TheChek News Flow

Investor John Paulson, a Trump ally, says he would also work on trade and energy if he became Treasury secretary

Billionaire investor John Paulson says he would work with Tesla CEO Elon Musk to enact massive federal spending cuts if Paulson were to become Treasury secretary in a second Trump administration.

Paulson, an ally of the former president, said in an interview his top priority would be extending Donald Trump’s expiring 2017 tax cuts, followed by “working with Musk to reduce federal spending,” particularly by getting rid of the subsidies for green energy in the Inflation Reduction Act, which he referred to as the Green New Deal.

“All of these tax subsidies for solar, for wind, inefficient, uneconomic energy sources,” said Paulson. “Eliminate that. That brings down spending.”

It is relatively unusual for an ally of a presidential candidate to talk openly about the role he or she might play in a future administration. Treasury secretary is one of the most prominent positions in the government, interfacing with Wall Street, business leaders and foreign heads of state.

Paulson, 68 years old, has been close to the former president for over a decade. He is one of several people Trump and his allies have considered for Treasury secretary, according to people familiar with the matter.

The Treasury secretary will likely be point person on several key Trump initiatives, including extension of the Tax Cuts and Jobs Act, portions of which expire at the end of 2025, and a broad range of new tax cuts. Financial markets worry that the resulting deficits could put upward pressure on interest rates.

Paulson’s views carry weight due to his closeness to the former president and yearslong involvement in GOP politics. He has donated to Republican political operations such as the Senate Leadership Fund. He is a trustee of the Manhattan Institute, a conservative-leaning think tank whose chairman is fellow Wall Street executive Paul Singer.

In the interview, Paulson indicated that he saw his potential remit extending to energy and trade. He said he would work with Trump to “encourage energy production so we become an energy dominant producer” and enact “strategic tariffs.”

Economists have predicted that if Trump carried through with plans to impose 60% tariffs on imports from China and 10% to 20% on all other imports, inflation would jump and growth suffer. It is unclear whether Trump would actually enact tariffs of that magnitude or is using them as a negotiating tool. In the interview, Paulson suggested the tariff threats are in part a tactic to elicit concessions, such as persuading Deere & Co. to keep production in the U.S.

Trump has promised to make Musk the head of a new “government efficiency commission” if he wins in November. The Musk-led group would advise Trump where to make cuts in federal spending. Paulson said he hasn’t spoken to Musk about teaming up.

Musk said this week he could cut at least $2 trillion from the federal budget, but didn’t say how. The U.S. government spent $6.75 trillion in the last fiscal year, according to the Congressional Budget Office, over half of which went to Social Security and Medicare—which Trump has promised not to touch—defense, and interest on the debt. Trump had promised to cut spending in his first term but instead presided over significant increases, even before the pandemic.

The Inflation Reduction Act, which President Biden signed into law in 2022, includes extensive tax credits for electric-vehicle purchases, renewable power, carbon capture and storage, hydrogen and nuclear energy. It paid for those credits by increasing tax collections via beefed-up Internal Revenue Service enforcement and a minimum tax on large corporations. Trump said at the Economic Club of New York in September he would “rescind all unspent funds under the misnamed Inflation Reduction Act.” His campaign hasn’t been specific about what that would mean.

While the 2022 law’s tax credits have helped Tesla, Musk said during his company’s second-quarter earnings call that a rollback of the incentives would only “slightly” hurt the company, but it would also be “devastating for our competitors” and in the “long term, it probably actually helps” Tesla.

Musk has been a crucial Trump supporter, campaigning with him, contributing nearly $120 million to a pro-Trump super political-action committee and offering $1 million to voters who sign a pledge to uphold the rights to free speech and bear arms.

Musk didn’t respond to a request for comment.

Repealing the clean-energy tax breaks could yield about $921 billion over a decade, according to the Tax Foundation. But Trump couldn’t do that unilaterally; repealing the law or any of its tax credits would require an act of Congress.

The next administration could revise some Treasury rules that increased usage of the law’s tax credits, for example allowing some leased electric vehicles to qualify for larger tax breaks than if purchased outright.

But in some cases, such as the clean-hydrogen tax credit, industry groups are pushing the administration for looser rules to expand eligibility.

Beyond scaling back the consumer tax credits for electric vehicles, any changes could prove challenging to get through even a Republican-led Congress.

That’s because many projects funded by the Inflation Reduction Act are spurring jobs and investment in the rural Republican districts that are most conducive to wind and solar energy or large manufacturing sites.

Republicans also tend to favor tax breaks for carbon capture that the oil-and-gas industry backs. Last year, when House Republicans tried to repeal the tax breaks, Midwestern lawmakers insisted that incentives for biofuels remain in place.

Paulson is one of several names under consideration for Treasury secretary. Others include Scott Bessent, a founder of Key Square Group and another Trump ally on Wall Street, former trade ambassador Robert Lighthizer, and former Securities and Exchange Commission Chairman Jay Clayton.

