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AI models such as OpenAI’s ChatGPT “are just insatiable in terms of their thirst” for electricity, Haas said

TOKYO—Chip-design company Arm ARM 3.55%increase; green up pointing triangle made its name by devising ways to minimize smartphones’ power consumption and extend battery life. Now, the company’s head says the same push for energy efficiency is needed in artificial-intelligence applications.

Rene Haas, chief executive of Arm, spoke ahead of an announcement Tuesday by the U.S. and Japan about a $110 million program to fund AI research at universities in the two countries. U.K.-based Arm and its parent, Tokyo-based SoftBank Group, are together offering $25 million in funding for the program.

AI models such as OpenAI’s ChatGPT “are just insatiable in terms of their thirst” for electricity, Haas said in an interview. “The more information they gather, the smarter they are, but the more information they gather to get smarter, the more power it takes.”

Without greater efficiency, “by the end of the decade, AI data centers could consume as much as 20% to 25% of U.S. power requirements. Today that’s probably 4% or less,” he said. “That’s hardly very sustainable, to be honest with you.”

The power issue has drawn growing attention from technology executives in recent months and helped drive up the stock prices of companies that own and operate electric-power plants.

In a January report, the International Energy Agency said a request to ChatGPT requires 2.9 watt-hours of electricity on average—equivalent to turning on a 60-watt lightbulb for just under three minutes. That is nearly 10 times as much as the average Google search. The agency said power demand by the AI industry is expected to grow by at least 10 times between 2023 and 2026.

“It’s going to be difficult to accelerate the breakthroughs that we need if the power requirements for these large data centers for people to do research on keeps going up and up and up,” Haas said.

He expressed hope that the U.S.-Japan research partnership would work on solutions to the power issue. Arm’s funding is going to a collaboration between Carnegie Mellon University in Pittsburgh, Pennsylvania, and Keio University in Japan.

The partnership is a project of the U.S. ambassador to Japan, Rahm Emanuel, who last year organized a $150 million U.S.-Japan research program in quantum computing backed by IBM and Google. Elsewhere in the AI partnership, Amazon.com and Nvidia are set to spend $25 million each to support AI research at the University of Washington and Japan’s University of Tsukuba.

Emanuel said it was important for the two allies to work together in the face of competing AI and quantum-computing research in China. He said the U.S. and Japan would harness the efforts of industry and academia together, contrasting that with Chinese leader Xi Jinping’s moves in recent years to rein in the country’s tech giants.

“One of the downsides of what Xi has done is squash entrepreneurship,” Emanuel said. “Our model is going to be more successful.”

Retail sales of passenger cars in China rose 6.0% from a year earlier

China vehicle sales rose in March, bouncing back from a weaker showing the prior month and registering a gradual pace of growth for the first quarter of the year, signaling that demand may be turning a corner.

Retail sales of passenger cars in China rose 6.0% from a year earlier to 1.687 million units, the China Passenger Car Association said Tuesday. Sales surged 53% compared with last month, as consumer demand recovered after the Lunar New Year in February, the association said.

BYD kept its title as the top seller of electric vehicles in March, selling 301,631 units, with Tesla in second place. The Chinese EV giant overtook the U.S. company as the world’s top seller of EVs in the final quarter of 2023.

Tuesday’s data showed that Tesla delivered 89,064 cars made at its Shanghai plant in March, recovering from February when it posted its lowest monthly figure since late 2022.

Countrywide, retail sales of new-energy cars, which include EVs and plug-in hybrids, rose 29.5% to 709,000 units.

Chinese exports of passenger cars hit a record high, jumping 39% to 406,000 units in March. Exports of new-energy vehicles rose 71% during the month, with Tesla exporting 26,666 cars made in China.

Consumers have been holding back from buying cars as they look at how the price war among automakers unfolds, and await more details on the government’s trade-in program for big-ticket items and how it applies to cars, the CPCA said.

Consumer sentiment toward cars is set to brighten moving forward, the association said.

It sees drivers in the recent launch of smartphone maker Xiaomi’s first EV, and the Beijing International Automotive Exhibition set for later this month. Expected launches from more automakers in April and Beijing’s measures to boost consumption could also help buoy demand, it said.

Private equity group sells stake for €1.25bn in latest transaction following travel rebound

The majority owner of Motel One Group has taken full control of the budget hotel chain in a transaction that values it at €4.1bn, the latest sign of a return to dealmaking in the hospitality sector following the end of the pandemic.

Proprium Capital Partners, a real estate private equity group, has sold back its 35 per cent stake in Motel One to the company’s majority shareholder, One Hotels & Resorts, according to a statement on Tuesday.

Proprium is selling its stake for €1.25bn, having acquired it for €65mn in 2007, providing the company with a more than 20-times return on invested equity when dividends are taken into account. The deal values Motel One at €4.1bn including debt, said Proprium.

The transaction follows a rebound in travel after the end of the coronavirus crisis that led to airlines recording record profits in 2023 and has triggered dealmaking among hospitality businesses.

The owners of boutique chain CitizenM are currently exploring options including a potential sale, as the group seeks to expand and capitalise on rising demand from travellers. It could be worth roughly €4bn in a deal, the Financial Times has previously reported, having been valued at half of that five years ago.

Meanwhile Saudi Arabia’s Public Investment Fund bought a 49 per cent stake in Sir Rocco Forte’s luxury hotel group in December, with plans to double the chain’s size over the next five years.

Munich-based Motel One has expanded from Germany since Proprium’s original investment, with 94 hotels and 26,470 rooms in countries including the UK, France, US and Spain at the end of last year.

“Together with Proprium, we have built Motel One into an international platform and brand and expect continued strong and profitable growth in the future,” said Motel One founder and supervisory board chair Dieter Müller in a statement.

The group said on Tuesday it planned to expand to 117 locations and more than 32,00 rooms across 56 cities. Third-quarter sales increased 15 per cent to roughly €231mn, according to its latest financial report.

“While the sale of our stake in Motel One will generate very attractive returns for our investors, we leave Motel One very well positioned,” said Proprium head of Europe Philipp Westermann.

Proprium was spun out of Morgan Stanley’s real estate special situations investing team, and has more than $4bn of net assets under management. Its other assets span hospitality, residential and logistics sectors such as Admiral Taverns and the student housing provider Collegiate.

The real estate market has experienced a slowdown over the past two years, triggered by higher borrowing costs, but stabilising inflation and market expectations that central banks will soon begin reducing interest rates is expected to lead to a pick-up in activity.

Last week Gucci owner Kering said it had bought a retail block on Milan’s top shopping street from Blackstone for €1.3bn, the largest property deal in Europe over the past couple years.