By Dan Levine and Hyunjoo Jin

(Reuters) – Tesla on Tuesday won the first U.S. trial over allegations that its Autopilot driver assistant feature led to a death, a major victory for the automaker as it faces several other lawsuits and federal investigations related to the same technology.

The verdict represents Tesla’s second big win this year, in which juries have declined to find that its software was defective. Tesla has been testing and rolling out its Autopilot and more advanced Full Self-Driving (FSD) system, which Chief Executive Elon Musk has touted as crucial to his company’s future but which has drawn regulatory and legal scrutiny.

The outcome in civil court shows Tesla arguments are gaining traction: when something goes wrong on the road, the ultimate responsibility rests with drivers.

The civil lawsuit filed in Riverside County Superior Court alleged the Autopilot system caused owner Micah Lee’s Model 3 to suddenly veer off a highway east of Los Angeles at 65 miles per hour (105 km per hour), strike a palm tree and burst into flames, all in the span of seconds.

The 2019 crash killed Lee and seriously injured his two passengers, including a then-8-year-old boy who was disemboweled, court documents show. The trial involved gruesome testimony about the passengers’ injuries, and the plaintiffs asked the jury for $400 million plus punitive damages.

Tesla denied liability, saying Lee consumed alcohol before getting behind the wheel. The electric-vehicle maker also argued it was unclear whether Autopilot was engaged at the time of the crash.

The 12-member jury announced they found the vehicle did not have a manufacturing defect. The verdict came on the fourth day of deliberations, and the vote was 9-3.

Representatives for Tesla and the plaintiffs did not immediately comment on the verdict.

Tesla won an earlier trial in Los Angeles in April with a strategy of saying that it tells drivers that its technology requires human monitoring, despite the “Autopilot” and “Full Self-Driving” names.

That case was about an accident where a Model S swerved into the curb and injured its driver, and jurors told Reuters after the verdict that they believed Tesla warned drivers about its system and driver distraction was to blame.

Bryant Walker Smith, a University of South Carolina law professor, said the outcome in both cases show “our juries are still really focused on the idea of a human in the driver’s seat being where the buck stops.”

At the same time, the Riverside case had unique steering issues, said Matthew Wansley, a former general counsel of nuTonomy, an automated driving startup, and associate professor at Cardozo School of Law.

In other lawsuits, plaintiffs have alleged Autopilot is defectively designed, leading drivers to misuse the system. The jury in Riverside, however, was only asked to evaluate whether a manufacturing defect impacted the steering.

“If I were a juror, I would find this confusing,” Wansley said.

Tesla shares closed up 1.76% after rising more than 2%.

During the Riverside trial, an attorney for the plaintiffs showed jurors a 2017 internal Tesla safety analysis identifying “incorrect steering command” as a defect, involving an “excessive” steering wheel angle.

A Tesla lawyer said the safety analysis did not identify a defect, but rather was intended to help the company address any issue that could theoretically arise with the vehicle. The automaker subsequently engineered a system that prevents Autopilot from executing the turn which caused the crash.

On the stand, Tesla engineer Eloy Rubio Blanco rejected a plaintiff lawyer’s suggestion that the company named its driver-assistant feature “Full Self-Driving” because it wanted people to believe that its systems had more abilities than was really the case.

“Do I think our drivers think that our vehicles are autonomous? No,” Rubio said, according to a trial transcript seen by Reuters.

Tesla is facing a criminal probe by the U.S. Department of Justice over claims its vehicles can drive themselves. In addition, the National Highway Traffic Safety Administration has been investigating the performance of Autopilot after identifying more than a dozen crashes in which Tesla vehicles hit stationary emergency vehicles.

Guidehouse Insights analyst Sam Abuelsamid said Tesla’s disclaimers give the company powerful defenses in a civil case.

“I think that anyone is going to have a hard time beating Tesla in court on a liability claim,” he said. “This is something that needs to be addressed by regulators.”