That Paulson is even a contender represents a striking ascension for the former hedge-fund manager who burst into prominence by reaping an estimated $3 billion betting against subprime mortgages during the 2007-09 financial crisis.

Trump first met Paulson as part of a group of investors that sold the Doral Golf Course to Trump. In April, he hosted Trump and dozens of donors at his Florida mansion for a fundraiser that drew in just over $50 million for Trump’s campaign, the Republican National Committee and dozens of state parties.

Paulson could face questions about his background during Senate confirmation. Some Democrats, including Sen. Elizabeth Warren (D., Mass.), could home in on his Wall Street ties and the money he made off the housing crisis.

“I wouldn’t expect a Senate fight,” Paulson said of a potential nomination. “I have good relationships with senators on both sides of the aisle. The review process is a rigorous process. That’s a hurdle that would have to be crossed before we get to the Senate. I think once we cross that review process, I wouldn’t expect opposition.”

Trump’s Treasury chief in his first term, Steven Mnuchin, was narrowly confirmed by the Senate in a 53-47 vote.

Buyers clamour for gold-backed ETFs as central banks scale back purchases of the precious metal

Investors’ “fear of missing out” on gold’s rally has sparked record demand for the precious metal, even as high prices push central banks to scale back their purchases.

The value of global demand passed $100bn for the first time in the third quarter of this year, according to industry body the World Gold Council, driven mainly by investor buying.

The volume of global gold demand also rose to a record in the same period, up 5 per cent to 1,313 tonnes.

The rush has helped drive the price of the yellow metal up 34 per cent this year and pushed it to a series of record highs, amid concerns about conflict in the Middle East and Ukraine, and as central banks diversify away from the US dollar and western economies start cutting interest rates. Gold hit a fresh high on Tuesday of just over $2,770 per troy ounce.

“Professional and institutional investors seemed to suffer a case of Fomo — fear of missing out — as gold’s performance repeatedly hit the headlines,” the WGC said in its quarterly report.

This “Fomo” has meant that falls in the price of gold have been shorter and shallower than normal as investors pounce on softer prices.

“There’s lots and lots of people looking to buy gold on a dip,” said John Reade, market strategist at the WGC. “A lot of people like gold, they wanted to be in gold, but they didn’t have it [in their portfolio] in the first half of the year, for whatever reason.”

Total demand for investments, such as bars, coins or backing for exchange traded funds, more than doubled to reach 364mn tonnes in the third quarter, according to the report. Inflows into gold-backed ETFs hit 94 tonnes, a reversal after nine successive quarters of outflows.

Family offices and wealthy individuals have been buying more gold in recent months due to concerns about government debt levels, particularly in the US, according to Reade.

“Family offices tend to think in longer time horizons than retail investors. They think of generational wealth protection, the grandchildren — and they have become really concerned about debt levels, particularly in the US,” he said.

However, central banks slowed their gold purchases during late summer, with buying falling 49 per cent year-on-year to 186 tonnes, the lowest quarterly level in two years. The sharp increase in gold prices since March had inhibited buying by central banks, the WGC said.

As western governments cut interest rates, this is expected to continue to support gold prices. A non-yielding asset, gold typically benefits from lower rates because the opportunity cost of holding it is lower.

Jewellery demand has been dented by high gold prices, with global consumption falling 7 per cent in the quarter compared with the previous year, according to the WGC. Jewellery represents about 40 per cent of global gold demand.

“The absolute price level is quite mind-boggling to someone who’s been following gold for a long time,” said Reade. “Jewellery demand is being impacted.”

Nuclear fuel producer calls for more incentives to end Russia reliance

Second-largest western supplier of enriched uranium Orano urges more clarity on demand or stricter sanctions

The west will struggle to break its reliance on Russian nuclear fuel without bigger incentives for alternative suppliers or restrictions on Moscow’s supplies, the head of the second-largest western supplier of enriched uranium has warned. 

“To entirely disconnect from Russia, we need new capacities, and industrial groups will only invest if they have long-term contracts,” Nicolas Maes, chief executive of French group Orano, told the Financial Times. “It’s then up to the political world to choose what they do to make that happen.”

After President Vladimir Putin’s full-blown invasion of Ukraine in 2022, the nuclear fuel supply chain was initially spared sweeping sanctions like those imposed on Russian oil and gas because of Moscow’s dominant position, with roughly 40 per cent of the global enrichment market. 

The US this year moved to ban Russian nuclear fuel imports, with potential waivers until 2028. But in Europe a historical reliance on Russian supplies for more than 30 Russian-made power stations across the east of the continent, including Ukraine, has made it more complicated to find a consensus for sanctions, although some western companies are now making fuel assemblies that can be used in the Russian designs. 

Maes said new uranium enrichment plants could take only a few years to build. Orano, one of the few western rivals to Russian nuclear fuel supplier Rosatom alongside British-Dutch-German consortium Urenco, is extending a facility in France in a €1.7bn project that should start producing by 2028. 

But he added that while it was technically possible to replace Russian supplies by next decade, it would require huge investment that providers would only consider if demand was guaranteed. 

