Netherlands Prime Minister Mark Rutte speaks with U.S. President Joe Biden. The U.S. has been putting pressure on the Netherlands to block exports to China of high-tech semiconductor equipment. The Netherlands is home to ASML, one of the most important companies in the global semiconductor supply chain.
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Washington has its eyes on the Netherlands, a small but important European country that could hold the key to China’s future in manufacturing cutting-edge semiconductors.
The Netherlands has a population of just more than 17 million people — but is also home to ASML, a star of the global semiconductor supply chain. It produces a high-tech chipmaking machine that China is keen to have access to.
The U.S. appears to have persuaded the Netherlands to prevent shipments to China for now, but relations look rocky as the Dutch weigh up their economic prospects if they’re cut off from the world’s second-largest economy.
These machines are required to make the most advanced chips in the world, and ASML has a de facto monopoly on them, because it’s the only company in the world to make them.
This makes ASML one of the most important chip companies in the world.
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U.S.-Netherlands talks
U.S. pressure on the Netherlands appears to have begun in 2018 under the administration of former President Donald Trump. According to a Reuters report from 2020, the Dutch government withdrew ASML’s license to export its EUV machines to China after extensive lobbying from the U.S. government.
Under Trump, the U.S. started a trade war with China that morphed into a battle for tech supremacy, with Washington attempting to cut off critical technology supplies to Chinese companies.
President Joe Biden‘s administration has taken the assault on China’s chip industry one step further.
In October, the U.S. Department of Commerce’s Bureau of Industry and Security introduced sweeping rules requiring companies to apply for a license if they want to sell certain advanced computing semiconductors or related manufacturing equipment to China.
Pressure on the Netherlands to fall in line with U.S. rules continues. Alan Estevez, the undersecretary of commerce for industry and security at the U.S. Department of Commerce, and Tarun Chhabra, senior director for technology and national security at the U.S. National Security Council, reportedly spoke with Dutch officials this month.
“Now that the U.S. government has put unilateral end-use controls on U.S. companies, these controls would be futile from their perspective if China could get these machines from ASML or Tokyo Electron (Japan),” Pranay Kotasthane, chairperson of the high-tech geopolitics program at the Takshashila Institution, told CNBC.
“Hence the U.S. government would want to convert these unilateral controls into multilateral ones by getting countries such as the Netherlands, South Korea, and Japan on board.”
The National Security Council declined to comment when contacted by CNBC, while the Department of Commerce did not respond to a request for comment.
A spokesperson for the Netherlands’ Ministry of Foreign Affairs said it does not comment on visits by officials. The ministry did not reply to additional questions from CNBC.
Tensions
Last week, U.S. Secretary of State Antony Blinken hailed the “growing convergence in the approach to the challenges that China poses,” particularly with the European Union.
But the picture from the Netherlands does not appear as rosy.
“Obviously we are weighing our own interests, our national security interest is of utmost importance, obviously we have economic interests as you may understand and the geopolitical factor always plays a role as well,” Liesje Schreinemacher, minister for foreign trade and development cooperation of the Netherlands, said last week.
She added that Beijing is “an important trade partner.”
Companies such as Getir and Gorillas promise to deliver items to shoppers’ doors in as little as 10 minutes.
Angel Garcia | Bloomberg via Getty Images
Grocery delivery startup Getir announced on Monday that it is quitting international markets including the U.K., Germany, the Netherlands and the U.S., marking a major setback for the once hyped online grocery industry.
The Istanbul, Turkey-based firm said in a statement that it was withdrawing from its U.S. and European markets and would now refocus its financial resources on Turkey.
The company said it raised a new investment round led by Abu Dhabi sovereign wealth fund Mubadala and venture capital firm G Squared “to bolster its competitive position in its core food and grocery delivery businesses in Turkey.”
Getir said it generates 7% of its revenues from the U.K., Germany, the Netherlands and the U.S.
