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Agency chief Chance Saltzman says Washington must co-operate with allies to counter threats from China and Russia

The chief of the US Space Force has warned that China is putting military capabilities into space at a “mind-boggling” pace, significantly increasing the risk of warfare in orbit.

“The number of different categories of space weapons that [China has] created and . . . the speed with which they’re doing it is very threatening,” said General Chance Saltzman, head of space operations at the US military’s recently created force tasked with protecting American interests in space.

Saltzman spoke during a tour of Europe to raise awareness about the potential for conflict in space with powers including China and Russia and the need to co-operate with European allies to improve deterrence capabilities.

“One of the reasons you have a space force in the US now is in recognition of the last 20 years, [Russia and China] have developed and demonstrated the ability to conduct war fighting in space,” he said. The Space Force was established in 2019 by then-president Donald Trump, who is vying for re-election next week.

The US military has long been using space-based assets for communications and missile targeting. For China, space has become an increasingly crucial domain in its quest to put one of the US military’s traditional strengths at risk. 

Beijing has dismissed US claims its increasingly sophisticated space programme poses any danger to other countries. The foreign ministry accused Washington this year of “repeatedly hyping up China” as a threat as “an excuse for the US to expand its forces in outer space and maintain military hegemony”.

As part of large-scale military reforms started in 2015, Chinese President Xi Jinping combined space, information and cyber warfare operations under the Strategic Support Force, a new arm of the People’s Liberation Army.

In April, Xi launched another restructuring that in effect dissolved the SSF and puts its functions under direct control of the military leadership, in a sign that he seeks to enhance space, cyber and information operations.

Both Russia and China have tested satellites with capabilities that include grappling hooks to pull other satellites out of orbit and “kinetic kill vehicles” that can target satellites and long-range ballistic missiles in space.

In May, a senior US defence department official told a House Armed Services Committee hearing that Russia was developing an “indiscriminate” nuclear weapon designed to be sent into space, while in September China made a third secretive test of an unmanned space plane that could be used to disrupt satellites.

The US is far ahead of its European allies in developing military space capabilities but it wanted to “lay the foundations” for the continent’s space forces, Saltzman said. Last year UK Air Marshal Paul Godfrey was appointed to oversee allied partnerships with Nato with the US Space Force — one of the first times that a high-ranking allied pilot has joined the US military.

But Saltzman warned against a rush to build up space forces across the continent. 

“It is resource-intensive to separate out and stand up a new service. Even . . . in America where we think we have more resources, we underestimated what it was going to take,” he said.

The US Space Force, which monitors more than 46,000 objects in orbit, has about 10,000 personnel but is the smallest department of the US military. Its officers are known as “guardians”.

The costs of building up space defence capabilities mean the US is heavily reliant on private companies, raising concerns about the power of billionaires in a sector where regulation remains minimal.

SpaceX, led by prominent Trump backer Elon Musk, is increasingly working with US military and intelligence through its Starshield arm, which is developing low Earth orbit satellites that track missiles and support intelligence gathering.

This month, SpaceX was awarded a $734mn contract to provide space launch services for US defence and intelligence agencies.

Despite concerns about Musk’s erratic behaviour and reports that the billionaire has had regular contact with Russian President Vladimir Putin, Saltzman said he had no concerns about US government collaboration with SpaceX. 

“I’m very comfortable that they’ll execute those [contracts] exactly the way they’re designed. All of the dealings I’ve had with SpaceX have been very professional,” he said.

Malgré son rejet par l’Assemblée nationale dans la nuit de vendredi à samedi, le projet de loi de l’exécutif peut encore faire son retour et modifier la taxation des très grandes entreprises pour les deux prochains exercices.

L’examen à l’Assemblée nationale du budget 2025 ne manque pas de péripéties. Dans le projet initial du gouvernement, il est question d’une taxe exceptionnelle sur les entreprises qui réalisent un chiffre d’affaires de plus d’un milliard d’euros par an. Selon les articles 11 et 12 de ce projet de loi, ces grandes entreprises paieraient un taux exceptionnel majoré de 20,6 % sur leurs bénéfices réalisés en France pour l’exercice 2025 et de 10,6 % sur ceux de 2026. Pour celles avec un chiffre d’affaires d’au moins trois milliards d’euros, il est prévu, toujours dans le texte du gouvernement, une majoration de l’impôt sur les sociétés de 41,2 % pour le prochain exercice comptable et de 20,6 % pour le suivant. Cela signifie que leur taux d’imposition sur les bénéfices passerait à 30 % et 36 % en 2025 et à 28 % et 30 % en 2026, selon les calculs de Bercy.

