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David Carbon, vice president of Prime Air at Amazon.com Inc., speaks during the Delivering the Future event at the Amazon Robotics Innovation Hub in Westborough, Massachusetts, US, on Thursday, Nov. 10, 2022. 

Bloomberg | Bloomberg | Getty Images

In mid-January, Amazon’s drone delivery head David Carbon sat down for his weekly “AC/DC” video address to employees, where he gives the latest updates on Prime Air.

The acronym stands for A Coffee with David Carbon, and the event followed a very busy end to 2022. A decade after Prime Air’s launch, Amazon was starting drone deliveries in two small markets, bringing one of founder Jeff Bezos’ dreams closer to reality.

In the video, which was obtained by CNBC, Carbon told employees that Prime Air had recently kicked off durability and reliability (D&R) testing, a key federal regulatory requirement needed to prove Amazon’s drones can fly over people and towns. 

“We started D&R and we’re into D&R as of the time of this filming by about 12 flights,” Carbon said. “So, really excited to get that behind us.” 

However, there’s a cavernous gap between starting the process and finishing it, and employees could be forgiven for expressing skepticism.

Since at least last March, Carbon has been telling Prime Air staffers that D&R testing is underway, according to people who worked on the project and requested anonymity because they aren’t authorized to discuss it. He even had baseball caps made that said “D&R 2022” with the Prime Air logo on them.

But the Federal Aviation Administration didn’t provide clearance for testing until December, and the company began the campaign shortly after, in January of this year, Amazon said. Before a broader rollout, Prime Air must complete several hundred hours of flying without any incidents and then submit that data to the FAA, which oversees the approval process for commercial deliveries.

That all stands in the way of Prime Air’s expansion and its efforts to achieve Amazon’s wildly ambitious goal of whisking food, medicine and household products to shoppers’ doorsteps in 30 minutes or less.

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Bezos predicted a decade ago that a fleet of Amazon drones would take to the skies in about five years. But as of now, drone delivery is restricted to two test markets — College Station, Texas, and Lockeford, California, a town of about 3,500 people located south of Sacramento.

Even in those hand-picked areas, operations have been hamstrung by FAA restrictions that prohibit the service from flying over people or roads, according to government records. That comes after years of challenges with crashes, missed deadlines and high turnover.

So, while Prime Air has signed up about 1,400 customers for the service between the two sites, it can only deliver to a handful of homes, three former employees said. In all, CNBC spoke to seven current and former Prime Air employees who said continued friction between Amazon and the FAA has slowed progress in getting drone delivery off the ground. They asked to remain anonymous because they weren’t authorized to speak on the matter.

Amazon told CNBC that thousands of residents have expressed interest in its drone-delivery service. The company said it’s making deliveries to a limited number of customers, with plans to expand over time.

CEO Andy Jassy, who succeeded Bezos in mid-2021, hasn’t talked a lot about Prime Air in public. He’s got much bigger problems to solve as Amazon navigates a period of deep cost cuts while trying to reaccelerate its business after revenue growth in 2022 was the slowest in the company’s quarter century on the public market.

But Jassy also wants to maintain a culture that’s thrived on big bets and risk-taking. His leadership circle, known as the S-team had previously set a goal of beginning drone deliveries in two locations by the end of 2022, according to two employees.

In January, a significant number of Prime Air workers were let go as part of the largest round of layoffs in Amazon’s history, totaling more than 18,000 people, CNBC previously reported. Prime Air sites in Lockeford, College Station and Pendleton, Oregon, were all hit by the job cuts, further straining operations.

The Lockeford site is now down to one pilot certified to operate commercial flights, a former employee said, so days after the layoffs were announced, Amazon flew a staffer there from College Station to help with deliveries.

Not that there’s much activity. Employees told CNBC that the Lockeford location can only deliver to two homes, which are located next door to one another and sit less than a mile from Amazon’s facility. Some details of the FAA restrictions were previously reported by The Information and Business Insider.

Employees who remain after the layoffs told CNBC that morale in the division has continued to sink since the cuts. With more work to do and less clarity on their parent company’s ongoing commitment to the mission, some are saying that they and their colleagues have started searching for jobs.

