Intel only start of US deals

 

U.S. Government’s Stake in Chipmakers: Protection or Meddling?

hashtagWhiteHouse economic adviser Kevin Hassett, in an interview with CNBC, suggested that the U.S. government could take equity stakes in other hashtag#semiconductor companies, following the Intel deal, it signaled more than just a financial move.

It hints at a shift in how hashtagWashington views private industry: not just as market actors, but as strategic assets that may require direct state participation.

On the surface, the logic is compelling. hashtagAI chips have become the “new oil” of the hashtag#digitaleconomy. They power everything from hashtaggenerativeAI to hashtagcybersecurity, space exploration, and hashtagmilitary systems.

Hassett’s remarks underscore a broader view inside Washington. If these chips are central to hashtagnationalsecurity and global power, then leaving them entirely to market forces may be too risky. By taking minority stakes, the government ensures visibility, leverage, and a measure of control over a hashtagtechnology that could define the next century.

hashtagChina, hashtagTaiwan, and hashtagSouthKorea all have heavy state involvement in semiconductors.

For the U.S., which has long prided itself on market-led hashtaginnovation, this is a cultural shift, but arguably a necessary one.

Advocates see it as protective custody, a way to guarantee supply chain resilience and prevent adversaries from exploiting U.S. dependence on foreign fabs.

But here lies the tension. Does government ownership strengthen competitiveness or weaken it?

The hashtagAmerican technology sector has historically thrived because of independence, agility, and an innovation-first mindset.

Government stakes, even symbolic ones, blur that line. International customers could view Intel Corporation and others as extensions of Washington policy, potentially complicating global sales. Investors may fear that political considerations could override commercial logic.

Hassett’s comments also revive an old debate about a U.S. sovereign wealth fund, a systematic approach to state equity investments.

But here’s the risk: the more Washington embeds itself into private enterprise, the greater the danger of creeping overreach. The very dynamism that made U.S. tech giants dominant could be eroded if political priorities intrude on business decisions.

So we’re left with a critical question: is this about safeguarding America’s future, or is it the start of government meddling that could backfire?

In a world where AI chips define not only markets but hashtag#geopolitics, there may be no easy answer.

Hassett has opened the door to a model where the state becomes an active shareholder in the industries of tomorrow. Whether history judges this as protection or interference will depend on how wisely that power is used.

Either way, the semiconductor story has outgrown the business pages. It’s now at the intersection of economics, security, and technological power — and the stakes could not be higher.

Elon Musk accused Apple Inc. and OpenAI in a lawsuit of unfairly favoring the artificial intelligence company across iPhones and thwarting competition for other chatbot makers.

Musk’s X and xAI seek billions of dollars in damages in the suit filed Monday in federal court in Fort Worth, Texas, arguing that Apple’s decision to integrate OpenAI into the iPhone’s operating system inhibits rivalry and innovation within the AI industry and harms consumers by depriving them of choice.

The billionaire founder of xAI Holdings, which now houses the Grok AI team and X social network, said Apple makes it impossible for anyone other than OpenAI’s ChatGPT to reach the top of the App Store charts, a sought-after global spotlight for app developers.

The case sets up a high-stakes court showdown between the richest person on the planet and one of the world’s most valuable companies.

Apple and OpenAI — whose ChatGPT service is the most-downloaded free iPhone app in the US — have a partnership around AI built into the latest iPhones. Musk, 54, has a long-running feud with OpenAI Chief Executive Officer Sam Altman, which dates back to disagreements that led to their split after the two founded OpenAI together a decade ago.

Apple and OpenAI’s “exclusive arrangement has made ChatGPT the only generative AI chatbot integrated into the iPhone,” lawyers for Musk’s companies said in the lawsuit, and “have locked up markets to maintain their monopolies and prevent innovators like X and xAI from competing.”

“This latest filing is consistent with Mr Musk’s ongoing pattern of harassment,” an OpenAI spokesperson said in a statement. Apple did not immediately respond to a request for comment.

Apple has tangled with regulators around the world in recent years over claims that its app store has illegally squelched competition in the marketplace for mobile applications used on smartphones. The iPhone maker also has been engaged a five-year legal fight with Fortnite maker Epic Games Inc. over the App Store’s dominance of the smartphone software market.

Some of the allegations in Musk’s suit mirror those brought by the Justice Department against Apple. The US sued the iPhonemaker in New Jersey federal court in March 2023, alleging the company has monopolized the smartphone market by blocking rivals from accessing hardware and software features on its popular devices.

The government’s lawsuit alleges that Apple has used its power over app distribution to thwart innovations that would have made it easier for consumers to switch phones, in particular by blocking “super apps.” Musk’s suit makes a similar allegation that Apple’s conduct inhibits “everything apps” like X.

“Apple’s conduct inhibits the growth of AI and super apps by allowing OpenAI to maintain its monopoly and curtail innovation and investment in generative AI chatbots that would develop into super apps that replace iPhone functionality,” according to the complaint.