Sur le papier, rien ne semblait pouvoir empêcher cette contribution exceptionnelle qui rapporterait huit milliards d’euros en 2025 et quatre en 2026, selon les calculs de l’exécutif. Sauf que La France Insoumise (et le Nouveau Front populaire avec) a souhaité aller beaucoup plus loin. Un taux de 40 % pour les entreprises qui réalisent au moins un milliard d’euros de chiffre d’affaires et un taux de 55 % pour celles au-dessus de trois milliards est désormais sur la table.

L’article 11 a finalement été rejeté dans la nuit du 25 au 26 octobre, mais il pourrait revenir dans sa version initiale à l’issue de la navette parlementaire. Dans ce cas de figure, quelques entreprises – parmi les 440 concernées selon Bercy – ont déjà fait savoir la somme qu’elles seraient amenées à mettre sur la table.

Le numéro un mondial du luxe (actionnaire de Challenges) s’est notamment exprimé il y a plusieurs jours sur l’effort exceptionnel tel qu’annoncé par le gouvernement dans son projet de loi. Avec un chiffre d’affaires de 86 milliards d’euros en 2023, le groupe dirigé par Bernard Arnault contribuerait entre « 700 et 800 millions d’euros » pour l’année prochaine, en fonction de ses résultats récents.

« La France représente 7 % du chiffre d’affaires, un tiers du revenu avant impôt et 40 % des impôts » du groupe, a tenu à préciser son directeur financier Jean-Jacques Guiony, le 16 octobre dernier, en marge de la publication du chiffre d’affaires du groupe.

Le géant français du BTP a aussi fait les calculs, alors qu’il a fait état au troisième trimestre d’un chiffre d’affaires de 18,5 milliards d’euros, en hausse de 1,4 %. Une évolution qui traduit le ralentissement de l’inflation dans les pays d’implantation du groupe.

« En première approche, si ce PLF était voté en l’état, une charge supplémentaire de l’ordre de 400 millions d’euros serait reconnue sur l’exercice 2024 (son décaissement interviendrait en 2025) », a fait savoir le groupe dans le communiqué de ses résultats financiers arrêtés au 30 septembre.

L’autre mastodonte du luxe français, Hermès, a pour sa part annoncé qu’il allait payer moins que son rival. Le sellier maroquinier, connu pour ses sacs comme le Birkin ou le Kelly, a réalisé en 2023 un chiffre d’affaires de 13,4 milliards d’euros. « Sur la base des dernières informations disponibles, on évalue à environ 300 millions d’euros de complément d’impôt, l’impact au titre de 2024 », a ainsi déclaré Éric du Halgouët, le directeur général finance de l’entreprise, le 24 octobre à des journalistes.

En 2024, le groupe ne semble pas affecté par le ralentissement du marché du luxe, en particulier en Chine, puisque au troisième trimestre, contrairement à ses concurrents, ses ventes ont continué de progresser, grimpant de 10 %.

L’industrie du luxe est bien représentée parmi les contributeurs de cet impôt exceptionnel. L’Oréal, qui possède les marques Garnier, Maybelline, Lancôme, Giorgio Armani ou encore La Roche-Posay, a réalisé en 2023 un chiffre d’affaires de 41 milliards d’euros. L’entreprise a déclaré le 22 octobre dernier estimer à « un peu plus de 250 millions d’euros » son imposition dans le cadre de cette contribution exceptionnelle.

Few are as skilled, and quick, as Elon Musk at raising capital—billions of dollars, no less. But if there’s one constant in Musk’s fundraising strategy, it’s that he often changes the details of a round at the last minute.

Take the latest process to raise money for his 18-month-old artificial intelligence startup, xAI. Representatives of the startup, including Musk’s right-hand man, Jared Birchall, have been talking to investors about another megafinancing expected to value the company at around $45 billion, we reported. Musk’s usual backers have been in talks to invest, including Valor Equity Partners, Sequoia Capital, Andreessen Horowitz and Vy Capital. However, sources tell us xAI could raise mostly from strategic investors, potentially spurning some venture capital backers.