“What’s certain is that if you have a maximum level of sanctions, new investments in [enrichment] capacities are going to be developed at maximal level,” Maes said.

“If there are no sanctions at all, we’ll see some electricity producers continue to get supplies from Russia as long as it’s possible.”

He said Orano had pre-signed contracts with US and European customers to buy the output from its French enrichment plant extension, and that there were other nuclear power nations that had been keen to diversify their supplies since the start of the war, from South Korea and Japan to South Africa and India. 

Sanctions may not be a catch-all solution to incentivise customers to sign new western contracts, however. The US is investigating whether Russia is circumventing its ban thanks to help from China.

“A scheme under which people are told they’re not allowed to buy in Russia, so Russia sells to China, which sells its enriched uranium to the western world — that wouldn’t fix the problem,” Maes said. 

Backed by the French state, and born out of a group once known as Areva, Orano has been diversifying its activities in recent years, including a sideline in the medical sphere with radiopharmaceuticals.

However, it fell to a €133mn loss in the first half of 2024 because of problems in its core mining division, particularly in Niger, where its uranium production was disrupted by a coup last year.

Orano’s exports from the country have now dried up completely, for which it has been able to compensate with extra production from its mines in Canada. But it was still trying to salvage the Niger operations as Orano “is not exonerated from its social and local implication” there, Maes said.

The company is launching a legal challenge to the ruling junta’s decision this summer to withdraw its permit to exploit its Imouraren site, which is under development, Maes added. It is also trying to lift export restrictions that have forced it to stop operations at its one operational mine in the country.

“It’s having liquidity issues and there’s no cash coming in,” Maes said, adding that the situation could tip the mine into insolvency. 

Germany’s loveless coalition teeters on brink of break-up

Chancellor Olaf Scholz snubs partners, fuelling speculation of early elections in spring

Chancellor Olaf Scholz held a much-vaunted “industrial summit” on Tuesday, sitting down with business leaders and union bosses to figure out how to pull Germany out its current malaise. Pointedly left off the guest list: his own finance and economy ministers.

Robert Habeck, the economy minister, responded by unveiling plans for a multibillion-euro, debt-financed investment fund — an idea not previously discussed with cabinet colleagues — while finance minister Christian Lindner simply scheduled his own, rival business summit on the same day.

The duel of the summits, against the backdrop of a stagnating economy and Volkswagen mulling domestic factory closures for the first time in its history, symbolises the disarray at the heart of Scholz’s coalition — a loveless marriage that increasingly seems on the verge of divorce.

Speculation is growing in Berlin that the alliance could soon collapse, pulled apart by its own internal contradictions. Several German media outlets have even named a possible date for snap elections — March 9, more than six months ahead of schedule.

On Tuesday, Lindner pushed back against suggestions the end was nigh. “There’s such a thing as an obligation to govern,” he said, “and for Germany it’s always better when a government agrees on a common direction, describes it and implements it.” 

But many others think the odds of Scholz’s Social Democrats (SPD), Habeck’s Greens and Lindner’s liberal Free Democrats (FDP) discovering that common direction in their last remaining year in power have never been so slim.

“Not since the early 1980s have we seen such fundamental differences — and such arguments — between the partners in a German coalition,” said Uwe Jun, a political scientist at Trier University in a reference to the break-up of the SPD-FDP alliance in 1982. “There doesn’t seem to be any basis of trust between them any more.”

There is also a clear potential trigger for a break-up — a failure to agree on a budget for 2025. Negotiations have been fraught: the government’s draft spending plan features a financing gap of nearly €10bn and the coalition partners are hopelessly split on how to plug it ahead of a November 14 deadline.

But Scholz loyalists say they have little choice but to keep trying. “The coalition is like a couple that has separated but still has to figure out how to raise the kids together,” said one senior SPD MP. “Regardless of our differences, we have to thrash this budget out and get it done.”

Meanwhile, talk of snap elections ignores one important factor — Donald Trump.

Many in Berlin say a victory for the Republican candidate in next week’s US presidential election will deliver such a shock to the German political system — and the transatlantic alliance — that it’ll galvanise Scholz’s coalition into closing ranks and soldiering on.

“A Trump win massively reduces the likelihood that the coalition will break apart,” said one senior Green MP. “Germany would have to step up and show some leadership, and it can’t do that if there’s chaos here.”

France also showed the potential pitfalls of early elections after President Emmanuel Macron called snap polls this summer.

“In that case, we saw how they led to a long political impasse,” said Johannes Fechner, a senior SPD MP.

“We have a government, a clear majority in parliament and the motivation to pass legislation. All coalition parties are responsible for working together to improve people’s lives — so why should the Greens or FDP have any interest in leaving early?”

The coalition partners weren’t always at loggerheads. They started off in 2021 promising to breathe new life into a political system lulled into lethargy by Angela Merkel’s 16-year rule, embracing a progressive agenda for modernising the creaking German state and greening its economy.