In addition to monetary damages, the suit seeks a court order preventing Apple and OpenAI from continuing with their alleged “illegal arrangement.”

Apple announced a deal with OpenAI last year to incorporate ChatGPT into Apple Intelligence on the iPhone. In court testimony in May, Eddy Cue, Apple’s senior vice president of services, said the deal with OpenAI is non-exclusive and Apple has the ability to integrate other AI apps or features if it wants. Cue’s testimony was part of the Justice Department’s antitrust lawsuit against Google.

The lawsuit filed by Musk’s companies follows his Aug. 11 social media post in which he asked if Apple is “playing politics” by not highlighting his products. Apple responded in a statement that the App Store “is designed to be fair and free of bias.” Altman replied to Musk’s X post by turning the focus to how Musk manages the X network, suggesting he manipulates it to serve his personal interests.

The case is X Corp. et al v. Apple Inc., US District Court, Northern District of Texas (Fort Worth).

Sales of new U.S. single-family homes fell in July following a sharp upward revision to the prior month's sales pace, and the overall trend remained consistent with a housing market struggling in an environment of high mortgage rates.

The report from the Commerce Department on Monday bolstered economists' expectations that the housing market slump could persist through the end of the year. Though mortgage rates have eased on expectations that the Federal Reserve would resume cutting interest rates in September, they continue to outpace wage growth, pushing home ownership beyond the reach of many.

"Affordability challenges and slower job growth in most industries serve as headwinds to the housing market," said Daniel Vielhaber, an economist at Nationwide. "There is little reason to expect a pick-up in sales through the end of the year due to the combination of still-high mortgage rates and a weakening labor market."

New home sales dropped 0.6% to a seasonally adjusted annualized rate of 652,000 units last month, the Commerce Department's Census Bureau said. The sales pace for June was upgraded to a rate of 656,000 units from the previously reported pace of 627,000 units.

Economists polled by Reuters had forecast new home sales, which make up about 14% of U.S. home sales, would rise to a rate of 630,000 units. Sales declined 6.6% in the Midwest and dropped 3.5% in the densely populated South. They were unchanged in the Northeast and increased 11.7% in the West.

New home sales, which are counted at the signing of a contract, are volatile on a month-to-month basis and subject to big revisions. They dropped 8.2% on a year-over-year basis in July. Government data last week showed single-family homebuilding rebounded in July though permits for future construction rose marginally.

Economists expect that residential investment, which includes homebuilding and home sales through broker commissions, to contract for a third straight quarter in the third quarter.

SEPTEMBER RATE CUT EYED

The housing market has been hardest hit by the U.S. central bank's tight monetary policy stance. Fed Chair Jerome Powell last week signaled a possible rate cut at the central bank's September 16-17 policy meeting, in a nod to rising labor market risks, but also noted inflation remained a threat.

August employment and inflation reports due to be published next month will greatly influence the rate decision. The Fed has kept its benchmark overnight interest rate in the 4.25%-4.50% range since December.

The average rate on the popular 30-year fixed-rate mortgage has dropped to around 6.58% from 7.04% in mid-January, data from mortgage finance agency Freddie Mac showed. Mortgage rates track the 10-year U.S. Treasury yield. Annual wage growth has slowed to 3.9% from 4.3% in January 2024 in tandem with easing labor market conditions.

The inventory of unsold homes on the market dropped to a still-high 499,000 units last month from 502,000 in June. New housing supply is near levels last seen in October 2007, weighing on house prices. The median new house price dropped 5.9% to $403,800 in July from a year earlier. That was the lowest house price level in eight months.

The bulk of the homes sold last month were priced under $499,000. A National Association of Home Builders survey last week showed the share of builders cutting prices to attract buyers jumped in August to the highest level since 2022.

At July's sales pace, it would take 9.2 months to clear the supply of new houses on the market, unchanged from June. The inventory of completed new homes for sale was the highest in 16 years.

"The buildup of completed new-home inventory will limit the upside for single-family housing starts in the near-term," said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. "Given excess inventory, it's unlikely new home prices will increase on a sustained basis in the near term."

 U.S. soft drinks giant Keurig Dr Pepper (KDP.O), opens new tab is set to create a global coffee giant to rival market leader Nestle (NESN.S), opens new tab with an $18 billion takeover of JDE Peet's (JDEP.AS), opens new tab, Europe's largest acquisition in more than two years.

The deal, announced on Monday and offering a 20% premium to JDE Peet's closing market price on Friday, proposes splitting the merged entity's coffee operations and other beverage businesses into two separate publicly U.S.-listed companies, as the Dutch company would be delisted from the Amsterdam stock exchange.

The transaction, which comes as the global trade war intensifies corporate action in the consumer goods sector, aims to create $400 million in annual cost savings, allowing the new entities to better fare against rising U.S. tariffs against coffee-producing nations and other trade rivals.