So which corporation might buy in? Our guess is Nvidia.

XAI and the semiconductor designer are already tight. Earlier this month, Nvidia CEO Jensen Huang called Musk “superhuman” while applauding his ability to build a cluster of 100,000 Nvidia H100 graphics processing units in Memphis to train and run AI models in only 19 days.

“As far as I know, there is only one person in the world that could do that,” Huang said. “Elon is singular in his understanding of engineering and construction and large systems and marshaling resources. It’s unbelievable.”

Investing in xAI would keep Nvidia close to the fast-growing AI company. Nvidia already works more directly with the startup than with others, such as Anthropic and OpenAI, which primarily access GPUs by renting them from cloud providers like Microsoft or Amazon Web Services. Since Musk owns and runs his own data center in Memphis, Nvidia has the ability to not only sell him chips, but also influence xAI’s decisions to buy networking equipment and other supplies for the supercomputer.

Nvidia and Musk have said they plan to double the size of the GPU cluster to 200,000. If those chips were all connected in a single chip cluster, it would be one of the largest in the world. But xAI is likely to need far more. For instance, Microsoft has promised OpenAI access to 300,000 of Nvidia’s most advanced chips by the end of the 2025.

There is precedent for a deeper relationship between Nvidia and xAI. Microsoft’s $13 billion investment in OpenAI, which has come as a mix of cash and credits on Microsoft’s Azure, essentially meant Microsoft has been financing OpenAI’s compute needs.

Nvidia hasn’t done the same kind of landmark deal—but it has become one of most active investors in AI startups over the last two years. Often it backs companies that are also its customers.

OpenAI, for instance, spends billions of dollars annually on renting servers from Microsoft that have Nvidia chips. Nvidia invested in OpenAI’s recent financing, which valued the company at $157 billion. The chip giant has also funded several of OpenAI’s competitors, including Cohere, Adept and Aleph Alpha, a German model developer.

Mostly, Nvidia isn’t leading deals, which has allowed it to play nice with the VC firms that want a piece of these emerging AI startups. But if Nvidia takes a big chunk of Musk’s latest fundraising, it may not be welcome news among the frequent Musk backers that are hoping to increase their xAI stake.

Eye On AI: The Never-Ending AI Valuation Escalation

It really never stops.

It’s only been a few weeks since OpenAI announced its long-awaited raise of $6.6 billion at a post-money valuation of $157 billion. The Thrive Capital-led raise nearly doubled the San Francisco-based AI giant’s $80 billion valuation from its secondary offering in February.

The value seemed lofty for a company that loses a lot of money and now has a 46x revenue multiple. But OpenAI is OpenAI. It is ChatGPT and Sam Altman. It is a headline maker, a soap opera and a worry for regulators. It is what ushered in the gold rush to AI that began just a couple years ago and still has yet to let up.

And while there were skeptics of OpenAI’s raise, that gold rush it caused seems ready to push even more AI startups’ valuations to heights rarely seen in venture.

In the last few weeks reports have surfaced that xAI, Perplexity and perhaps Anthropic all are raising new cash (hey, AI isn’t cheap) at exploding valuations.

Just this week, it was reported Elon Musk’s Burlingame, California-based xAI is in early talks with investors for new $5 billion funding round that would value it around $45 billion — a billion dollars more than what he bought Twitter for.

xAI just closed a $6 billion round at a $24 billion post-money valuation in May, meaning if it does raise the new round, its value would have nearly doubled in five months — to the point where it would now be the 9th most valuable VC-backed startup (per our Unicorn Board), just in front of Databricks.

Of course, xAI is not the only generative AI company looking to get into that rarified neighborhood. Just a couple weeks before OpenAI officially announced its raise, it was reported competitor Anthropic had just started to chat with investors about raising at a $30 billion to $40 billion valuation.

Just in February, the San Francisco startup raised $750 million in fresh capital that valued it around $18.5 billion — again, meaning it is looking to double its valuation and become one of the 15 most-valuable startups in the world.