But with time their interests diverged. For the Greens, the priority was mitigating climate change, for the SPD preserving the welfare state and for the fiscally hawkish FDP upholding Germany’s strict rules on deficits and debt.

Increasingly, these aspirations collided, causing near-constant strife. Relations were not helped by the partners’ plunging approval ratings and the surge in support for populist parties of the hard-left and extreme-right.

“The problem is that the closer we get to the election, the less we seem to have in common,” said one FDP MP. “It’s all just campaigning now.”

The person who has articulated the ideological differences most forcefully is Lindner. German newspaper columnists note how these days he sounds much more like an opposition leader than a member of the cabinet. “Whether this government survives or dies is at Lindner’s whim,” said the Green MP.

In a meeting with foreign journalists earlier this month, the finance minister said there were “two schools of thought” in the government, one committed to “subsidising certain industries and technologies with public money” and the other — by implication his FDP — committed to supply-side reforms aimed at improving the business climate.

These different approaches were “in a conflict” that was being “played out in public”, creating a “palpable sense of uncertainty” that was spreading through the economy, he said, discouraging companies from investing and consumers from spending.

But some feel that the FDP itself, with its commitment to debt rules that even IMF economists consider hopelessly inflexible, was only making the uncertainty worse.

“It’s annoying when you’re trying to enact policies for ordinary people and then the Greens or FDP come along and block them,” said the SPD MP.

Lindner has said that much hinges on the fate of 49 business-friendly economic reforms agreed by the government in July, the so-called “growth initiative”.

“If they don’t get implemented, we’ll lose the bedrock holding the coalition together,” said the FDP MP. “It’s a necessary precondition for our support for the budget.”

For industry leaders, individual measures are less important than a sense that the coalition partners are all pulling in the same direction.

“The coalition must come together — and I emphasise together — to enact the right economic policy,” said Rainer Dulger, head of Germany’s employers’ federation, the BDA. “That means making Germany’s economy competitive again.”

But others are losing hope.

Levies totalling up to 45% needed to compensate for Beijing’s ‘injurious’ subsidies, says Brussels

The EU is pushing ahead with tariffs of up to 45 per cent on Chinese electric vehicles, sharply escalating the trade war between the 27-member bloc and Beijing over allegations of unfair industrial subsidies.

The tariffs, which come into force on Wednesday and will be imposed for five years, come after the EU rejected China’s claims that it was introducing protectionist measures without evidence that Chinese vehicles were receiving undue state support. The new duties also come on top of an existing 10 per cent tariff on Chinese car imports in the bloc.

The two sides said they would continue talks, including over the introduction of “minimum prices” for Chinese-made vehicles sold in Europe. That level would have to be high enough to compensate for the “injurious subsidisation” that Chinese manufacturers received and which allowed them to undercut European rivals, an EU official said.

China’s commerce ministry said in a statement on Wednesday that Beijing would “continue to take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies”. It added that it hoped Brussels could work with Beijing in a “constructive manner” to resolve the dispute through dialogue.

The EU’s decision to impose additional duties on Chinese-made EVs followed the conclusion of a months-long investigation launched by commission president Ursula von der Leyen last year into China’s allegedly unfair support for its EV industry.

Beijing has repeatedly criticised Brussels over the investigation and tariff rises, arguing the European actions violate international trade rules and threaten global progress on fighting climate change.

The EV tariffs have caused deep divisions in the bloc, with strong opposition from member states including Germany and Hungary. Diplomats have warned that EU countries that export to China are bracing for further retaliation from Beijing.

The introduction of the duties also comes at a vulnerable time for the EU car industry, which has struggled to compete with the aggressive expansion of low-priced Chinese EVs in the bloc. Except for Renault, all the major European car manufacturers have issued profit warnings this year.

Volkswagen, Europe’s biggest car manufacturer, is planning to shut at least three German plants and cut tens of thousands of jobs as part of a cost-cutting drive.

Along with high energy costs and challenging regulation linked to the EU’s green transition, the industry is contending with a significant increase in the number of cheaper Chinese models reaching the market. The commission has insisted it is introducing tariffs to ensure a level playing field in Europe rather than to restrict trade with China.

The tariffs were first announced in June, with four companies — China’s BYD, Geely and SAIC and Tesla of the US — allocated individual duties that ranged from 7.8 per cent for Tesla to 35.3 per cent for SAIC, according to the level of subsidies they received from Beijing.

All other manufacturers that co-operate with Brussels by providing requested information will be hit with a tariff of 20.7 per cent. Those that do not face a 35.3 per cent levy.

“We can safely say that we basically disagreed on each and every fact, each and every legal argument that we have established in the investigation,” an EU official said.

China has already said it will impose anti-dumping measures on EU brandy imports and has launched probes into EU imports of pork and dairy products since the EV tariffs were announced.

Beijing also raised a complaint at the World Trade Organization after the tariffs were provisionally announced, calling the investigation “protectionist in nature” and claiming an “absence of any concrete evidence regarding alleged subsidisation in China”.

