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The Wild Markets Behind Polymarket’s ‘Truth Machine’

Shayne Coplan has built the crypto-based betting platform into a $9 billion company; Justice Department probe gets shelved

Just before dawn on Nov. 13, 2024, FBI agents smashed through the door of Shayne Coplan’s penthouse apartment in Manhattan, barged into his bedroom and grabbed his phone.

Federal prosecutors were investigating whether the cryptocurrency-based betting platform he founded, Polymarket, where users can wager on everything from presidential elections to the identity of the next James Bond actor, was violating laws designed to prevent money laundering.

Fourteen months later, the fortunes of the shaggy-haired 27-year-old couldn’t be more different. The Justice Department has dropped its probe. Donald Trump Jr., whose venture-capital firm is an investor, joined the company as an adviser. The New York Stock Exchange’s parent company struck an investment deal that boosted Polymarket’s value to $9 billion and made Coplan a billionaire. And his startup, which had long been off-limits to U.S. users, was cleared to launch a betting app for them.

Polymarket’s rise comes as wagering on sports, bitcoin, elections and just about everything else has grown ubiquitous, and barriers between traditional investments, crypto and gambling are eroding.

The predictions derived from Polymarket’s betting action—Coplan has called the operation a “global truth machine”—are now cropping up everywhere. Analysts and national news outlets cite them regularly. Viewers of the Golden Globes saw them on their TV screens. Google, X, the National Hockey League and Dow Jones, the publisher of The Wall Street Journal, have all struck data partnerships with Polymarket.

Yet for all its mainstream success, Polymarket hasn’t managed to stamp out controversy tied to its freewheeling markets, most of which remain unregulated.

In the past few months alone, there have been flaps over the possible manipulation of bets tied to the Russia-Ukraine war, traders seeming to have advance knowledge about the ouster of Nicolás Maduro and the winner of the Nobel Peace Prize, and disputes about whether bets are being resolved fairly. Polymarket’s popular international platform still doesn’t require identity checks for most users, making it largely anonymous. And researchers have cast doubt on whether its billions of dollars in reported trading volume are genuine.

Rajiv Sethi, a Barnard College economics professor who has studied prediction markets, said what concerns him the most is that Polymarket doesn’t know the real-world identities of most people who trade on the platform. “What that means is people can do all kinds of things that they would not be able to do on other markets,” he said.

That anonymity, he said, could allow Polymarket users to trade on classified information or have more than one account, buying and selling between them to artificially boost trading volume.

Polymarket has said it complies with all applicable laws, and that because its technology provides real-time transparency into trading, episodes of possible manipulation and insider trading are quickly exposed.

“The moment there’s a suspected insider, it’s pointed out on X, and it’s visible on Polymarket immediately,” Coplan said in an interview. “So it’s not like it’s done in darkness.”

Coplan has said he expects billions of people will eventually use the platform. He foresees its predictions being used to inform government policy and to help people understand whether to trust the information they find online. “The vision that I know that my team and I want to build has not come to life fully yet,” he said. “We still have a long way to go.”

Polymarket’s backers speak glowingly about the promise of harnessing the wisdom of the crowd, arguing that people who put money on the line are more likely to be right than purported experts and biased commentators.

“With prediction markets, if you make a dumb bet, you lose,” Vitalik Buterin, a prominent crypto founder and Polymarket backer, wrote online in December.

Bookmakers outside of the U.S. have long offered wagers on elections, sports and even papal conclaves. They set the odds, take in the bets and pay off the winners.

The businesses run by Polymarket and its chief U.S. competitor, Kalshi, are different. They typically list contracts that pay $1 if a bet proves correct and zero if not. The contract prices fluctuate as traders, weighing the likelihood of various outcomes, buy and sell contracts. Those prices imply probabilities: If a contract tied to the collapse of Iran’s regime is trading for 41 cents, Polymarket’s website will say there’s a 41% chance of that happening.