On a smaller scale, it also was reported just more than a week ago that AI search startup Perplexity — which in June reportedly received between $10 million and $20 million from SoftBank at a $3 billion valuation — is in talks to raise new funding that would nearly triple its valuation to $8 billion.

The fact that a 167% valuation jump to $9 billion can be considered “smaller scale” says a lot about the current state of venture funding and AI.

At some point, the crazy valuation hikes — seemingly monthly — have to stop and investors have to ask themselves how they are going to make money on these deals. While that may not be a concern for large corporations who get other benefits from these deals, it certainly has to be a consideration for VCs who have often talked about the lack of liquidity they face thanks to a slow IPO and M&A market.

However, that seems to be another problem for another day when it comes to AI — where the AI valuation escalation never stops.

The reading was in line with a competing official gauge

A private gauge of China’s manufacturing activity signaled that the sector returned to growth in October, in a potential sign that Beijing’s more aggressive efforts to boost the economy are having an effect.

The Caixin manufacturing purchasing managers index rose to 50.3 in October from 49.3 in September, according to data released by Caixin Media Co. and S&P Global on Friday.

A reading below 50 suggests that activity is shrinking and one above indicates that it is expanding.

The reading was in line with an official gauge on Thursday that also signaled a pickup in October, ending a five-month run in contractionary territory. A separate official index for China’s construction and service activity also returned to expansion lastmonth.

“The surveys point to an improvement in October, with an acceleration in manufacturing and services activity more than offsetting a further slowdown in construction,” said Julian Evans-Pritchard, head of China economics at Capital Economics.

The hard data show that manufacturing output has been growing rapidly in recent months and the latest PMIs hint at a further pickup in October, he said in a note.

Since late September, authorities have unleashed a torrent of measures aimed at restoring growth and confidence in the economy. The unprecedented effort has involved policy rate cuts, mortgage relief, home buying incentives, and massive liquidity injections for the financial system.

Policymakers have pledged more support in the form of a fiscal package set to include trillions of yuan of extra debt. The fiscal stimulus is expected to be approved next week at meeting of China’s top legislative body.

Friday’s PMI data indicated that supply and demand in China’s sprawling manufacturing sector both grew in October. A subindex measuring output notched a 12th straight month of expansion, Caixin said. Another bright spot was the barometer for total new orders, which returned to positive territory and reached its highest level since June, Caixin said.

External demand remained weak, however, with the gauge for new export orders languishing in contractionary territory for a third month, it said. Lukewarm appetite for Chinese products overseas reflected sluggish global economic conditions, Caixin said.

Another weak spot was employment, which continued to fall as businesses remained cautious about hiring due to uncertainty about the outlook, the data showed. The gauge for employment fell to its lowest since May 2023, reflecting widespread job cuts among companies that produce investment goods, according to Caixin.

Overall, the survey data suggests that market demand stabilized and optimism improved, said Wang Zhe, senior economist at Caixin Insight Group. That suggests early signs that the series of policies officials have rolled is having an impact, Wang said.

“However, the labor market remains under pressure, and price levels are still subdued,” the economist said.

The effectiveness of policies in improving domestic demand, employment and people’s livelihoods merits close monitoring, Wang said.

Looking ahead, Wang said achieving China’s 2024 economic growth target of around 5% will depend on engineering sustained recovery in consumer demand.

“That means policy efforts should focus on increasing household disposable income more effectively,” Wang said.

The latest version of the AI chatbot will allow users to search up-to-date information from across the internet

OpenAI has embedded a search engine into its popular ChatGPT chatbot, entering a space long dominated by Alphabet’s GOOGL -1.92%decrease; red down pointing triangle Google as technology companies compete to use artificial intelligence to improve search results.

The San Francisco-based company on Thursday announced what it calls “ChatGPT search.” The latest version of the AI chatbot will allow users to search up-to-date information from across the internet, such as sports scores, stock prices and weather, powered by real-time third-party search providers and content partners.

The search tool will summarize the information found on websites, including news sites, and let users ask follow-up questions, just as they can currently with ChatGPT.

ChatGPT can automatically search the web based on what the user asks, it said. Users also can manually choose to search by clicking the web search icon. OpenAI said it plans to improve the search function in areas like shopping and travel and add voice capabilities.