(Reporting by Dan Levine and Hyunjoo Jin; editing by Jonathan Oatis and Richard Chang)

By Marcelo Teixeira

NEW YORK (Reuters) – Prices for orange juice rose on Tuesday to the highest since future contracts started trading in New York in 1966 as an outlook for limited production in the United States, Brazil and Mexico boosted investors’ interest in the product.

The January contract of frozen concentrated orange juice (FCOJ) on the Intercontinental Exchange (ICE) hit an all-time high of $4.17 per pound during the session, before falling back to $3.83 per pound.

The contract was up 90% this year.

“Occasionally, these markets exceed our wildest expectations. Did anyone predict $4.00 orange juice? The profit potential from this trade is staggering,” trader Dave Reiter with Reiter Capital Investments LLC said on X, formerly Twitter, referring to the position some investors built on the contract.

“OJ is very thinly traded. Not extremely hard to move the market like it is with corn or soybeans,” said Darin Fessler, SVP, Market Strategist at Lakefront Futures & Options.

The January OJ position, for example, had an open interest of 8,111 lots at the end of trading on Monday. As a comparison, the most traded contract among the soft commodities, ICE’s raw sugar, had over 435,000 lots in open interest.

Beyond the speculative game, however, fundamentals are extremely positive, with negative weather and a bacterial disease called greening having reduced production in the three main growers Mexico, U.S. and Brazil. Florida’s production has also been hit by hurricanes in recent years.

Ibiapaba Netto, executive director at CitrusBR, the association representing Brazilian juice producers, said that a reversal of the current tight supply situation would take time, and is not certain to happen.

Brazil has a 75% share of the global orange juice trade.

Netto said fruit producers are afraid to invest to expand orchards fearing the greening disease.

“Our last large crop was five years ago. We are in a situation of basically zero stocks,” he said.

(Reporting by Marcelo Teixeira, Editing by Nick Zieminski)

By Chibuike Oguh

NEW YORK (Reuters) -Shares of Nvidia Corp dropped by about 5% to a near five-month low on Tuesday following a Wall Street Journal report that the artificial intelligence (AI) giant may be forced to cancel up to $5 billion worth of advanced chip orders to China in compliance with new U.S. government restrictions.

Nvidia was notified last week that AI chip orders scheduled for delivery next year to major Chinese technology companies, including Alibaba Group, TikTok owner-ByteDance and Baidu, are subject to the latest export restrictions announced by the U.S. Commerce Department, the Wall Street Journal reported, citing people familiar with the matter.

Nvidia’s stock fell to as low as $392.30, down 4.7%, to the lowest level since mid-June. The stock, which has been one of the major drivers of this year’s 22% gain in the Nasdaq index, is now down nearly 20% from its record high close of $493.55 reached on Aug. 31. It was last down 2.09%.

“The stock is getting oversold,” said Tom Plumb, chief executive and lead portfolio manager at Plumb Funds, which has Nvidia as one of its largest holdings.

“Previously, Nvidia has said this is not going to have a short-term impact but it’s more in the long term. We still expect a pretty strong quarter and think it’s a great long-term holding, although we are not adding any new positions because of the volatility,” Plumb added.

A Nvidia spokesperson said there is “high demand” for its advanced chips, which often require significant lead time to build, and that it is working to allocate orders to its “wide range of customers” in the United States and elsewhere.

“These new export controls will not have a meaningful impact in the near term,” the Nvidia spokesperson said in a statement.

Earlier this month, the Biden administration imposed export restrictions on shipments of more AI chips designed by Nvidia and others to China, a move designed to stop Beijing from receiving cutting-edge U.S. technologies to strengthen its military.

The new rules go into effect in November and included export controls to countries including Iran and Russia.

“I think Nvidia is priced for perfection and any trip off can have major impact when you have a stock that is trading at 20 times sales and 40 times earnings,” said Thomas Hayes, chairman at Great Hill Capital in New York.

(Reporting by Chibuike Oguh in New York; additional reporting by Stephen Nellis in San Francisco and Amruta Khandekar in Bengaluru; Editing by Lance Tupper, Michelle Price, Jonathan Oatis and Deepa Babington)

By Samrhitha A

(Reuters) -Shares of Pinterest surged 17% on Tuesday after a strong quarterly performance indicated that the image-sharing platform was riding a rebound in the advertising market and making inroads among the lucrative Gen Z.