Despite its high valuation, Polymarket has almost no revenue. It could make money by charging fees to those buying and selling contracts, but so far it has kept fees at zero on nearly all of its markets as it strives to attract more users.

Regulators have long been wary of prediction markets. In some countries, they have run afoul of gambling officials, who regard the platforms as unregistered casinos. In the U.S., their bets are considered derivatives under the oversight of the Commodity Futures Trading Commission. Federal courts are still weighing whether prediction markets can legally offer sports betting.

In recent months, as Polymarket publicized the launch of its regulated U.S. platform, it was dogged by episodes of suspicious activity in its offshore betting markets.

In November, Polymarket angered some users with a ruling that Russia had seized the Ukrainian town of Myrnohrad—a decision that benefited those betting the town would be captured by Nov. 15. In fact, Russia hadn’t captured the town.

The bet was settled using an online map maintained by the Institute for the Study of War, a Washington think tank. That map—very briefly—was wrong. The institute fixed it the next morning, after the bets had already been settled. The think tank apologized for what it said was an “unauthorized and unapproved edit” and fired an employee over the incident.

Polymarket users suggested the map had been rigged, zeroing in on a bet in which an anonymous user turned $62 into more than $6,700 shortly before the Myrnohrad market was resolved.

Asked about the incident, Coplan said Polymarket needs to “troubleshoot” the process for resolving bets as the company grows.

There were more raised eyebrows in early January when a mystery trader earned more than $400,000 betting on the downfall of Maduro. Many of the bets came just hours before the surprise U.S. military operation to remove the Venezuelan leader. More than two dozen House Democrats have since signed on to a proposed bill to ban government employees from trading on inside knowledge on prediction markets.

Months earlier, a trader identified only as 6741 made more than $50,000 betting that Venezuelan opposition leader María Corina Machado would win the Nobel Peace Prize. The bets, placed the night before the announcement, led the Norwegian Nobel Institute to investigate whether it had been the target of espionage.

Some traders suggested the institute accidentally leaked the news by posting files about Machado in an obscure corner of its website. An image of her face was uploaded about an hour and 40 minutes before the announcement, according to cybersecurity firm Patchstack. A Nobel spokeswoman said the institute prepares online materials about winners “in a secure, isolated offline environment.”

Some wagers have led to disputes over which side is the rightful winner. Last year, users bet on whether Ukrainian President Volodymyr Zelensky—known for military-style attire—would be seen wearing a suit by July. After he attended a June 24 summit wearing a black, suit-like outfit, a battle erupted over how to classify it. Some users had hundreds of thousands of dollars at stake. The decision came down in favor of traders who didn’t view Zelensky’s outfit as a suit.

Angry traders slammed Polymarket on social media, complaining that a cabal of big traders had skewed the resolution process. Samuel J. Gosling, a software engineer in Ireland, lost about $1,000. “A lot of people would assume that it is a suit,” he said. “If you ask anyone in the Western world, ‘Is this man wearing formal attire?’ they would say yes.”

Early prediction markets focused on topics such as economic indicators and elections. Polymarket lets users bet on a head-spinning array of things, many of them frivolous.

In August, after dildos were thrown on the courts during some WNBA games, Polymarket listed contracts on when the next such incident would occur. Players denounced the bets as crass and disrespectful. Others noted that Polymarket was providing an incentive for bettors to throw dildos at games.

In the recent interview, Coplan called those bets “silly” and said Polymarket no longer lists such contracts. “It’s not what we want to be known for,” he said.

College dropout

Coplan grew up on Manhattan’s Upper West Side. As a boy, he was cast as “cute kid” in a little-seen 2006 movie directed by his film-professor mother. He attended a selective public high school, wrote songs and played guitar, keyboards and ukulele.

He got into the cryptocurrency startup scene early on, after dropping out of New York University. After his first crypto venture, Union Marketplace, failed to gain traction, he pivoted to prediction markets.

He launched Polymarket in 2020, raising a $4 million seed round from investors such as Naval Ravikant, an early investor in Uber Technologies. He told some investors that Polymarket would grow into a $100 billion company.