Skeptics have raised concerns about the reliability of AI-based results, as the machines don’t always explain their recommended answers. The machines can sometimes hallucinate by making up answers or misattributing information. OpenAI’s new search engine will include links to sources, such as news articles and blog posts, to provide context for the results.

The function will be rolled out gradually over the coming months, starting with some paid users on Thursday. The search function will be available on its website and desktop and mobile applications.

ChatGPT Plus users can install a Google Chrome extension to make ChatGPT the default search engine within the web browser.

OpenAI said it collaborated with news partners such as the Associated Press, Financial Times, Reuters, News Corp, Time and Vox Media.

The new technology positions the AI startup to compete with search engines by other U.S. tech companies. Google this year widely rolled out its own AI search feature that synthesizes information from multiple web sources. Other AI companies are also entering the search battle, including Perplexity, which is backed by Jeff Bezos and founded by a former OpenAI employee. OpenAI’s biggest investor, Microsoft, has also added AI to its search engine, Bing.

News Corp, owner of The Wall Street Journal and Dow Jones Newswires, has a content-licensing partnership with OpenAI.

British aerospace pioneer Reaction Engines collapses into administration

Group’s demise is a challenge for several F1 racing teams which use its cooling technology in engines supplied by Mercedes-Benz

British aerospace pioneer Reaction Engines has collapsed into administration after failing to secure new funding, ending ambitious hopes of revolutionising air travel by making hypersonic flight a reality.

PwC, which was already on standby, was appointed as administrator on Thursday. The firm said Reaction, which had been developing a hybrid rocket-jet engine, had been “pursuing opportunities to raise further funds, but unfortunately these attempts were unsuccessful”.

The majority of Reaction’s 208-strong staff — 173 people — have been made redundant. The remaining staff will be kept on to complete a “number of existing orders and support in winding down operations,” according to PwC.

Reaction’s collapse could prove a challenge for several Formula One racing teams which use its innovative cooling technology in their engines supplied by Mercedes-Benz.

A spokesperson for Mercedes F1 said the company was in “active dialogue with the administrators to ensure the necessary hardware supply for the 2025 season”.

Reaction’s technology is part of the cooling system in the engines used by Mercedes F1 and supplied to McLaren, Williams and Aston Martin to help optimise performance.

The company’s demise could also trigger a battle over the ownership of the intellectual property of its cutting-edge technology, which PwC is expected to assess, according to people familiar with the situation.

Sarah O’Toole, joint administrator and partner at PwC, said it was with “great sadness that a pioneering company with a 35-year history of spearheading aerospace innovation has unfortunately been unable to raise the funding required to continue operations”.

Reaction had been locked in talks with shareholders, including the UAE-based Strategic Development Fund, over a £20mn cash injection for several weeks. Some of its strategic backers, which include FTSE 100 groups BAE Systems and Rolls-Royce, had been reluctant to commit to more funding, several people familiar with the talks had confirmed.

Rolls-Royce said on Thursday it was “saddened” that Reaction had gone into administration. BAE said it was “keen to explore potential employment opportunities which may be of interest for those affected”.

Founded in 1989, Reaction’s Sabre technology — short for Synergetic Air Breathing Rocket Engine — was designed to combine the fuel efficiency of a jet engine with the power of a rocket.

Key to Sabre was the company’s pre-cooling technology which dissipates heat and prevents engines from overheating. At hypersonic speeds, the temperature generated inside a conventional gas turbine would start to melt components unless they were cooled in some way.

Under chief executive Mark Thomas, the company had in recent years pivoted to licensing the technology to commercial customers such as Mercedes, as well as US aerospace group Honeywell. Honeywell was not immediately available for comment.

Reaction had already warned investors earlier this year that it needed to raise additional money. The company had previously raised £150mn, including £40mn in January 2023 through a fundraising led by SDF. Key financial investors, including Artemis and Schroders, subsequently wrote down the value of their stakes in August this year.

The company’s collapse raises questions over a UK-led military project to pursue reusable hypersonic air vehicle technologies.

Along with Rolls-Royce, the Royal Air Force and the defence research agency Defence Science and Technology Laboratory, Reaction was part of the consortium behind the project, which had hoped to fly a demonstrator vehicle as early as the middle of this decade.

The government said that it “closely monitors all of its supply chains to ensure the secure and continued delivery of key capabilities”.