"The new Coffee entity will be somewhat similar in size to the coffee business of Nestle... The two would each have a market share of around 20% in the global CPG (consumer packaged goods) coffee market" ING analyst Maxime Stranart told Reuters.

The deal comes amid record high prices for global coffee, driven by droughts in top producers Brazil and Vietnam and following U.S. President Donald Trump's decision to impose 50% duties on beans imported from Brazil.

Keurig Dr Pepper's North American footprint will complement JDE Peet's European presence, while offering a springboard to grow in emerging markets as coffee consumption there rises. But avoiding tariffs into the world's biggest consumer market will be hard as most of North America is too cold to grow coffee.

"Rolling the two coffee businesses together makes sense, reducing the European-centric and commoditised nature of most of JDE Peet’s business, and giving Keurig international exposure," said analyst Jon Cox of Kepler Cheuvreux.

POST-CLOSE SEPARATION

The transaction announced on Monday would partly reverse a 2018 merger that created Keurig Dr Pepper by combining Keurig Green Mountain and Dr Pepper Snapple, allowing investors to focus a single segment rather than a bundle of diverse products.

Item 1 of 2 Aluminium Dr Pepper cans leave the production line at Ball Corporation, Wakefield, Britain, October 18, 2019. REUTERS/Andrew Yates/File Photo

[1/2]Aluminium Dr Pepper cans leave the production line at Ball Corporation, Wakefield, Britain, October 18, 2019. REUTERS/Andrew Yates/File Photo Purchase Licensing Rights, opens new tab

The new entities, called Beverage Co and Global Coffee Co, will be led by Keurig's CEO Cofer and CFO Sudhanshu Priyadarshi, respectively.

Keurig said that Global Coffee Co, with around $16 billion in combined annual net sales, will be well positioned to profit from the world's $400 billion coffee market, while Beverage Co, with more than $11 billion in yearly net sales, will focus on North America's $300 billion refreshment beverage market.

Shares in JDE Peet's surged 17.5%, marking their strongest day on record, while U.S.-listed shares of Keurig Dr Pepper were down about 7% as of 1625 GMT.

JDE Peet's, with brands including Jacobs, L'Or, Tassimo and Douwe Egberts, was valued at 12.76 billion euros at Friday's market close, while Keurig's worth stood at around $48 billion, according to LSEG data.

Its shares have risen nearly 10% this year on strong beverage sales, while the Dutch coffee maker's almost doubled, supported by stable revenues and a focus shift towards shareholders' remuneration.

JDE Peet's is majority owned by a unit of the billionaire German Reimann family's investment firm JAB Holding, which has committed to tendering its 68% controlling stake in the Dutch coffee company.

JAB also owns a 4.4% stake in KDP and will hold nearly 5% in both follow-up companies after the acquisition and subsequent spin-off.

The deal is expected to close by the first half of 2026, with the split expected to happen by the end of that year.

President Trump signed an executive order Monday targeting the burning of the American flag, an act of political protest the Supreme Court has ruled is protected under the First Amendment.

The order would not attempt to criminalize burning the American flag but would direct Attorney General Pam Bondi to review cases where the flag has been set ablaze and determine what charges could be brought under existing laws.

 "If you burn a flag, you get one year in jail, no early exits, no nothing," Trump said while signing the executive order.

 In a landmark 1989 ruling, the high court decided that flag burning constitutes protected symbolic speech.

• An official told NewsNation, which first reported on the order before it was signed, that if someone was injured as a result of the flag burning, for example, then charges could be brought under the order.

 Trump has long said that anyone who desecrates the flag should receive a one-year jail sentence.

• "Now, people will say, 'Oh, it's unconstitutional.' Those are stupid people," he said in a 2024 interview on Fox News.
• Those comments followed a protest in Washington, D.C., opposing Israeli Prime Minister Benjamin Netanyahu's speech to U.S. lawmakers where an American flag was burned and several people were arrested.
• Trump revived that call for a year-long sentence during a June speech at Fort Bragg, saying he would work with lawmakers and see if he could "get that done." Soon after, Sen. Josh Hawley (R-Mo.) introduced legislation to enhance penalties who burn the flag while committing a federal offense.

"If there is a bedrock principle underlying the First Amendment," Justice William Brennan wrote for the majority in the court's 1989 opinion, "it is that the government may not prohibit the expression of an idea simply because society finds the idea itself offensive or disagreeable."

• Shortly after, in 1990, the court struck down a congressional act that criminalized destroying an American flag.
• The late conservative Justice Antonin Scalia, who Trump honored as "one of the best of all time," told CNN in 2012 that if "I were king, I would not allow people to go around burning the American flag."
• "However, we have a First Amendment, which says that the right of free speech shall not be abridged — and it is addressed in particular to speech critical of the government," he added.