“A lot of people wouldn’t invest because they thought Shayne was nuts,” said Samir Vasavada, an early investor in Polymarket. “It was to an extreme the amount he believed in himself.”

Polymarket set up shop in Manhattan’s SoHo neighborhood. Coplan struck some colleagues as a difficult boss. He often yelled at employees, and sometimes participated in video meetings shirtless, people familiar with the matter said.

“Look, I’m super passionate about my work,” Coplan said in the interview. “And sometimes things get heated.”

Three economists at the University of Iowa developed the first experimental prediction market in the 1980s. For decades, entrepreneurs struggled to turn the concept into successful businesses, partly because of resistance from the CFTC, which blocked contracts tied to sports and elections in a bid to separate the worlds of Wall Street-style financial trading and gambling.

Coplan’s backers knew he was taking a risk and that his platform could end up being quashed by regulators. “Shayne might end up a billionaire, or a CFTC casualty,” New Form Capital, an investor in Polymarket’s seed round, wrote in a 2020 memo.

The CFTC deemed Polymarket to be an unregistered exchange that was failing to comply with various agency rules, including safeguards against market abuse. In a January 2022 settlement, Polymarket agreed to pay a $1.4 million fine and stop offering its betting markets to Americans. That way, it wouldn’t need to register as an exchange. It didn’t admit any wrongdoing.

Coplan pressed on, lining up fresh funding from VC firms. And the platform kept drawing users, who now had to attest that they weren’t from the U.S.

Soon it was an open secret among traders that Americans were using Polymarket despite the ban. By using virtual private networks, U.S. bettors could make it appear that they were in other countries.

Because Polymarket took bets in crypto without requiring identification checks, it was easy for Americans to deposit funds. Research by CryptoQuant, a blockchain analytics firm, shows millions of dollars were moved to Polymarket wallets from Robinhood Markets—a platform with a predominantly U.S. customer base—after the CFTC settlement. Some users didn’t bother hiding that they were Americans, openly discussing their Polymarket trading on X.

In the spring of 2024, the U.S. Attorney’s Office for the Southern District of New York opened a criminal probe into whether Polymarket was violating anti-money-laundering laws or acting as an unlicensed money transmitter by serving U.S. users without the needed licenses, according to people familiar with the investigation.

The Biden administration was cracking down on crypto. Binance, the world’s largest crypto exchange, had recently pleaded guilty to those same violations.

Joe Biden’s disastrous debate performance that June triggered a surge of bets that he would drop out of the race, putting a spotlight on Polymarket. Coplan sought to promote Polymarket with both parties, but the company found a warmer reception from Republicans, who were embracing the crypto industry.

During the Republican National Convention, a photo circulated online showing Coplan at a table with Donald Trump Jr.; Omeed Malik, founder of 1789 Capital, a VC firm that backs businesses aligned with conservative values; David Sacks, now the White House crypto czar; and other tech investors.

Coplan said the group welcomed him with open arms when he said he was from Polymarket. “These guys were like, ‘Oh, Polymarket’s awesome. It is what I’m checking, it’s useful, you know, it’s better than polls,’” he recalled.

Republicans had another reason to cheer Polymarket: As the election approached, its markets suggested Trump was likely to win, even though polls showed him in a dead heat with Kamala Harris.

Meanwhile, federal investigators expanded their probe to include potential wash trading, according to the people familiar with the investigation. Wash trading is a practice in which traders move assets back and forth to create the illusion of genuine activity. Such transactions can benefit the traders by making them eligible for rewards tied to high volume. They also can make a trading platform appear more active than it really is.

A recent Columbia University study, co-written by Sethi, found signs of wash trading in about 25% of Polymarket’s volume. The company’s terms of use prohibit wash trading.

Investigators wanted to know whether the company was aware that it was serving U.S. users. Not only would this be a violation of the CFTC settlement, it would show that Polymarket was breaking laws designed to safeguard against money laundering. Such laws require financial businesses that serve Americans to verify the identities of their customers, among other measures.