Maria Boschetti, an Amazon spokesperson, said in a statement that the layoffs and delays experienced by Prime Air haven’t affected its long-term plans for deliveries. The company is staffed to meet all applicable FAA requirements for safe operations and safety standards, she said.

“We’re as excited about it now as we were 10 years ago — but hard things can take time, this is a highly regulated industry, and we’re not immune to changes in the macro environment,” Boschetti said. “We continue to work closely with the FAA, and have a robust testing program and a team of hundreds in place who will continue to meet all regulatory requirements as we move forward and safely bring this service to more customers in more communities.”

Irrational confidence

Prime Air’s FAA problem is not a new phenomenon, and the company has long been working to try to maneuver through restrictions that limit its flying capabilities.

Of particular note was an effort in late 2021 to get a key rule changed. On Nov. 29 of that year, Sean Cassidy, Prime Air’s director of safety, flight operations and regulatory affairs, wrote to the FAA seeking relief from an order that dictates the operational conditions for Amazon’s drones, according to government filings. 

Cassidy said in the letter that Amazon’s new MK27-2 drone had several safety upgrades from the earlier model, the MK27, that rendered many of the “conditions and limitations” set by the FAA obsolete. Among the restrictions Amazon sought to remove was a provision prohibiting Prime Air from flying its drones nearby or over people, roads and structures. 

A year later, in November 2022, the FAA declined Amazon’s request. The agency said Amazon did not provide sufficient data to show that the MK27-2 could operate safely under those circumstances.

“Full durability and reliability parameters have not been established to permit” flying over or near people, the FAA said.

An Amazon drone operator loads the single shoebox-size box that can fit inside its MK27-2 Prime Air drone

Amazon

It was a surprising setback for Amazon. In early 2022, the company was so confident the FAA would soon lift the restrictions that, according to five employees, it paid for around three dozen staffers to temporarily live in hotels and Airbnbs in the area of Pendleton, a small town in rural eastern Oregon that’s about a three-hour drive from Portland.

Upon lifting of the restrictions, Amazon intended to move the workers to Lockeford and College Station, with the goal of beginning deliveries in the summer of 2022, the employees said. 

But by October, the Pendleton crew was still “living out of their suitcases,” one employee said, while the company paid for their room and board. 

The following month, Prime Air moved the employees to their respective sites, just in time for the FAA to deny Amazon’s effort for a reprieve. But the company opted to proceed anyway. On Christmas Eve, Carbon announced in a LinkedIn post that Prime Air had made its first deliveries in College Station and Lockeford.

“These are careful first steps that we will turn into giant leaps for our customers over the next number of years,” Carbon wrote. 

Boschetti said Prime Air’s delivery team received “extensive training” at the Pendleton flight test facility before they were sent to delivery locations.

Some staffers viewed the launch as a rushed effort and questioned how the service would be able to operate fully without the ability to fly over roads or cars, former employees said.

What’s more, demand from Prime Air’s tiny customer base isn’t exactly soaring. At the Lockeford site, employees have to regularly contact the two households eligible for delivery to remind them to place orders, and Amazon incentivizes them with gift cards, according to two people familiar with the situation.

Meanwhile, Amazon is working on development of its next-generation Prime Air drone called the MK30, and known internally as CX-3. At an event in Boston in November, Carbon unveiled a mockup of the unmanned aircraft, which is supposed to be lighter and quieter than the MK27-2.

As of January, Carbon was still expressing optimism at his weekly AC/DC chats. He said Prime Air has a target to make of 10,000 deliveries this year between its two test sites, even with the D&R campaign unfinished and the FAA limitations firmly in place.

Carbon acknowledged that Prime Air “is not immune to the costs savings” that Jassy is implementing, but he sounded undeterred.

“This year is going to be a big year,” Carbon said. “We’ve got lots going on.”

The MK30, expected to launch in 2024, will have to go through the same regulatory process, including a separate D&R campaign, as well as so-called type certification, an even more rigorous FAA benchmark that allows a company to produce drones at scale.

It’s not a distinction the FAA is quick to hand out. Of all drone makers vying to deliver commercially, only one has received type certification — a startup called Matternet.