The EU has said the WTO complaint is now void since the tariffs were marginally reduced after the investigation ended.

The China Chamber of Commerce to the EU “expressed profound disappointment” over the commission’s decision to proceed with the tariffs, telling the Financial Times it was “disheartened by the lack of substantive progress in negotiations”.

But an EU official confirmed prices were unlikely to rise immediately for consumers. “There is a big chance that if a consumer bought a car now, it would be bought from stock [already] on the EU market,” the official said.

How Arm could be the unexpected winner of the AI investment boom

Shares in the British chip designer, which is controlled by SoftBank, have trebled in price over the past year. But its ambitions go much further

Almost 20 years ago, Intel made a decision that changed the course of computing history.

Soon after Apple started putting Intel inside its Mac computers in 2005, Steve Jobs pitched the chipmaker’s then chief executive, Paul Otellini, on its top-secret plan to break into the mobile phone business. Intel turned down Jobs — and what would become the iPhone.

One result of Intel’s decision was to hand UK-based tech group Arm an effective monopoly on the chip designs that now power virtually every mobile phone, a $500bn market that is more than twice the size of the PC industry.

Thanks to its uniquely energy efficient technology, Arm is now using that same platform to outpace Intel again in the era of artificial intelligence, as Big Tech companies spend billions of dollars to build massive new power-guzzling data centres.

Arm has been a huge beneficiary of the investor fervour for semiconductor companies that has also propelled Nvidia’s valuation to more than $3tn. Shares in Arm have nearly tripled since the SoftBank-backed company went public last year and it is now valued at around $157bn. After its annual revenues grew 21 per cent to $3.2bn in the fiscal year to March, Arm’s market capitalisation overtook Intel, once a Silicon Valley icon, this summer.

If those valuations look frothy to some AI sceptics, Arm chief executive Rene Haas is convinced the AI boom is only just getting started. He told a Bloomberg conference in London last week that betting against an AI future would be like saying “the internet’s not going to happen” when the dotcom bubble burst in 2000 or “the automobile’s not going to happen” after the stock market panic of 1907.

“We’ve seen such advancement across AI in the last couple of years that the amount of innovation this is going to drive is just going to be incredible,” Haas said. More powerful processors will be needed to create better AI models, he added. “I’m pretty optimistic about the growth for our industry.”

At the moment, Arm’s role in the AI spending spree is principally as an ally to Nvidia. Arm-based central processing units (CPUs) are being installed alongside Nvidia’s new Blackwell series of AI processors in the vast data centres that Microsoft and OpenAI are building to train the next generation of ChatGPT, for instance.

But if Masayoshi Son, SoftBank chief executive, gets his way, Arm could soon end up in direct competition with Nvidia, by building its own AI chips.

Following the initial public offering, SoftBank still owns about 90 per cent of Arm, and Son would like the company to grab a much bigger share of the economic value of chips than it currently receives from just designs.

After SoftBank took a $500mn stake in OpenAI earlier this month, Son wants to put Arm technology at the centre of a new network of data centres, purpose-built to train and run AI systems, according to people familiar with his thinking. That would not only put Arm on a collision course with Nvidia but also mark a dramatic departure from its traditional business model of selling only intellectual property.

That prospect alarms some of Arm’s old guard, who fear it could destabilise its role as the chip industry’s neutral “Switzerland”, selling its designs to everyone and rarely competing with its licensees. Son’s latest scheme, when coupled with a rapidly escalating legal battle with another big customer, smartphone chipmaker Qualcomm, has raised fears that Arm is struggling to maintain good relations with its partners while also trying to move up the semiconductor food chain.

Replicating Nvidia’s formidable computing horsepower, and its long established community of AI developers, poses an immense challenge. “When you think about the investment needed to go out and really compete against Nvidia, it really makes your eyes bleed,” says a former Arm executive.

Despite the risks, SoftBank is determined to play a central role in what Son believes is the next stage of human evolution, according to people familiar with his thinking.

“Many people still doubt . . . [but] I think Nvidia is undervalued,” Son told the Future Investment Initiative conference on Tuesday in Riyadh. “Because the future is much bigger.”

Haas has not commented on the specifics of SoftBank’s scheme, but told the Bloomberg event last week: “All those AI workloads are going to run on Arm somewhere, somehow. That’s the reason we spend a lot of time talking to SoftBank about the future.”

Since Arm started out in a barn in Cambridgeshire in the early 1990s, its designs have shipped in almost 300bn devices. It makes less than a dollar from most of those chips: unlike Intel and Nvidia, Arm does not currently make its own processors.

Instead it licences its designs to anyone who wants to make their own chips, giving it a unique position in the tech industry. Arm provides the blueprints that chipmakers can use to build their processors.

For most of its 34-year existence, those customers have been overwhelmingly in the mobile phone business. Companies such as Apple, Samsung, Google and Qualcomm took advantage of the unparalleled energy efficiency of Arm’s designs. For battery-powered devices, Arm’s technology holds a key advantage over the x86 architecture used by Intel, which has dominated PCs and servers for decades.