The investigators obtained a search warrant for Coplan’s electronic devices, which they thought might contain evidence that he was communicating with customers he knew to be American, the people said.

After more senior Justice Department officials worried that any search might be seen as political interference in the election, the people said, the raid was delayed until after Election Day.

Trump’s win was a validation for Polymarket, largely silencing critics who had suggested the platform was being manipulated in Trump’s favor.

1789 Capital made its first investment in Polymarket before the election. After Trump won, Donald Trump Jr. became a 1789 partner and the firm invested in Polymarket again. Neither investment was disclosed publicly at the time. All told, 1789 Capital has invested at least $10 million, said one person familiar with the matter.

A few days after the election, Coplan attended the Las Vegas meeting of a Trump-allied donor network called the Rockbridge Network. Shortly after he returned to New York, FBI agents broke down his door with a battering ram.

Polymarket denounced the raid as “obvious political retribution” by the outgoing administration. The company’s lawyers arranged a meeting with senior prosecutors, where Polymarket lawyer Orin Snyder heatedly accused the office of pursuing the probe at the behest of Biden’s White House, according to the people familiar with the investigation.

After Trump took office, the new administration dialed back enforcement actions against the crypto industry. Last April, Deputy Attorney General Todd Blanche instructed prosecutors to focus crypto cases on swindlers who hurt investors and on the financing of terrorism, drug trafficking and other forms of organized crime.

Polymarket’s lawyers reached out to Blanche’s office to complain about the continuing probe, the people familiar with the investigation said. They submitted thousands of pages of documents to Manhattan prosecutors and had additional calls and meetings with them to push for the case to be dropped.

Nicholas Roos, a federal prosecutor who had co-led the case against fallen crypto tycoon Sam Bankman-Fried, informed Polymarket’s lawyers by letter on July 1 that the investigation was being shelved. He cited information provided by Polymarket, as well as “relevant precedent and current policies of the Department of Justice,” according to a copy reviewed by the Journal.

Coplan marked the one-year anniversary of the FBI raid by posting on X a picture of a cake. “Cheers to free markets, the American dream, and $3000/hr lawyers,” he wrote.

BlueScope Steel Open to Better Offers After Spurning $8.8 Billion Takeover Bid

The company will flesh out its plans for future shareholder returns, among other priorities, when it reports its half-year earnings later this month

BlueScope Steel BSL -1.65%decrease; red down pointing triangle isn’t in talks with suitors Steel Dynamics STLD -1.32%decrease; red down pointing triangle and SGH but would be open to a takeover proposal that meets its expectations, the company’s new chief executive officer said in an interview.

Tania Archibald, who on Sunday succeeded former CEO Mark Vassella, also flagged a review of BlueScope’s dividend policy as she highlighted higher shareholder returns among her priorities for the year ahead.

BlueScope last month rebuffed a roughly US$8.8 billion bid from Steel Dynamics and SGH, saying it was an attempt to buy the Australian steelmaker cheaply.

Archibald on Monday said BlueScope hasn’t engaged with the pair about the proposal—the fourth involving Steel Dynamics since late 2024.

“There’s been no change,” she said. But “we remain open to all proposals that allow us to realize value for the business.”

She declined to comment on whether BlueScope is in talks with other companies on an alternative deal.

The CEO of Steel Dynamics, Mark Millett, last week expressed disappointment at BlueScope’s reaction to the joint takeover bid in a call with analysts. BlueScope hadn’t provided shareholders with an alternative strategy that could provide the same certainty of a similar return to its offer with SGH, he said.

Archibald Monday outlined a few of her priorities to deliver value for shareholders, including plans for more cost savings and to develop surplus land near some of the steelmaker’s operations.

“We’ve got our views around fundamental value, and we’re very firmly focused on looking at all options as to how we realize that value,” she said.