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Tech founders call on Sequoia Capital to denounce VC Shaun Maguire’s Mamdani comments

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Tech founders call on Sequoia Capital to denounce VC Shaun Maguire's Mamdani comments

Almost 600 people have signed an open letter to leaders at venture firm Sequoia Capital after one of its partners, Shaun Maguire, posted what the group described as a “deliberate, inflammatory attack” against the Muslim Democratic mayoral candidate in New York City.

Maguire, a vocal supporter of President Donald Trump, posted on X over the weekend that Zohran Mamdani, who won the Democratic primary last month, “comes from a culture that lies about everything” and is out to advance “his Islamist agenda.”

The post had 5.3 million views as of Monday afternoon. Maguire, whose investments include Elon Musk’s SpaceX and X as well as artificial intelligence startup Safe Superintelligence, also published a video on X explaining the remark.

Those signing the letter are asking Sequoia to condemn Maguire’s comments and apologize to Mamdani and Muslim founders. They also want the firm to authorize an independent investigation of Maguire’s behavior in the past two years and post “a zero-tolerance policy on hate speech and religious bigotry.”

They are asking the firm for a public response by July 14, or “we will proceed with broader public disclosure, media outreach and mobilizing our networks to ensure accountability,” the letter says.

Sequoia declined to comment. Maguire didn’t respond to a request for comment, but wrote in a post about the letter on Wednesday that, “You can try everything you want to silence me, but it will just embolden me.”

Among the signees are Mudassir Sheikha, CEO of ride-hailing service Careem, and Amr Awadallah, CEO of AI startup Vectara. Also on the list is Abubakar Abid, who works in machine learning Hugging Face, which is backed by Sequoia, and Ahmed Sabbah, CEO of Telda, a financial technology startup that Sequoia first invested in four years ago.

At least three founders of startups that have gone through startup accelerator program Y Combinator added their names to the letter.

Sequoia as a firm is no stranger to politics. Doug Leone, who led the firm until 2022 and remains a partner, is a longtime Republican donor, who supported Trump in the 2024 election. Following Trump’s victory in November, Leone posted on X, “To all Trump voters:  you no longer have to hide in the shadows…..you’re the majority!!”

By contrast, Leone’s predecessor, Mike Moritz, is a Democratic megadonor, who criticized Trump and, in August, slammed his colleagues in the tech industry for lining up behind the Republican nominee. In a Financial Times opinion piece, Moritz wrote Trump’s tech supporters were “making a big mistake.”

“I doubt whether any of them would want him as part of an investment syndicate that they organised,” wrote Moritz, who stepped down from Sequoia in 2023, over a decade after giving up a management role at the firm. “Why then do they dismiss his recent criminal conviction as nothing more than a politically inspired witch-hunt over a simple book-keeping error?”

Neither Leone nor Moritz returned messages seeking comment.

Roelof Botha, Sequoia’s current lead partner, has taken a more neutral stance. Botha said at an event last July that Sequoia as a partnership doesn’t “take a political point of view,” adding that he’s “not a registered member of either party.” Boelof said he’s “proud of the fact that we’ve enabled many of our partners to express their respected individual views along the way, and given them that freedom.”

Maguire has long been open with his political views. He said on X last year that he had “just donated $300k to President Trump.”

Mamdani, a self-described democratic socialist, has gained the ire of many people in tech and in the business community more broadly since defeating former New York Gov. Andrew Cuomo in the June primary.

— CNBC’s Ari Levy contributed to this report.

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Samsung expects second-quarter profits to more than halve as it struggles to capture AI demand

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Samsung expects second-quarter profits to more than halve as it struggles to capture AI demand

Samsung signage during the Nvidia GPU Technology Conference (GTC) in San Jose, California, US, on Thursday, March 20, 2025.

David Paul Morris | Bloomberg | Getty Images

South Korea’s Samsung Electronics on Tuesday forecast a 56% fall in profits for the second as the company struggles to capture demand from artificial intelligence chip leader Nvidia. 

The memory chip and smartphone maker said in its guidance that operating profit for the quarter ending June was projected to be around 4.6 trillion won, down from 10.44 trillion Korean won year over year.