Monthly active user growth surpassed the pandemic surge to hit a record high of 482 million, with the company saying that a lot of that was driven by the younger Gen Z population, seen as a top target for mobile advertisers.

“Take the strong engagement trends as a sign that Pinterest may have found product-market fit with younger users which keeps the flywheel going,” Bernstein analyst Mark Shmulik said.

Wall Street lauded the results. At least 19 analysts raised their price targets on the stock, boosting the median to $35, per LSEG data.

Shares were up 17% at $29.43, and the company was on track to add nearly $3 billion in market value if the gains held.

Pinterest’s comments on an improving advertising market are the latest after Meta, Google and Snap last week pointed to the recovery following the pandemic-induced slowdown and later warnings of a recession.

Like its larger peers, retail was an area of strength for Pinterest.

Meanwhile, the company said more than half its users were viewing the platform, which helps create online pinboards, as a place to shop and the company has focused on making it more “shoppable” to help drive engagement.

“If the company can convert that intent to revenues over the next few years, then we can see a pathway to further revenue acceleration beyond our base case and closing the gap to more intentional, shopping-heavy peers,” Schmulik said.

(Reporting by Samrhitha Arunasalam in Bengaluru; Editing by Sriraj Kalluvila)

(Reuters) -Rapid advances in artificial intelligence (AI) such as Microsoft-backed OpenAI’s ChatGPT are complicating governments’ efforts to agree laws governing the use of the technology.

Here are the latest steps national and international governing bodies are taking to regulate AI tools:

AUSTRALIA

* Planning regulations

Australia will make search engines draft new codes to prevent the sharing of child sexual abuse material created by AI and the production of deepfake versions of the same material, its internet regulator said in September.

BRITAIN

* Planning regulations

Governments and companies need to address the risks of AI head on, Prime Minister Rishi Sunak said on Oct. 26 ahead of the first global AI Safety Summit at Bletchley Park on Nov. 1-2.

Sunak added Britain would set up the world’s first AI safety institute to “understand what each new model is capable of, exploring all the risks from social harms like bias and misinformation through to the most extreme risks”.

Britain’s data watchdog said on Oct. 10 it had issued Snap Inc’s Snapchat with a preliminary enforcement notice over a possible failure to properly assess the privacy risks of its generative AI chatbot to users, particularly children.

CHINA

* Implemented temporary regulations

China published proposed security requirements for firms offering services powered by generative AI on Oct. 12, including a blacklist of sources that cannot be used to train AI models.

The country issued a set of temporary measures in August, requiring service providers to submit security assessments and receive clearance before releasing mass-market AI products.

EUROPEAN UNION

* Planning regulations

European lawmakers agreed on Oct. 24 on a critical part of new AI rules outlining the types of systems that will be designated “high risk”, and inched closer to a broader agreement on the landmark AI Act, according to five people familiar with the matter. An agreement is expected in December, two co-rapporteurs said.

European Commission President Ursula von der Leyen on Sept. 13 called for a global panel to assess the risks and benefits of AI.

FRANCE

* Investigating possible breaches

France’s privacy watchdog said in April it was investigating complaints about ChatGPT.

G7

* Seeking input on regulations

The Group of Seven countries agreed on Oct. 30 to an 11-point code of conduct for firms developing advanced AI systems, which “aims to promote safe, secure, and trustworthy AI worldwide”.

G7 leaders had in May called for the development and adoption of technical standards to keep AI “trustworthy” at a ministerial forum dubbed the “Hiroshima AI process”.

ITALY

* Investigating possible breaches

Italy’s data protection authority plans to review AI platforms and hire experts in the field, a top official said in May. ChatGPT was temporarily banned in the country in March, but it was made available again in April.

JAPAN

* Investigating possible breaches

Japan expects to introduce by the end of 2023 regulations that are likely closer to the U.S. attitude than the stringent ones planned in the EU, an official close to deliberations said in July.