BlueScope’s dividend policy is being reconsidered as part of a periodic review of shareholder returns, said Archibald. She expects substantially higher shareholder returns as the company finishes a 2 billion Australian dollar, equivalent to US$1.39 billion, investment program.

“We’re coming towards the back end of a pretty long major capital investment program and as that program ramps down, it’s really about focusing on ramping up the returns to shareholders,” she said.

BlueScope will flesh out its plans for future shareholder returns, among other priorities, when it reports its half-year earnings later this month, Archibald said. “That’s when we would normally talk more specifically about the mechanisms and the nature of the returns that we’ll be providing.”

Shares in the company were 1.0% lower by early afternoon in Sydney amid a sharp retreat in materials stocks across the region.

Plans to streamline BlueScope’s leadership and functional teams are among Archibald’s priorities to help the steelmaker save money. BlueScope has nearly completed a A$200 million cost and productivity program and will target savings of roughly A$150 million more on an annualized basis, she said.

“I think the majority of it will be people related, but clearly there will be a spend component as well,” she said. Archibald said there is a lot of “back-office stuff that we do that we just feel can be done in a much more efficient way.”

She declined to comment on how many jobs could be cut.

On the plans for BlueScope’s surplus land, Archibald said the steelmaker will be exploring a range of options.

In rejecting the takeover proposal, the steelmaker highlighted a portfolio of land that it estimates could be valued at as much as A$2.8 billion, based on gains from a recent sale. Steel Dynamics’s Millett countered that it will take the company a long time unlock value from the land holdings.

“It could well be that we sell some land,” Archibald said. “There may be other parts of the land that we joint venture. There may be some that we develop. So that’s what we’re working through at the moment.”

Investors say prices have become unmoored from fundamental demand

Gold prices tumbled on Monday in Asia as a record-breaking rally in precious metals cooled.

The price of gold fell as much as 6.3 per cent to below $4,600 a troy ounce for the first time since January 16, before rebounding to trade at $4,729. Silver prices fell as much as 11.9 per cent to $75 a troy ounce before paring losses to trade at $82.

The correction in precious metals prices began on Friday after the nomination of Kevin Warsh, seen as a more orthodox economist than some other potential candidates, as Federal Reserve chair.

“We were seeing quite a bit of speculative activity,” said Raymond Cheng, chief investment officer for north Asia at Standard Chartered. “That spurred the reversal after the announcement for Warsh.”

The recent gains in bullion were initially driven by increased central bank buying after Russia’s foreign exchange reserves were frozen in 2022 following its full-scale invasion of Ukraine.

Rising demand from private investors buying exchange traded funds and physical bullion added to the rally. Investors have cited gold as a hedge against mounting concerns over increased fiscal spending in developed economies around the world.

Cheng said gold trading at $4,650 was “an opportunity to add” the metal amid uncertainty about government spending in the US.

“We think the Trump risk premium is still warranted,” said Cheng. “He will stay as the US president no matter who is the Fed chair. His fiscal policy will remain expansionary.”

Investors backed by Sheikh Tahnoon bin Zayed al-Nahyan put half a billion dollars into World Liberty Financial

A crypto venture linked to Donald Trump accepted a half-billion-dollar investment backed by an Abu Dhabi royal days before the US president’s inauguration.

The Trump family’s World Liberty Financial (WLF) in January signed a deal with a group of investors backed by Sheikh Tahnoon bin Zayed al-Nahyan, the UAE’s national security adviser who also oversees a sprawling business empire. The deal was worth $500mn for a roughly 49 per cent equity stake in the company, according to The Wall Street Journal, which first reported the deal.

WLF spokesperson David Wachsman said the company agreed to the investment “because we strongly believe that it was what was best for our company as we continue to grow”.

He denied that the investment had anything to do with an agreement to grant the UAE access to US artificial intelligence chips struck later in the year, but declined to give details of the deal.

“Any claim that this deal had anything to do with the administration’s actions on chips is 100 per cent false. The leftwing media is dishonestly pushing baseless innuendo in an effort to deceive the public and smear our company,” Wachsman said.

