putin’s desire to muster the energy sector to support his war effort, the people familiar with the talks said. The Russian president, some of them said, envisions a juggernaut able to compete with Saudi Arabia at a time when oil demand, while still enormous, is slowing in the face of greener alternatives.

Oil and gas are the lifeblood of Russia’s economy, supplying almost a third of federal revenue and handing Putin influence around the world. Russia’s success at stabilizing its economy in the face of Western sanctions is in large part thanks to its oil industry.

A champion exporter may be better able to withstand Western sanctions, which have complicated exports, hamstrung big new oil-and-gas projects and snarled payments, the people said. The talks, while influenced by the war in Ukraine, are also meant to prepare Russia for an eventual postwar thawing in economic relations.

Bringing Lukoil under direct state control would mark a big step toward fully unwinding the privatization of Russia’s mineral riches after the collapse of the Soviet Union.

When he came to power a quarter-century ago, Putin ruthlessly reorganized the fragmented post-Soviet oil industry, arresting oligarchs and redistributing power to his allies. Today’s handful of players maintain different levels of independence from the government, but all are seen as ultimately compliant to the Kremlin’s wishes. The leaders of the three oil giants are considered among the most powerful players in Putin’s orbit.

For Putin, a combination carries risks. The presence of oil company fiefs prevents any one boss from gaining too much clout. Russia’s oil companies cooperate as part of the OPEC+ cartel, but compete for market share and vie for favor with the government.

Supporters of the plan believe a combined company could make significantly more money, some of the people said. One reason: Oil from all three companies could be sold with the help of Lukoil’s big Dubai-based trading arm, Litasco.

Rosneft in particular has faced difficulties maximizing profits on its exports. Western sanctions allow Russia to sell oil, but seek to limit how much it earns and where the crude can go.

Since early in the war, Rosneft has relied on a secretive network of trading and shipping firms run by a little-known trader from Azerbaijan to send crude to buyers, the Journal reported this year. At times, this operation has struggled to extract payments from India and elsewhere, according to people familiar with its business and documents seen by the Journal.

As well as the trading unit, Lukoil has reserves in the Middle East, Africa, the Americas, and in Russia. One of Russia’s two remaining major independent producers, Lukoil also has a gas-station network, owns refineries in Eastern Europe and has a Moscow stock listing.

A week after the Ukraine invasion in 2022, Lukoil’s board called for an end to the fighting in an open letter to shareholders, customers and employees, making it a rare Russian company to have publicly opposed the war. Ravil Maganov, then chairman, died when he fell from a hospital window in Moscow six months later, state media reported at the time.

Longtime boss Vagit Alekperov—a former deputy Soviet energy minister, and Russia’s richest person last year, according to Forbes—officially resigned as Lukoil president in April 2022, days after being sanctioned by the U.K. He remains the biggest shareholder.

A deal would spark a shake-up in the Russian corridors of power. A main player in the talks is Rosneft boss Igor Sechin, a Putin confidant since the 1990s and former deputy prime minister.

Under Sechin, Rosneft expanded into a massive producer, partnered up with the likes of Exxon and received investments from BP and Qatar’s sovereign-wealth fund. All the while, the U.S. said when it sanctioned him in 2014, Sechin displayed “utter loyalty to Vladimir Putin.”

He has played a major role in foreign relations because of Rosneft’s strategic ties with foreign governments. His 35-year-old son died earlier this year.

It isn’t clear if Sechin would head any eventual combined company, some of the people familiar with the talks said. Another possible leader of the group could be Aleksandr Dyukov, who is credited by analysts with having introduced Russia’s most advanced oil-extraction technology as CEO of the smallest of the three producers, Gazprom Neft.

The Week’s Biggest Funding Rounds: Slow Week Produces Small Venture Rounds

Regular readers know this is usually a top 10 list of the biggest rounds of the week. However, this week is a little different — mainly because of the election.

Very few companies announced funding rounds this week, and the ones that did were on the smaller side — obviously aside from Physical Intelligence’s massive one. Many startups clearly didn’t want their funding news overshadowed by a presidential election. So instead of running a list of 10, we’re going with a top five.