“Getir expresses its sincere appreciation for the dedication and hard work of all its employees in the UK, Germany, the Netherlands, and the U.S.,” the company said.
Pandemic grocery hype fades
Getir was one of the most-hyped online grocery delivery companies at the height of the Covid-19 pandemic in 2020 and 2021, when people around the world flocked to online services for their shopping purchases.
The company, which was founded in 2015, has raised a whopping $1.8 billion to date. Getir raised $768 million of that sum in 2022, at a sky-high valuation of $11.8 billion.
Getir’s valuation has since sunk considerably, with the company having reportedly seen billions of dollars wiped off its market value.
Getir raised funds from key backers including Mubadala, G Squared and ex-Sequoia Capital partner Michael Moritz, at a $2.5 billion valuation, according to a September 2023 Financial Times report, citing unnamed sources familiar with the matter.
That would mark a hefty 79% discount to Getir’s previously disclosed valuation. CNBC was unable to independently verify the FT report.
Struggling space
Getir’s bright purple and yellow branding had become a common sight on mopeds whizzing around the city to deliver groceries on demand in bustling cities such as London and New York.
Getir’s business, and others like it, rely on a model where groceries are packed at local so-called “dark stores” peppered about a major city in spots that are close to areas with a dense urban population.
Groceries would be packed up by staff at Getir’s stores and then delivered by its fleet of drivers in a matter of minutes. Getir touted delivery times of as little as 10 minutes.
Gorillas, another grocery delivery company with a model similar to Getir’s, faced financial struggles in 2022 when high interest rates and soaring inflation put pressure on its business. The brand was acquired by Getir in December 2022 for $1.2 billion.
SpaceX owner and Tesla CEO Elon Musk arrives on the red carpet for the Axel Springer Award 2020 on Dec. 1, 2020 in Berlin, Germany.
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Shares of Tesla rose sharply in U.S. premarket trading on Monday after the electric car maker passes a significant milestone to roll out its full self-driving technology in China.
The company’s share price spiked more than 10% just after 7:30 a.m. ET, as investors reacted to news surrounding Tesla CEO Elon Musk’s visit to China.
Tesla on Sunday said that local Chinese authorities removed restrictions on its cars after passing the country’s data security requirements.
The move raised expectations that Tesla’s driver-assistance software Full Self Driving (FSD) would soon be available in the country, which is the largest market for electric vehicles.
FSD is an upgrade to Tesla’s Autopilot driver assistant. Tesla has offered its FSD technology in China for years, but with a restricted feature set that limits it to operations, such as automated lane changing.
Data security concerns have been a key obstacle preventing Tesla from achieving a full rollout of the system in China.
Tesla also reportedly scored a deal with Baidu that would give Musk’s firm access to the Chinese internet giant’s mapping and navigation technology for Tesla’s FSD feature.
The agreement would allow Tesla to tap into Baidu’s mapping service license, which is a requirement for intelligence driving systems to operate on public roads in China, Reuters reported, citing two anonymous sources familiar with the matter.
CNBC was unable to independently verify the report. Tesla and Baidu were not immediately available for comment.
With the license, which foreign companies can only clinch in partnership with local Chinese firms, Tesla will be allowed to legally operate FSD on Chinese roads, and its fleets will be able to gather data about traffic, road signs and routes.
The breakthrough for Tesla toward bringing its FSD self-driving technology to China marks a key win for the firm at a time when it is facing hefty competition in the Chinese market. Local rivals such as Warren Buffett-backed electric vehicle maker BYD, Nio, and Xpeng have ramped up their competition with Tesla in recent years.
US multinational computer technology company Oracle’s logo is pictured at the Mobile World Congress (MWC), the telecom industry’s biggest annual gathering, in Barcelona on February 27, 2024. The world’s biggest mobile phone fair throws open its doors in Barcelona with the sector looking to artificial intelligence to try and reverse declining sales. (Photo by PAU BARRENA / AFP) (Photo by PAU BARRENA/AFP via Getty Images)
Pau Barrena | Afp | Getty Images
U.S. cloud infrastructure provider Oracle is boosting its generative AI capabilities as cloud competition intensifies and more companies jump into AI.