During a trip to the Gulf last May, Trump and his UAE counterpart Sheikh Mohamed bin Zayed al-Nahyan revealed plans to build the largest group of artificial intelligence data centres outside the US.

A planned 10sq mile UAE-US AI campus in Abu Dhabi is expected to have 5GW of data centre power — equivalent to more than 2mn of AI chipmaker Nvidia’s latest generation of GB200 chips.

The investment raises more questions about the fusion of politics and business during Trump’s second term.

WLF was set up in late 2024 by Trump’s three sons and Steve Witkoff’s sons Zach and Alex. Donald Trump is described on WLF’s website as the company’s co-founder emeritus, as is Steve Witkoff, who is the president’s Middle East envoy.

The WLF statement said neither President Trump nor Steve Witkoff “had any involvement whatsoever in this transaction and have had no involvement in World Liberty Financial since taking office”.

The White House said that the president “only acts in the best interests of the American public”, adding that his assets were in a trust managed by his children.

“The president has no involvement in business deals that would implicate his constitutional responsibilities,” said David Warrington, White House counsel.

A person close to Steve Witkoff said his children run WLF and he has “nothing to do with it”.

“Steve was not involved in negotiations related to [Emirati AI company] G42. He was only briefed on these discussions, which is totally appropriate,” the person said. 

Sheikh Tahnoon has spearheaded Abu Dhabi’s push into AI and been integral to its discussions with the US to secure Nvidia chips. He chairs G42 and MGX, a state-backed fund focused on AI. 

Like other oil-rich Gulf states, the UAE, a traditional US ally, has actively courted Trump since he returned to the White House, pledging hundreds of billions of dollars in investment in the US.

During Trump’s visit to the Gulf last year, the US and the UAE announced plans to build a vast data centre campus in Abu Dhabi, boosting its ambitions to become a global AI hub as it sought to secure access to Nvidia’s chips. 

Investment funds in Abu Dhabi, the UAE’s wealthy capital, have also done deals with Trump’s family network. 

Before Trump was re-elected last year, his son-in-law Jared Kushner’s private equity fund, Affinity Partners, raised $1.5bn from Qatar’s sovereign wealth fund and an Abu Dhabi fund linked to Sheikh Tahnoon.

In another business connection between Trump’s network and the UAE, Zach Witkoff announced last year that Abu Dhabi investment vehicle MGX had decided to use WLF’s USD1 stablecoin to close its $2bn investment in crypto exchange Binance.

Parts for iPhones to cost more owing to surging demand from AI companies

Apple AAPL 0.46%increase; green up pointing triangle has dominated the electronics supply chain for years. No more.

Artificial-intelligence companies are writing huge checks for chips, memory, specialized glass fiber and more, and they have begun to outduel Apple in the race to secure components. Suppliers accustomed to catering to Apple’s every whim are gaining the leverage to demand that the iPhone maker pay more.

Apple’s normally generous profit margins will face pressure this year, analysts say, and consumers could eventually feel the hit.

Chief Executive Tim Cook mentioned the problem in a Thursday earnings call, saying Apple was seeing constraints in its chip supplies and that memory prices were increasing significantly. Those comments appeared to weigh on Apple shares, which traded flat despite blowout iPhone sales and record company profit.

“Apple is getting squeezed for sure,” said Sravan Kundojjala, who analyzes the industry for research firm SemiAnalysis.

AI chip leader Nvidia recently became the largest customer of Taiwan Semiconductor Manufacturing, or TSMC, Nvidia Chief Executive Jensen Huang said on a podcast. Apple had been TSMC’s biggest customer by a wide margin for years. TSMC is the world’s leading manufacturer of advanced chips for AI servers, smartphones and other computing devices.

Spokesmen for Apple and TSMC declined to comment.

The big computers that handle AI tasks don’t look like the smartphones consumers own, but many companies supply components for both. In particular, memory chips are in short supply as companies such as OpenAI, Alphabet’s Google, Meta, Microsoft and others collectively spend hundreds of billions of dollars to build AI computing capacity.

