—— US to Tighten AI Chip Export Curbs; OpenAI Opens London Office; Lordstown EV Files for Bankruptcy; Porsche to Invest €20B in Tech; Brookfield Leads Global M&A; Fed Stress Test Results Positive; NY Teachers’ Pension to Sell $6B Assets
1. US to Tighten AI Chip Export Curbs
A new report today revealed that the US may further tighten its export controls on AI chips, causing Nvidia’s premarket stock price to drop by 4.6%, triggering broader tech stock sell-offs.
Rival AMD’s shares also fell by 3.7%; both companies are leading producers of chips critical for generative AI.
Since about one-fifth of Nvidia’s revenue comes from China, stricter export rules would have a significant impact.
Previously, Nvidia created slightly downgraded chips specifically for China that avoided requiring a US export license, but the US may soon place even low-performance chips under new controls.
The policy highlights President Biden’s determination to curb China’s technological development, even at the cost of worsening already tense relations.
US officials are also considering restricting cloud services rentals by Chinese AI companies.
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2. OpenAI Opens London Office
OpenAI, the creator of ChatGPT, announced plans today to open its first office outside the US, located in London.
Founded in San Francisco, OpenAI has raised over $10 billion and is currently on a major hiring spree to support AI development.
Today, OpenAI said in a blog post that it is hiring for research, engineering, and business development roles in London.
Backed by Microsoft, OpenAI is leading AI innovation and aggressively expanding its workforce.
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3. Lordstown EV Files for Bankruptcy
This week, electric truck company Lordstown Motors filed for bankruptcy protection after a failed partnership with Foxconn.
On Tuesday, Lordstown accused Foxconn of breaching cooperation agreements, forcing it to file for Chapter 11 to maximize asset value and shareholder returns.
Lordstown also plans to sue Foxconn, claiming the latter has a history of abandoning US partnerships.
Foxconn said it would seek a resolution but called Lordstown’s statements malicious.
Foxconn had initially planned to help Lordstown produce the Endurance electric truck but later withdrew from the project.
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4. Porsche to Invest €20B in Tech
At its first post-IPO general meeting, Porsche CEO Oliver Blume announced plans to invest €20 billion ($21.9 billion) in developing new EVs and digital technologies to boost sales of key models like the Cayenne.
The company aims to increase its profit margin from 18% last year to 20%.
Porsche remains a major profit driver for parent company Volkswagen Group and plans to develop proprietary software and high-performance batteries to maintain margins.
Porsche’s technological and EV development are critical given its key role within Volkswagen’s income portfolio.
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5. Brookfield Leads Global M&A
According to Bloomberg data, since January, Canadian asset manager Brookfield has announced over $50 billion in acquisitions, three times the combined total of rivals Apollo and KKR.
In April, Brookfield Infrastructure acquired shipping giant Triton International for $13 billion. Its renewable energy fund also acquired Canada’s Origin Energy for $12 billion, both among the year’s largest deals.
Brookfield’s CEO said that acquisitions must be disciplined in today’s liquidity-strained market.
Brookfield’s aggressive deal spree has far outpaced private equity competitors.
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6. Fed Stress Test Results Positive
According to the Federal Reserve’s annual stress test results released today, major US banks could lose $541 billion under a worst-case “doomsday” economic scenario.
Vice Chair for Supervision Michael Barr said that although the loss figure is large, US banks have sufficient capital buffers, demonstrating a resilient banking system.
The Fed’s scenario included a 10% unemployment spike, a 40% commercial real estate crash, a 38% drop in housing prices, and near-zero short-term interest rates.
Among the 23 banks tested, Deutsche Bank faced the largest potential loss, followed by UBS.
Barr emphasized that while banks are resilient, vigilance against emerging risks remains necessary.
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7. NY Teachers’ Pension to Sell $6B Assets
Sources revealed that the New York State Teachers’ Retirement System (NYSTRS) plans to sell $6 billion worth of private assets on the secondary market and is actively seeking buyers.
After public equity markets crashed last year, many pension funds boosted private equity allocations. Some funds are now selling those stakes to rebalance portfolios or fund new investments.
As of March 31, NYSTRS managed $133.7 billion, including $16.2 billion in private equity and private credit, and $24.6 billion in real estate equity and debt.
Recently, a major Canadian pension fund also sought buyers for $3 billion of private assets.
Pension funds are increasingly tapping the secondary market to optimize portfolio liquidity.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.