As smartphones became most people’s primary computing devices, and as mobile chips became much more capable, Arm quietly built a powerful platform from which to attack Intel’s traditional strongholds in PCs and servers.

“Arm, when it came about, was really a disruptive innovation,” says Robert Burgelman, a professor at the Stanford Graduate School of Business. “It was not as good in performance in computing but it was better for non-PC devices because it was low power.”

Burgelman, who has studied Intel and the semiconductor industry for decades, says he initially underestimated Arm’s longer-term prospects. “What I didn’t realise was that the rate of increase in performance for Arm would be higher than the rate of decrease of power consumption for the Intel architecture. If you combine both, that’s a very dangerous situation [for Intel].”

Arm’s prospects in the personal computer market received a huge boost in 2020, when Apple released the first Macs based on its own M-series processors, ditching Intel at the same time. The M-series is based on the same Arm blueprints that Apple uses in its iPhones. The switch to its own chips brought much improved battery life to its laptops and other performance improvements as Apple was able to design its hardware and software in tandem. Earlier this year, Microsoft followed suit by putting Arm-based chips at the centre of its push to rejuvenate Windows with a new class of so-called AI PCs.

Arm, when it came about, was really a disruptive innovation. It was better for non-PC devices because it was low power

However, the Qualcomm-built chips that power the first wave of AI PCs have become the focus of a high-stakes legal fight. In 2021, Qualcomm acquired a start-up called Nuvia that had been developing PC chips based on Arm’s designs. Arm alleges that Qualcomm failed to obtain its permission to continue developing Nuvia’s chips, as required by the terms of its IP licence.

In an escalation that took many in the tech industry by surprise earlier this month, Arm issued an official notice that it would withdraw Qualcomm’s architecture licence altogether, preventing the San Diego-based chipmaker from shipping its latest generation of products, including a new range of mobile processors.

Wall Street took fright at what analysts called Arm’s “nuclear” move against one of its largest customers, sending its stock down 9 per cent in a day. Qualcomm has accused the chip designer of “strong-arm tactics” to boost its royalty rate. Arm insisted in a statement that it was “left with no choice” by Qualcomm’s “repeated material breaches of Arm’s licence agreement”.

The case, which is expected to go to trial in December, has exposed the complex relationships between Arm and its licensees at a time when it is expanding its customer base into new sectors.

The most promising of these new opportunities is in the huge data centres that cloud computing providers are building to fuel anticipated growth of services such as Google’s Gemini, OpenAI’s ChatGPT and Anthropic’s Claude.

Breakneck expansion of these vast server farms is already putting strain on the grid, boosting demand for Arm’s energy-efficient tech.

Goldman Sachs estimated earlier this year that data centres’ global power demands will grow 160 per cent by 2030. The bank’s analysts say data centres will use 8 per cent of US power by 2030, up from 3 per in 2022, while in Europe, these facilities will need as much energy as Portugal, Greece and the Netherlands combined by the end of this decade.

Getting into the data centre has been a long time coming for Arm. Amazon, the first cloud computing company to embrace Arm’s designs in its servers, first discussed the idea more than a decade ago.

James Hamilton, a senior vice-president and distinguished engineer at Amazon, pitched then-CEO Jeff Bezos on the idea of AWS creating its own data centre chips back in 2013. “If we want to continue to innovate on behalf of our customers . . . we’ve got to be in the semiconductor business,” Hamilton told Bezos and his successor, Andy Jassy, who was running AWS at the time.

But it was not until 2018 that AWS unveiled its first Arm-based CPU, Graviton, and initial sales were slow. Today, data centre chips still only make up just over 10 per cent of Arm’s royalty revenues, analysts say.

Nonetheless, Arm’s patience is finally paying off as Amazon’s cloud computing rivals all pile into the semiconductor business. After Microsoft launched Cobalt, its first Arm-based CPU for servers, a year ago, Google unveiled its own equivalent, Axion, in April.

But it is an alliance with Nvidia that is propelling Arm into the heart of the AI data centre. Nvidia’s latest GB200 “superchip” combines two of its Blackwell graphics processing units with an Arm-based Grace CPU. Nvidia’s $40bn attempt to buy Arm from SoftBank in 2020 failed amid antitrust scrutiny, but now the two companies have never been closer. An Nvidia-powered range of AI PCs, using an Arm CPU, is widely expected to launch next year.

The two companies are so close that when Haas interviewed Nvidia chief Jensen Huang as the first guest on his new podcast recently, the pair joked about the thwarted deal, which had been vehemently opposed by many of Arm’s customers.

“You almost acquired us, which would have been fun,” says Haas, who is a former Nvidia executive. “I know you’re still sad about it,” replies Huang. “Every day I cry a little bit,” Haas laughs, “but I’m here.”

Despite the budding bromance, SoftBank’s Son wants to enlist Arm in his campaign to take on Nvidia, which currently dominates AI chip supply. Son is intent on investing billions of dollars to create a network of Arm-powered AI data centres, according to people familiar with his thinking.