“The rate of increase in the price of memory is unprecedented,” said Mike Howard, an analyst for research firm TechInsights. That applies both to the flash memory chips that store photos and videos, called NAND, as well as the memory used to run apps quickly, called DRAM. By the end of this year, the price of DRAM will quadruple from 2023 levels, and NAND will more than triple, estimates TechInsights.

Howard estimates that Apple could pay $57 more for the two types of memory that go into the base-model iPhone 18 due this fall compared with the base model iPhone 17 currently on sale. For a device that retails for $799, that would be a big hit to profit margins.

Apple’s purchasing power and expertise in designing advanced electronics long made it an unrivaled Goliath among the Asian companies that make most of the iPhone’s parts and assemble the device.

Apple spends billions of dollars a year on NAND, for instance, according to people familiar with the figures, likely making it the single biggest buyer globally. Suppliers flocked to win Apple’s business, hoping to leverage its know-how and prestige to attract other customers.

These days, however, “the companies now pushing the boundaries of human‑scale engineering are the ones like Nvidia,” said Ming-chi Kuo, an analyst with TF International Securities.

Demand for AI hardware is poised to keep growing rapidly. Apple’s spending growth is modest in comparison with what is being spent to fill up AI data centers, even though it is breaking records with huge sales of the iPhone 17.

Samsung Electronics and SK Hynix are raising the price of a type of DRAM chip for Apple, according to people familiar with Apple’s supply chain. Big AI companies pay generously and are willing to lock in supply and make upfront payments, giving the South Korean chip makers leverage against the iPhone maker.

Apple signs long-term contracts for memory, but it has used its heft to squeeze suppliers. Its contracts have empowered it to negotiate prices as often as weekly, and to even refuse to buy any memory from a supplier if Apple didn’t view the price as favorable, according to people familiar with its memory purchases. To boost leverage with suppliers, Apple even began stocking more inventory of memory. That was atypical for Cook, who normally cuts inventory to the bone to maximize Apple’s cash flow.

Apple is fighting not only for current deliveries but also for the attention of engineers at suppliers. Glass scientists who worked on developing the smoothest and lightest smartphone displays are now also spending time on specialized glass for packaging advanced AI processing chips, according to industry executives.

Makers of sensors and other gizmos inside the iPhone are winning new business from AI companies such as OpenAI that are developing their own hardware.

Still, suppliers said they were far from giving up on business with Apple. Working with Apple is a form of education, they said, because it remains one of the most demanding and disciplined customers in the industry.

TSMC, the Taiwanese chip manufacturer, has built successive generations of its most advanced chips with Apple as its lead customer, relying on the big predictable demand for iPhones. Now that TSMC is doing more business with Nvidia and other AI companies, people with knowledge of the chip supply chain said Apple was exploring whether some lower-end processors could be made by someone other than TSMC.

One of Apple’s biggest profit-spinners is selling extra memory for far more than the memory chips cost the company. Last fall Apple discontinued the iPhone Pro model with 128 gigabytes of storage. Customers who want that model must now start at 256 gigabytes and pay $100 more—the type of move that could be repeated this year to help Apple offset higher costs, wrote Craig Moffett, an analyst at Moffett Nathanson, in an investor note.

However, Apple isn’t expected to raise the price of its next iPhone models over similarly equipped iPhone 17s, said Kuo, the analyst.

News Corp, owner of The Wall Street Journal, has a commercial agreement to supply news through Apple services.

Even with a stock market outperforming S&P 500, Chinese shoppers aren’t flocking to luxury brands as they once did

Chinese shoppers are returning to luxury stores, but with less appetite to spend and in greatly diminished numbers. That is disappointing for high-end brands desperate for fresh growth.

After five years of weak sales, some luxury brands said their China business recently turned a corner. Richemont, which owns Cartier and Van Cleef & Arpels jewelry, said sales started to grow again in China in the third quarter of 2025. British luxury trench coat maker Burberry BRBY -1.88%decrease; red down pointing triangle also noticed an improvement last fall, and said demand accelerated further in the final three months of the year.