The country’s privacy watchdog has warned OpenAI not to collect sensitive data without people’s permission.

POLAND

* Investigating possible breaches

Poland’s Personal Data Protection Office said on Sept. 21 it was investigating OpenAI over a complaint that ChatGPT breaks EU data protection laws.

SPAIN

* Investigating possible breaches

Spain’s data protection agency in April launched a preliminary investigation into potential data breaches by ChatGPT.

UNITED NATIONS

* Planning regulations

The U.N. Secretary-General António Guterres on Oct. 26 announced the creation of a 39-member advisory body, composed of tech company executives, government officials and academics, to address issues in the international governance of AI.

The U.N. Security Council held its first formal discussion on AI in July, addressing military and non-military applications of AI that “could have very serious consequences for global peace and security”, Guterres said at the time.

U.S.

* Seeking input on regulations

President Joe Biden issued a new executive order on Oct. 30 to require developers of AI systems that pose risks to U.S. national security, the economy, public health or safety to share the results of safety tests with the government.

The U.S. Congress in September held hearings on AI and an AI forum featuring Meta CEO Mark Zuckerberg and Tesla CEO Elon Musk.

More than 60 senators took part in the talks, during which Musk called for a U.S. “referee” for AI. Lawmakers said there was universal agreement about the need for government regulation of the technology.

On Sept. 12, the White House said Adobe, IBM, Nvidia and five other firms had signed Biden’s voluntary commitments governing AI, which require steps such as watermarking AI-generated content.

A Washington D.C. district judge ruled in August that a work of art created by AI without any human input cannot be copyrighted under U.S. law.

The U.S. Federal Trade Commission opened in July an investigation into OpenAI on claims that it has run afoul of consumer protection laws.

(Compiled by Alessandro Parodi and Amir Orusov in Gdansk; editing by Kirsten Donovan, Mark Potter, Christina Fincher and Milla Nissi)

By Suzanne McGee

(Reuters) – Bitcoin, the original crypto rebel, is racing into the heart of the financial establishment with an exchange-traded fund that tracks its price. But will it strike gold?

The world’s biggest cryptocurrency has leapt 28% in October, with investors betting U.S. regulators will give the green light for a spot bitcoin ETF and thereby unleash a new wave of demand.

How much cash could such a fund reel in, though?

Well, it’s hard to say, judging by the wide assortment of estimates from market players, ranging from $3 billion on its first day to $55 billion over five years.

“The analogy that I’m looking at is to gold,” said Dave Mazza, chief strategy officer at ETF provider Roundhill Investments, adding that the gold market had been transformed by the approval of spot ETFs.

He said he expected the first spot bitcoin ETFs on the scene to see a “wave of buying,” echoing the launch of the first ever gold ETF in 2006 in the U.S. or the bitcoin futures ETF in 2021.

Mainstream investment giants such as BlackRock and Fidelity, as well as crypto-focused firms like Grayscale, have filed applications for spot bitcoin ETFs. The U.S. Securities and Exchange Commission will be considering eight to 10 filings for new spot bitcoin products, its chair said on Thursday, without giving details of timing of decisions.

Ranged against the ETF optimists are those traditional investors long wary of crypto who say they won’t be won over by new investment vehicles.

“Not a penny of my clients’ money will find its way into these misbegotten so-called investments,” said George Gagliardi, an investment advisor with Coromandel Wealth Management in Lexington, Massachusetts, who believes cryptocurrencies “have no underlying intrinsic value.”

The prospect of an ETF that offers investors direct exposure to bitcoin has nonetheless buoyed the price of the cryptocurrency, which hit $35,198 last week, its highest level since May 2022.

The metrics investors and analysts use to come up with estimates for demand for an ETF, from the size of the gold ETF market to demand for existing products, vary almost as much as their conclusions. Bitcoin markets are also opaque, with price moves driven mostly by investor sentiment.

U.S. crypto firm NYDIG estimates demand for a spot bitcoin ETF at around $30 billion. Their calculation compares the sizes of the gold and bitcoin ETFs – $210 billion versus $28.8 billion, respectively – and adjusts them for their relative volatility.