Son’s ambition is to push Arm from an IP licensing business into a company that can produce the data centre chips necessary to both “train” or build AI models, and for “inference”, whereby the system responds to users’ queries. SoftBank’s purchase of UK AI chipmaker Graphcore in July was also driven by its expertise in bringing a chip into production, these people say.

As well as chip production and software, Son’s plans include providing power for the data centres. SoftBank is actively engaging with potential customers for its proposed system and has pitched Big Tech firms such as Google and Meta on the merits of creating a counterweight to Nvidia.

After earlier talks with Intel fell through, SoftBank is now in negotiations with Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker, to secure capacity in its foundry where the AI chips would be produced. However, people familiar with Son’s scheme caution that no public announcements are imminent. SoftBank declined to comment.

Speaking to the Financial Times last week, Haas admitted that replicating Nvidia’s entire technology “stack” — which includes not just chips but networking technology and software — would involve a “lot of heavy lifting”. Arm does make what it calls “neural processing units”, or NPUs, chips that are optimised for the neural networks needed for AI. But Haas conceded that Arm’s NPUs are “not in the performance level that Nvidia is at” because they are largely designed to run on so-called edge devices — smartphones, the “internet of things” and other products outside the cloud — rather than in data centres.

“But I can assure you that there is a lot of work under way in terms of how to broaden that space, beyond just the edge,” he said.

The irony is that SoftBank’s plan could have been much further along if Arm had not shelved one internal effort to develop standalone AI accelerator technology about five years ago, according to three former employees.

Arm was under pressure from SoftBank, which had acquired it for £24bn ($31bn) in 2016, to prepare for a return to the stock market. That meant focusing on proven, profitable businesses to make its margins shine for prospective investors. At the same time, some of Arm’s biggest customers, including Apple, Qualcomm and Graphcore, were raiding its engineering talent as they built up their own chip design capabilities.

Arm’s management team — including Haas, who at that time led its main product divisions — knew they needed to shore up its core CPU business. So Arm redeployed hundreds of engineers from a budding project building chips that were optimised for AI, sending them to work on its CPU instead. Although those engineers continued to build AI acceleration capabilities into Arm’s CPUs, the move meant that the company still lacks a standalone NPU product today.

“We were bleeding processor engineers,” says a former Arm executive who was involved in the decision, “and in the end, the CPU is just more important.”

Analysts are sceptical that Arm, even with SoftBank’s resources behind it, can build a true competitor to Nvidia’s GPUs, whose success rests not only on its hardware expertise but also its widely used Cuda software, which would take years to replicate.

“I don’t see what tools they have to take on Nvidia,” says Edward Wilford, semiconductor analyst at Omdia, a tech consultancy.

“Arm doesn’t have [AI] accelerator IP for the data centre,” says Ben Bajarin of Creative Strategies, another consultancy. He believes that the most likely challengers to Nvidia’s dominance are Big Tech companies such as Microsoft, Google and Amazon, whose AI accelerator chips do not largely rely on Arm’s IP.

Publicly, Haas maintains that Arm does not need to compete with Nvidia to benefit from the AI boom. Chips based on Arm’s tech are already handling AI tasks such as photo editing on smartphones or image processing on security cameras. It recently collaborated with Meta to make a slimmed-down version of its Llama AI system that can run on its mobile CPUs.

“Seventy per cent of the world’s population touches Arm in some way,” Haas said at the Bloomberg event. “AI is going to run on Arm, period.”

But he rejects the idea that Arm has strayed too far from its humble British origins and got caught up in Silicon Valley’s AI hubris.

“We have an incredible opportunity to address an unprecedented market demand,” he told the FT. “If there’s anything changed inside of Arm, it’s a sense of urgency to take advantage of the opportunity.”

EXCLUSIF – Le DG de la Société générale s’attaque au réseau de la banque de détail en France, qui connaît une crise structurelle depuis des années. Philippe Aymerich, numéro deux du groupe, et Marie-Christine Ducholet, directrice du réseau en France, sont sur la sellette.

Slawomir Krupa poursuit la réorganisation stratégique de la Société générale et rentre maintenant dans le dur. Après une série de cession d’activités non stratégiques, un plan de licenciement de 900 personnes au siège et la fermeture de 600 agences, le DG, qui a pris les commandes en septembre 2023, réorganise la direction de la banque de détail. Avec les patrons de cette branche dans son viseur : Philippe Aymerich et Marie-Christine Ducholet, tous les deux membres du comité exécutif du groupe, pourraient être amenés à quitter prochainement leur fonction, selon deux sources internes. Interrogée, la banque n'a pas fait de commentaire.