The world’s biggest luxury goods company, LVMH, reported results this past week and gave a more mixed picture. Sales to Chinese consumers are stabilizing for LVMH, but aren’t back to growth yet.

The company is tweaking its footprint in the country. LVMH recently agreed to sell its duty-free business in China, but is investing, too. Its flagship brand, Louis Vuitton, in June opened a Shanghai boutique in the shape of a ship, which is drawing thousands of visitors a day.

If the global luxury industry is to get back to the 6% annual growth it averaged over the past two decades, it needs China to recover. Luxury stocks used to be a favorite way for investors to get exposure to the country’s then-booming middle class.

The Chinese went from barely being on luxury brands’ radar in the early 2000s to generating 35% of the industry’s global sales by 2019, Bernstein estimates. The appetite for luxury goods was so strong that Chinese tourists flew to European capitals for the experience of buying—for example—a Chanel or Hermès purse at a flagship in Paris.

The pandemic and China’s imploding housing market ended the good times. The Chinese share of global luxury spending dropped to 23% last year. They have been overtaken by Americans, who are now the industry’s most important customers. Last year, U.S. shoppers generated 31% of global luxury sales, up from 22% before the pandemic.

This leaves luxury brands heavily reliant on a clutch of wealthy Americans. The S&P 500 has gained 17% over the past 12 months, generating an additional $8.4 trillion of stock market wealth.

Most of the benefits have gone to the richest households, who have higher than average exposure to stocks. This is boosting the very top of the luxury market, for goods such as fine jewelry, or seats in first-class air cabins. Brands such as Gucci or Saint Laurent that are more dependent on aspirational shoppers in the U.S., defined as customers who spend up to $2,500 a year on luxury goods, are suffering.

A recovery in China would provide a welcome hedge. The Shanghai Stock Exchange Composite Index has outperformed the S&P 500 since the start of 2025. But China’s equity markets are volatile and a less important driver of consumer spending than in the U.S. Stocks make up just a 10th of China’s household wealth according to Goldman Sachs. This compares to 35% in the U.S., data from the Federal Reserve shows.

Home values, which make up 60% of household wealth in China, are much more important for consumer spending. A property crash has wiped two-fifths off the value of Chinese real estate since 2021 in some parts of the country. Prices for existing homes fell 6% in 2025, and don’t appear to have bottomed out yet.

However, prices are stabilizing in Tier 1 cities such as Shanghai and Shenzhen, where wealthy residents are also more likely to own stocks. This could create pockets of demand for luxury goods this year.

But a widespread recovery is a long shot. When middle-income Chinese consumers were splurging on designer goods several years ago, their homes were appreciating in value.

In the decade leading up to the pandemic, home prices in China’s top 70 cities rose more than 50%, data from the National Bureau of Statistics of China shows. Incomes were rising 10% a year on average over the period, more than double today’s rate.

Chinese households are still prodigious savers. The average household is socking away a third of its income, compared with less than 5% in the U.S. This will limit how much middle-class consumers are willing to spend on luxury goods.

That said, brands perceived to offer value for the money are growing. Ralph Lauren said its sales in China rose more than 30% in its latest quarter. Coach’s Chinese business was up 21%. Burberry is having success with Gen Z consumers, thanks in part to a realistic pricing strategy.

Local luxury players such as Songmont handbags are also winning over price-sensitive Chinese shoppers. Their goods sell for four to five times their manufacturing cost, compared with a 10 times markup or higher for Western luxury brands, Bernstein notes.

Richemont Chief Executive Nicolas Bos, said on the company’s latest investor call that the bar for selling luxury goods in China is high today. Chinese customers are “becoming much more demanding, discerning and differentiating when it comes to their choice of brands.” The days when shoppers queued around the block for a Chanel or Louis Vuitton handbag aren’t coming back any time soon.