“It’s rare to see a brand-new asset class arrive on the ETF market,” said Todd Sohn, ETF strategist at Strategas Securities. “That makes it tough to figure out exactly how much demand is going to materialize.”

Existing bitcoin ETFs, tied to the price of futures, don’t track price movements precisely, and the cost of rolling over futures contracts can eat into returns, leading many investors to see them as a less desirable vehicle.

Steven McClurg, investment chief at Valkyrie Funds, which has applied for a spot bitcoin ETF, believes one starting point in gauging demand is the size of the Grayscale Bitcoin Trust (GBTC), an open-ended private trust that owns bitcoin directly.

“If you look at the current market capitalization of GBTC – $3.2 billion – that’s probably day-one demand” for a spot bitcoin product, he said.

HALF OF FUNDS ‘GONE IN TWO YEARS’

Some advocates say that financial advisers, pension funds and other money managers – a pool of capital estimated to total around $46.5 trillion by Boston Consulting Group – could be a significant source of demand for a spot bitcoin ETF.

“If BlackRock reaches the market then some percentage of the wire houses and financial advisers will add their fund to platforms,” said Matthew Sigel, head of digital assets research at VanEck, which has a spot bitcoin ETF awaiting SEC approval.

BlackRock declined to comment on its pending spot bitcoin ETF, other than to confirm that it is still awaiting final SEC approval.

Matthew Hougan, CEO of crypto firm Bitwise Investments, said in an industry panel earlier this month that he expects spot bitcoin ETFs to pull in $55 billion in their first five years. His forecast is based on how demand evolved in smaller markets where spot bitcoin ETFs already exist, such as Canada.

However large demand turns out to be, it is unlikely to sustain offerings from all the asset managers vying for a slice of the action, said Steve Sosnick, chief strategist at Interactive Brokers.

“Are all of them going to be a success? Of course not,” he added. “The ones with the best marketing will succeed, but half will be gone within two years.”

(Reporting by Suzanne McGee; Graphic by Vineet Sachdev; Editing by Ira Iosebashvili, Michelle Price and Pravin Char)

By Jonathan Saul

JERUSALEM (Reuters) -Israeli forces are moving slowly in their ground offensive in Gaza in part to keep open the possibility of drawing Hamas militants to negotiate the release of more than 200 hostages, military specialists consulted by Reuters said.

The relative caution with which Israeli troops have taken and secured slices of territory in the first days of sustained ground incursions in Gaza stands in contrast to the past three weeks of unrelenting air strikes on the Mediterranean enclave, as well as to Israel’s previous land offensives there.

Not going directly into Gaza’s most built up areas with the full force of Israel’s ground troops is simultaneously aimed at wearing Hamas’ leadership down with a long campaign, while leaving space for a possible deal over those held as hostages, according to the assessment of three Israeli security sources.

For a graphic and map of the ground assault click here.

Prime Minister Benjamin Netanyahu said last week that recovering the hostages was an “integral” part of the military’s goal in Gaza. Hamas, an armed Islamist group that governs Gaza, has so far released four civilians among the 239 believed to be held, many in a deep network of tunnels.

Troops freed an Israeli soldier from Hamas captivity during the ground operation in Gaza, the military said on Monday.

By moving slowly, the army also hoped to secure Israeli forces’ flanks and bait Hamas fighters to come out of the tunnels or denser urban areas and engage Israeli forces in open areas where they could be more easily killed, said a former senior commander who declined to be named.

An Israeli military spokesperson declined to comment on details of the offensive, citing sensitivity with the issue.

“It’s inch by inch, metre by metre, trying to avoid casualties and trying to kill as much as possible Hamas terrorists,” Amos Yadlin, former chief of Israel’s defence intelligence, told reporters.

Israel’s heavy response was prompted after Hamas fighters burst into Israel on Oct. 7, killing 1,400 people, mostly civilians, in the deadliest day of the nation’s 75-year history. Israel says 239 people were taken as hostages into Gaza, where they are believed to be held in Hamas’ extensive tunnel network.