1. Physical Intelligence, $400M, robotics: Physical Intelligence, a startup developing brains for a wide array of robots, raised a $400 million round at a $2 billion valuation led by Jeff Bezos, Lux Capital and Thrive Capital, per The New York Times. The San Francisco-based company had raised a $70 million seed round at a valuation of about $400 million back in March. Physical Intelligence is just the latest startup looking to use AI to improve how robots operate and create foundational software that could be used on a variety of robot models instead of having to create separate operating software for each individual model. Investors already have placed big bets in the intersection of robotics and its AI-enhanced foundational software — especially Bezos. In February, Sunnyvale, California-based Figure, which is developing AI-enhanced robots that it hopes will be able to perform dangerous jobs and alleviate labor shortages, raised a huge $675 million round at a pre-money valuation of roughly $2 billion. That round included investments from Nvidia, Bezos’ Explore Investments and others. In July, Pittsburgh-based Skild AI — also developing brain models that can be used in a variety of robots and for different tasks — raised a $300 million Series A led by Coatue, Lightspeed Venture Partners, SoftBank Group and Bezos, through his Bezos Expeditions. The funding valued the company at $1.5 billion. Overall, this has been a good year for robotics startups receiving funding.

2. Precision Neuroscience, $93M, neuroscience: New York-based Precision Neuroscience, a developer specializing in brain-computer interfaces, raised a $93 million Series C, per reports from medical news outlets citing financial filings. Investors were not named. Founded in 2021, the company has raised $146 million, per Crunchbase.

3. AmplifyBio, $50M, biotech: Ohio-based drug development company AmplifyBio received a $50 million investment — with ability to scale to $65 million — from Vitrian for its new manufacturing enablement center in New Albany, Ohio. Founded in 2021, the company has raised nearly $330 million, per Crunchbase.

4. Inquis Medical, $40M, medical: Menlo Park, California-based Inquis Medical, a medical technology company specializing in thrombectomy systems, locked up a $40 million Series B led by Marshall Wace. Founded in 2020, this is the first round with a disclosed amount, per Crunchbase.

5. PrognomiQ, $34M, healthcare: San Mateo, California-based PrognomiQ, a healthcare company developing detection tests for cancer and other complex diseases, announced a $34 million Series D led by Seer. Founded in 2020, PrognomiQ says it has raised more than $135 million.

There were two big $100 million rounds outside the U.S. this week.

Summary

Nov 8 (Reuters) - Spirit AeroSystems (SPR.N), opens new tab and Boeing (BA.N), opens new tab are close to reaching a funding agreement that would give a cash lifeline to the struggling Boeing supplier, an industry source familiar with the matter said.

A deal could be announced in the next few days, said the source, who spoke on condition of anonymity about the private talks, although he cautioned that it has not yet closed.

Spirit Aero is juggling financial and production challenges, having issued a liquidity warning on Tuesday after four years of losses. It expects to burn around $450 million to $500 million in cash over the last three months of 2024 and first half of 2025, according to filings.

Boeing, which plans to buy its one-time subsidiary, is trying to revive its battered supply chain and jet production after a weeks-long strike halted most of its output.

Spirit could not be immediately reached. Boeing declined to comment.

Spirit said this week it is seeking ways to raise liquidity including possible customer advances. The supplier has previously disclosed it has drawn down a $350-million bridge loan set up when Boeing agreed to acquire the supplier, and previous advances from both the U.S. planemaker and rival Airbus (AIR.PA), opens new tab that Spirit has not repaid.

The Wichita, Kansas-based aerostructures company is a key supplier to the world's two major commercial planemakers.

Spirit had been weighing furloughs of workers on its 737 MAX fuselage program after it ran short on storage space and cash, a second source close to the matter said.

In late October, Reuters first revealed a decision by the supplier to temporarily furlough 700 employees, who produce parts for Boeing's 767 and 777 jets, due to space constraints.

Separate industry sources said cash support from Airbus is also an option, as the European company has warned its A350 deliveries could be disrupted next year due to concerns over the timely delivery of fuselage parts from Spirit.

“Spirit is a cash story now,” a third source said.

Airbus declined to comment.

All the sources spoke about private conversations on condition of anonymity.

Boeing CEO Kelly Ortberg reiterated the planemaker's commitment to an all-stock deal to acquire the supplier in 2025 during a recent call with analysts.