Deux historiques sur la sellette

Philippe Aymerich est un pur produit de la Société générale. Proche de Frédéric Oudéa, le prédécesseur de Slawomir Krupa, il est entré à l’inspection interne de l’établissement en 1997 avant de faire toute sa carrière dans cet établissement. Directeur général délégué depuis 2018, soit numéro deux du groupe, il a été un des grands défricheurs de la banque, développant sa présence à l’international, notamment en Afrique et en Russie. Ces dernières années, la banque s’est désengagée de ces géographies. Philippe Aymerich s’est alors recentré sur les paiements et la banque de détail à l’international, reprenant le flambeau de la France lors de l’arrivée de Slawomir Krupa en 2023.

Marie-Christine Ducholet, 40 ans de maison, a connu diverses fonctions et métiers au sein de la Société générale avant de devenir directrice du réseau SG France il y a un an, directement sous les ordres de Philippe Aymerich. Auparavant patronne du réseau de détail, elle a récupéré en catastrophe la direction du plan « Vision », qui vise à rapprocher les réseaux de la Société générale avec ceux de Crédit du Nord. Le plan était initialement piloté par son prédécesseur Sébastien Proto, candidat malheureux à la succession de Frédéric Oudéa.

Un réseau malmené

Le nouveau tandem aux manettes du réseau SG aura pour feuille de route de réduire la voilure, notamment dans la fermeture d’agences. « On n’est pas en mesure de faire face à la concurrence des mutualistes », confie un très haut gradé de la banque. Le réseau SG est effectivement malmené par la concurrence très agressive des banques mutualistes (Crédit agricole, Crédit Mutuel, BPCE), déployée sur tout le territoire et plus bienveillante quant à la faible rentabilité de leurs agences.

Cette compétition s’est doublée de celle des banques en ligne et des néobanques comme Revolut ou N26 qui grignotent des parts de marché et bénéficient de la légèreté de leur structure de coûts, face au très lourd réseau physique des agences des banques traditionnelles.

Une situation financière fragile

La banque de détail de la Société générale souffre depuis longtemps. Rien qu’en 2023, le produit net bancaire (l’équivalent du chiffre d’affaires) a fait -13 %, s’établissant à 8,02 milliards d’euros, avec des encours de crédit et de dépôt en recul, et des coûts en croissance. Plus structurellement, entre 2016 et 2023, le produit net bancaire a chuté de 3 %.

Autre source de problème, l’immense chantier de la fusion des réseaux de banques de détail. Propriétaire depuis 1997 du réseau Crédit du Nord, Société générale a tardé avant d’oser s’y mettre. C’est compréhensible. Le défi est colossal de faire basculer les banques et les marques de Crédit du Nord, qui se sont construites sur des produits, des services informatiques différents, sur le système de la Société générale ; d’harmoniser les pratiques tout en faisant de la place pour le meilleur des deux entités ; et surtout de faire le ménage dans les agences bancaires.

Ce n’est que quatorze ans après l’acquisition que le DG d’alors, Frédéric Oudéa, confie cette titanesque mission à son dauphin, Sébastien Proto… Le projet a à peine le temps de se lancer que la remontée des taux d’intérêt, en 2022, abîme largement la rentabilité de ce business en France. « Le projet a été pris à bras-le-corps, mais dans un contexte dégradé, indique Nicolas Taufflieb, associé du cabinet de conseil Kearney et spécialiste des banques. Quand on fait une fusion, mieux vaut la faire quand on gagne de l’argent ! »

Couverture de taux pénalisante

La banque de détail a en outre été très pénalisée par un mauvais choix stratégique de couverture des taux – pariant à tort sur la baisse des taux avant la grande flambée de 2022. Cela lui avait coûté plus de 20 % de sa marge nette d’intérêt en 2023.

Depuis 2016, les banques de détail en France ont fermé 18 % de leurs agences. C’est 36 % pour l’Italie et près d’une sur deux pour l’Espagne. Un douloureux rattrapage semble sur le point de prendre corps.

Le traiteur Potel & Chabot, appartenant au groupe Accor, a été désigné par le tribunal de commerce pour racheter l’entreprise en difficulté Dalloyau.

C’est un petit joyau de la gastronomie française, une marque haut de gamme. Mais surtout une entreprise familiale en redressement judiciaire depuis cet été, qui peinait à juguler un endettement grandissant (13 millions d’euros), ne faisait plus de profits et se cherchait une stratégie et un modèle économique. Au terme d’une procédure de reprise, le tribunal de commerce a préféré l’offre du groupe Accor, qui proposait 3,3 millions d’euros et la reprise de l’ensemble du personnel, à celle du géant de la restauration collective Elior qui, lui, en offrait 2,5 millions d’euros.

Magasins et traiteur en entreprise

Le traiteur de luxe du groupe Accor entend développer cette enseigne de la gourmandise haut de gamme auprès du grand public, notamment avec son magasin historique du Faubourg Saint-Honoré, celui de Boulogne, les boutiques dans trois gares parisiennes dont Saint-Lazare, ses restaurants et cafés à Marseille. Il renforce aussi sa position de leader dans l’offre traiteur aux entreprises et lors d’événements.

La présence internationale du groupe Accor, son expérience et sa puissance de feu en matière de marketing et de développement permettent à la vénérable maison Dalloyau d’envisager un renouveau.