In the three weeks since the Hamas attack, Israeli air strikes have pulverized large swathes of Gaza, killing more than 8,000 people including more than 3,000 children, according to the Hamas-run Gaza health ministry, and cutting off supplies of food, medicine and fuel.

Hamas leaders have said that a ceasefire is required in order to release civilian hostages, who Israel says include people with passports from 25 different countries.

In 2011, Hamas negotiated the release of over 1,000 Palestininan prisoners in Israel in return for one Israeli soldier.

Growing international distress at the conditions in Gaza led major powers last week to call on Israel to allow “humanitarian pauses” to get aid in and hostages out. Saying any lull in fighting would benefit Hamas, Israel rejected the calls, in the first public split between Israel and its allies since Oct. 7.

On Saturday, Benny Gantz, a former defense minister who is now in Netanyahu’s war cabinet, said “in this war there is no diplomatic ticking clock”.

Defence Minister Yoav Gallant said the war would be long and Israel was striking Hamas “above and underground – from the air, land and sea”.

Netanyahu on Saturday stopped short of calling the ground incursion a full scale invasion.

ENCIRCLING GAZA CITY

After amassing hundreds of thousands of soldiers, including reservists, on its border with Gaza, Israel made the first sustained ground incursions of the offensive on Friday.

The government has given the Israeli military two objectives – to dismantle Hamas, including its infrastructure and operational capabilities, and to bring home the hostages, chief spokesperson Rear Admiral Daniel Hagari said.

Backed by helicopters and drones, tanks and armoured personnel carriers have pushed into the semi-rural area to the north of Gaza City, the enclave’s main urban centre.

Forces have also entered south of the city, threatening Salah Al Deen Road, the main transport artery that runs the length of the 40-km long strip, local residents and the Hamas-affiliated Shehab news agency said on Monday.

The tanks met resistance on the road, according to fighters and residents. The Israeli military said it would not detail the positions of their forces.

Abu Ahmad, a senior spokesperson for Islamic Jihad, a smaller militant movement allied to Hamas, said Israeli forces had failed to make any sustained breakthrough, apart from pushing into open areas.

Hagari said more infantry and armoured forces backed by artillery and combat engineers had been sent in and were manoeuvring on the ground and engaging Hamas fighters. He declined to confirm any troop locations.

“The offensive activity will continue with determination and intensify according to the phases of the war and its goals,” he told a regular briefing on Monday.

TUNNEL DANGERS

Hamas’ deep network of Gaza tunnels has been described by security sources as an underground city that includes rocket launching sites, command centres and attack paths targeting Israel forces.

Omri Attar, a reserve major in a special operations brigade, said ground troops were also trained to locate air vents and escape hatches leading to tunnel openings and to place explosives inside to seal them off. He said other special units within the Combat Engineering Corps, which in the past have used robots and dogs, would deal with any fighting inside the tunnels.

“It is a very complicated situation, and I’m not talking about the number of dead or number of kidnapped, namely the infrastructure of the lower city, of the tunnels, is a very delicate situation,” he said.

On Oct 29, Israeli forces operating adjacent to the Erez crossing “identified a number of terrorists exiting the shaft of a tunnel in the Gaza Strip”.

“Following the identification, the soldiers confronted the terrorists, killing and injuring them,” the Israeli military said.

The approach so far is different from previous offensives on Gaza, a mostly urban strip of land home to 2.3 million people subjected to Israeli assaults in 2008, 2014 and in 2021 against Hamas and Islamic Jihad, which have sworn Israel’s destruction.

In 2008, Israeli military forces entered built-up areas with massive strength, prompting Hamas to pull back and engage periodically.

Israeli military forces are aware of the dangers with heavily built up areas in Gaza and the dangers of sending in broad forces.

Underscoring the risks, in 2008, Israel lost nine soldiers during its incursion. In 2014, the number killed soared to 66.

Since Oct. 7, 315 Israeli soldiers have been killed, most of them in the initial Hamas attacks, according to the latest data released by the Israeli military.