The figure is a deeper plunge compared to smart estimates from LSEG, which are weighted toward forecasts from analysts who are more consistently accurate.

According to the smart estimates, Samsung was expected to post an operating profit of 6.26 trillion won ($4.57 billion) for the quarter. Meanwhile, Samsung projected its revenue to hit 74 trillion won, falling short of LSEG smart estimates of 75.55 trillion won.

Samsung is a leading player in the global smartphone market and is also one of the world’s largest makers of memory chips, which are utilized in devices such as laptops and servers.

However, the company has been falling behind competitors like SK Hynix and Micron in high-bandwidth memory chips — an advanced type of memory that is being deployed in AI chips.

“The disappointing earnings are due to ongoing operating losses in the foundry business, while the upside in high-margin HBM business remains muted this quarter,” MS Hwang, Research Director at Counterpoint Research, said about the earnings guidance.

SK Hynix, the leader in HBM, has secured a position as Nvidia’s key supplier. While Samsung has reportedly been working to get the latest version of its HBM chips certified by Nvidia, a report from a local outlet suggests these plans have been pushed back to at least September.

The company did not respond to a request for comment on the status of its deals with Nvidia.

Ray Wang, Research Director of Semiconductors, Supply Chain and Emerging Technology at Futurum Group told CNBC that it is clear that Samsung has yet to pass Nvidia’s qualification for its most advanced HBM.

“Given that Nvidia accounts for roughly 70% of global HBM demand, the delay meaningfully caps near-term upside,” Wang said. He noted that while Samsung has secured some HBM supply for AI processors from AMD, this win is unlikely to contribute to second-quarter results due to the timing of production ramps.

Meanwhile, Samsung’s chip foundry business continues to face weak orders and serious competition from Taiwan Semiconductor Manufacturing Company, Wang added.

Reuters reported in September that Samsung had instructed its subsidiaries worldwide to cut 30% of staff in some divisions, citing sources familiar with the matter.

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Waymo to begin testing in Philadelphia with safety drivers behind the wheel

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Waymo to begin testing in Philadelphia with safety drivers behind the wheel

A Waymo autonomous self-driving Jaguar electric vehicle sits parked at an EVgo charging station in Los Angeles, California, on May 15, 2024.

Patrick T. Fallon | AFP | Getty Images

Waymo said it will begin testing in Philadelphia, with a limited fleet of vehicles and human safety drivers behind the wheel.

“This city is a National Treasure,” Waymo wrote in a post on X on Monday. “It’s a city of love, where eagles fly with a gritty spirit and cheese that spreads and cheese that steaks. Our road trip continues to Philly next.”

The Alphabet-owned company confirmed to CNBC that it will be testing in Pennsylvania’s largest city through the fall, adding that the initial fleet of cars will be manually driven through the more complex parts of Philadelphia, including downtown and on freeways.

“Folks will see our vehicles driving at all hours throughout various neighborhoods, from North Central to Eastwick, and from University City to as far east as the Delaware River,” a Waymo spokesperson said.

With its so-called road trips, Waymo seeks to collect mapping data and evaluate how its autonomous technology, Waymo Driver, performs in new environments, handling traffic patterns and local infrastructure. Road trips are often used a way for the company to gauge whether it can potentially offer a paid ride share service in a particular location.

The expanded testing, which will go through the fall, comes as Waymo aims for a broader rollout. Last month, the company announced plans to drive vehicles manually in New York for testing, marking the first step toward potentially cracking the largest U.S. city. Waymo applied for a permit with the New York City Department of Transportation to operate autonomously with a trained specialist behind the wheel in Manhattan. State law currently doesn’t allow for such driverless operations.

Waymo One provides more than 250,000 paid trips each week across Phoenix, San Francisco, Los Angeles, and Austin, Texas, and is preparing to bring fully autonomous rides to Atlanta, Miami, and Washington, D.C., in 2026.

Alphabet has been under pressure to monetize artificial intelligence products as it bolsters spending on infrastructure. Alphabet’s “Other Bets” segment, which includes Waymo, brought in revenue of $1.65 billion in 2024, up from $1.53 billion in 2023. However, the segment lost $4.44 billion last year, compared to a loss of $4.09 billion the previous year.

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