The AI boom — fueled by the launch of chatbot ChatGPT in November 2022 — is driving an increase in demand for cloud computing services and data centers, as large amounts of data are required in AI model training and the cloud provides access to vast datasets.
Oracle has been introducing generative AI capabilities into its cloud infrastructure and applications to complement the traditional AI already embedded in them.
“The classic AI is very good in terms of detecting patterns or predicting numbers … but you cannot use large language models to predict numbers,” Rondy Ng, executive vice president of applications development at Oracle, told CNBC.
“So we combined the predictive numbering capability with the explained ability in words. So the two together become very powerful and you need both. In the past many years, the number prediction part is already very mature. As part of the product we continue to evolve that and it’s not going to stop. Generative AI is basically the talk of the town right now,” said Ng.
In March, Oracle announced additional generative AI features embedded across applications in finance, supply chain, human resources, sales, marketing, and service. The generative AI capabilities can perform tasks such as generating financial reports and drafting job ads, improving productivity and reducing business costs, Oracle said.
This comes after the firm announced the implementation of generative AI across its technology stack in January.
“We believe Oracle is seeing a renaissance of growth with its AI strategy. [It is] well positioned to be a major beneficiary of the AI revolution,” said Dan Ives, managing director of Wedbush Securities, in emailed comments to CNBC on Wednesday.
“The data Oracle sits on and installed base gives Ellison & co. a major advantage to monetize the software layer of AI,” said Ives, referring to Oracle’s chairman and chief technology officer Larry Ellison.
As firms talked up the generative AI story last year, technology providers have to be one step ahead of the cycle, research firm Gartner said in a report on April 17. “They are bringing GenAI capabilities to existing products and services, as well as to use cases being identified by their enterprise clients.”
JPMorgan has said generative AI and AI could drive incremental IT spending and growth across the software landscape. “Many software vendors, including Oracle, have cited benefits from ongoing investments by businesses into AI technologies,” JPMorgan analysts said in a note on March 12.
Oracle might see an increase in revenue and positive impact on its shares if the company manages to capture a larger-than-expected share of the spending into AI, the U.S. investment bank said. Oracle’s shares have spiked 23.74% in the last 12 months, according to FactSet data.
“Generative AI services [are] basically a huge advantage comparing with our competition. The competition needs to work with different companies and cloud providers for that infrastructure and those kinds of services. We actually take everything into an integrated stack, and we consume that,” Ng told CNBC.
AI growth
Oracle has lagged behind rivals like Amazon, Microsoft and Google in cloud infrastructure service market share, according to Synergy Research Group, which ranked Oracle as the sixth-largest service provider, alongside IBM, globally.
“Oracle did follow the hyperscalers. [I think] that’s not a competitive concern, say for the rest of 2024 and in the foreseeable future. We’re at the very beginning stage of this whole new generative AI journey,” said Ron Westfall, research director at Futurum Group.
“Interesting to us is management commentary suggesting its Oracle Cloud Infrastructure backlog is significant and AI isn’t yet really driving revenue, which is expected to be more meaningful in FY25,” said Deutsche Bank analysts on Mar. 12.
Ellison said in March that a Salt Lake City data center that Oracle is building can fit eight Boeing 747 airplanes nose-to-tail.
Laying out future market opportunities, Ellison said he sees more national and state government applications being run on platforms like Oracle Cloud Infrastructure, and added that the firm is negotiating sovereign regions with a number of countries.
“Another area [where Oracle] is ahead of the curve, although everybody’s jumping on it, is in terms of offering sovereign AI cloud – a cloud that operates exclusively within a country,” said Westfall.
“More and more countries are going to say when it comes to gen AI, we want all that information, all that data stored within the country.”
In April, Oracle said it would invest more than $8 billion in Japan over the next 10 years to grow cloud computing and AI infrastructure.