Ben Milch, who was a commander in 2014 with the Combat Engineering Corps and tasked with destroying tunnels, said their mission was not to go more than two kilometres into the network at the time.

“Where we only had to take out tens of tunnels, today’s challenge is going to be hundreds of tunnels and kilometres upon kilometres, and a real underground fortress that Hamas has built,” he told Reuters.

Clearing tunnels was also beset with other difficulties including hostages held as well as making decisions on whether to shut off ventilation shafts.

“In my opinion, that’s why the IDF (Israeli military) is taking a methodical, slower approach to make sure that they’re covering all their bases and making sure that they eliminate the tunnels as they go, so they’re not going to be ambushed from behind, from the side and so on,” Milch said.

“We don’t want to lose soldiers, so we’re going to go slow, and we’re going to make sure that we minimize casualties as best as possible.”

(Reporting by Jonathan Saul in Jerusalem, additional reporting by Nidal Al Mughrabi in Gaza; Editing by Frank Jack Daniel)

By Joyce Lee and Heekyong Yang

SEOUL (Reuters) -Samsung Electronics on Tuesday said it will continue to cut production to ease a chip supply glut, and gear up for 2024 when it expects industry-wide investment and production to focus on high-end chips for generative artificial intelligence.

Samsung has slashed chip output this year to weather an unprecedented industry downturn, and flagged further production adjustment, especially for NAND flash memory chips, as the market starts to recover.

“We’ve received purchase inquiries from (server) customers seeking to secure components … based upon widening awareness that the industry has reached bottom,” Jaejune Kim, memory business executive vice president, said on an earnings call.

“Considering the normalisation of inventory levels, we expect market recovery to accelerate in PC and mobile memory.”

The proliferation of on-device AI functions will increase appetite for DRAM chips such as high bandwidth memory (HBM) in 2024, the world’s biggest memory chip and smartphone maker said.

Samsung competes in memory chips for AI with the likes of SK Hynix, which took the lead in HBM3 chips by supplying tech major Nvidia. Chipmakers are now developing the next generation HBM3E for 2024.

Samsung said it plans to increase HBM output capacity by 2.5 times or more in 2024 versus this year.

Shares in Samsung were down 0.3% at midday following the comments, compared to a 1.9% decline in SK Hynix shares. The benchmark index was down 1.3%.

A rebound in NAND chips is less clear as those chips are for data storage and are unrelated to AI demand. Still, analysts said continued production cuts would hasten recovery in traditional memory chips.

“The most memorable part of today’s call was Samsung’s signal that (older) legacy chips are also rebounding… We knew things are bad for NAND, and Samsung’s comment on flexible production cuts hits just the right note,” said analyst Ko Yeongmin at Daol Investment & Securities.

“Considering the production cut policy and the change in demand for legacy products, Q4 chip prices might rise slightly faster than anticipated.”

IMPROVING DEMAND

Samsung reported operating profit of 2.4 trillion won ($1.78 billion) for July-September, 78% lower than a year prior but around a third better than the two previous quarters. Revenue fell 12% to 67.4 trillion won.

Loss in the memory chip business shrank to 3.75 trillion won in the third quarter, versus 4.36 trillion won in the second.

Reflecting improving chip demand, overall factory output in South Korea in September rose for a second consecutive month helped by increasing chip production.

In mobile devices, profit reached 3.3 trillion won, slightly higher than last year, on solid sales of premium foldable smartphones.

After contracting in 2022-2023, mobile demand is likely to stabilise next year, Samsung said. The firm targets double-digit growth in flagship mobile product shipments and revenue growth exceeding market growth.

It also said it expects to spend a record 53.7 trillion won in capital expenditure this year, including 47.5 trillion won on chips, to prepare for mid-to-long term demand increase.

The huge figure reflects a chip industry in flux. As well as increasing focus on AI, disruption is also coming from major tech players shifting to in-house development, with smartphone rival Apple on Monday announcing a set of custom chips.

($1 = 1,346.5000 won)

(Reporting by Joyce Lee and Heekyong Yang; Editing by Christopher Cushing and Miyoung Kim)

By Joyce Lee and Heekyong Yang

SEOUL (Reuters) -Samsung Electronics on Tuesday flagged a gradual recovery in demand in 2024 after reporting its highest quarterly profit so far this year, as the battered memory chip market began showing signs of a rebound from a severe downturn.

The proliferation of on-device artificial intelligence (AI) functions will increase appetite for DRAM chips in premium products in 2024, the world’s biggest memory chip and smartphone maker said in a statement.

“PC and mobile demand is likely to benefit from the arrival of some replacement cycles for products” next year, it added.

The South Korean technology giant said operating profit reached 2.4 trillion won ($1.78 billion) in July-September. Revenue fell 12% to 67.4 trillion won.

Although profit fell 78% from 10.85 trillion won a year earlier, it was higher than the first quarter’s 640 billion won and second quarter’s 670 billion won.

Loss in the memory chip business shrank to 3.75 trillion won in the third quarter, versus a 4.36 trillion won loss in the second, as Samsung focused on more profitable advanced chips such as DRAM chips used in AI, while continuing to cut production of older chips.

Manufacturers of smartphones and PCs grappling with weak consumer demand have gradually reduced chip inventories to levels low enough to resume purchases, signalling the end of an industry slump that began last year, analysts said.

Reflecting improving demand, some memory chip prices rebounded toward the end of the third quarter, while in September, overall factory output in South Korea rose for a second consecutive month helped by increasing chip production.

Cross-town rival SK Hynix last week said an AI boom is driving demand in DRAM chips while the effects of memory chipmakers’ production cuts are starting to show as clients are placing new orders and chip prices are beginning to stabilise.

Samsung’s earnings followed an announcement about new custom chips from smartphone rival Apple, in a continuation of the trend among major players toward in-house chip development.

PREMIUM MOBILE PROFIT

Samsung’s share price rose 0.7% in morning trade, versus a 0.1% rise in the benchmark index.

The stock has risen about 22% year-to-date as investors look forward to an expanding memory chip market rebound.

Samsung said on Tuesday it expects to spend a record 53.7 trillion won in capital expenditure this year, including 47.5 trillion won on chips, to prepare for mid-to-long term demand increase.

The mobile devices business booked a 3.3 trillion won operating profit, slightly higher than 3.24 trillion won last year. Samsung launched its premium foldable smartphones during the quarter, drumming up sales despite a sluggish overall smartphone market.

The third quarter is normally strong for Samsung’s mobile and display businesses given that is when it launches flagship smartphones, and demand for display panels from clients such as Apple rises before the debut of the latest iPhone.

($1 = 1,346.5000 won)

(Reporting by Joyce Lee and Heekyong Yang; Editing by Christopher Cushing)

(Reuters) – The FedEx Master Executive Council, the governing body of the delivery firm’s unit in the Air Line Pilots Association (ALPA), said on Monday it had elected a new interim chair after union members rejected a tentative contract with the company in July.

ALPA elected Billy Wilson last week to serve as interim chair through March 2025, replacing Chris Norman, who was instrumental in shaping the tentative agreement that union members voted down over pay and job security issues.

The union represents 6,000 pilots at FedEx, which did not immediately respond to a request for comment.

“I am committed to bringing all of our pilots together as we reestablish negotiations,” Wilson said in a statement.

Wilson called for compensation that is commensurate with pilots at other airlines, where commercial pilots have won significant raises, reflecting their bargaining power in an era of staff shortages.

Wilson said FedEx pilots transported vital goods when businesses shut down in the early days of the COVID pandemic.

“We paid a heavy price for this while the company made historic profits,” he said, adding that quality of life, work rules and retirement are also key issues for ALPA members.

The tentative FedEx deal rejected by pilots included a 30% pay rise and a 30% increase to their legacy pensions.

American Airlines pilots, represented by the Allied Pilots Association (APA), in August ratified a deal that raises their compensation by more 46% over the four-year duration of their contract.

(Reporting by Priyamvada C in Bengaluru and Lisa Baertlein in Los Angeles; Editing by Devika Syamnath and Alexander Smith)