OpenAI Plans Share Sale for $86B Valuation

OpenAI is not leaving anything to chance as it seeks to take full advantage of the artificial intelligence boom. The parent company behind the popular Chatbot ChatGPT reportedly plans to sell existing employees’ shares at an $86 billion valuation. Reports indicate the company is negotiating with potential investors as it seeks to issue a tender offer that will affirm its status as the most valuable AI startup.

OpenAI Shares Sale

The sale of the existing shares is more than welcome as it would prevent OpenAI from issuing new shares to raise fresh capital. The issuance of new shares could significantly dilute existing holdings, which the company wants to avoid at all costs.

The sale should attract strong interest from investors who have been eying a piece of the company that remains the poster child of the artificial intelligence revolution. The company already boasts of Microsoft as its biggest shareholder, with a 49% stake. The software giant took a massive stake in the company after investing about $13 billion as it sought to gain exposure to its AI innovations.

The sale of the existing shares for $86 billion would propel OpenAI above Stripe and Chinese online retailer Shein.  In addition, it would cement the company’s status as the most valuable closely held company behind SpaceX and ByteDance, the company behind the viral video app TikTok.

An $86 billion valuation would be almost three times what the artificial intelligence startup was valued at the start of the year. However, it would not be surprising as companies exposed to the revolutionary technology have seen their valuation explode amid solid institutional investor interest. Nvidia is one of the companies that have exploded, joining the trillion-dollar club and becoming the go-to chip for powering revolutionary technology.

OpenAI is regarded as one of the companies at the forefront of generative AI, as its technology is used to create content from videos to poetry out of simple commands. The integration of its Chatbot on the Microsoft search engine, Bing, has only underscored its capabilities. The integration forced Alphabet Google to respond with its own Chatbot dubbed Bard as it sought to safeguard its search engine edge.

OpenAI Revenue Prospects

Since its unveiling in November last year, ChatGPT has been integrated into major corporations to help in various operations. The integration has already set OpenAI on course to generate over $1 billion in annual revenues as businesses continue to adopt the technology behind the Chatbot. Reports indicate ChatGPT is earning over $80 million in revenue monthly for OpenAI, making it one of the most-prized possessions in the burgeoning segment.

While OpenAI allegedly lost close to $540 million in 2022 in developing ChatGPt, it is on course to recoup the losses and generate significant returns, given the increased adoption. ChatGPT edge stems from creating features and privacy safeguards that have made it an ideal tool for use in the business environment. Many businesses are increasingly using it to boost revenue and enhance product development.

OpenAI is already accelerating plans to monetize ChatGPT in a move that could see it sell premium subscriptions and offer companies paid access to the application programming interface.

By Aditya Soni and Akash Sriram

(Reuters) – Elon Musk’s warning that high interest rates could sap electric-vehicle demand knocked shares of the sector on Thursday, with some analysts questioning if Tesla can maintain the runaway growth that has for years set it apart from other automakers.

The world’s most valuable automaker’s stock closed down 9.3% at $220.11, erasing more than $70 billion in market value.

Rivals including Rivian Automotive, Lucid Group and Fisker ended down between 4% and 5%, while legacy automakers such as Ford closed nearly 2% lower.

The comments marked a change in tone from Tesla CEO Musk, who said last year that his company was “recession-resilient”.

The EV maker missed revenue estimates on Wednesday by the most in more than three years and Musk said it was impossible to maintain a 50% annual delivery growth rate.

“It didn’t have the same zip. We await Tesla’s earnings calls with a sense of excitement and suspense – and they usually deliver. Not Wednesday night,” Canaccord Genuity analysts said.

The company is expected to cut prices further in the current quarter to meet its annual deliveries goal of 1.8 million vehicles, even after its gross margin contracted to 17.9% between July and September from 25.1% a year earlier.

“We continue to believe that Tesla is a car company, and that the competitive nature of the auto industry will make it difficult for any player to have a sustained profitability advantage,” Bernstein analyst Toni Sacconaghi said.

Overall, 15 analysts cut their price targets on the stock, pushing the median view to $260, according to LSEG data.

The stock has nearly doubled in 2023 on investor optimism that the company will fare better than rivals in an uncertain economy and see a long-term boost from its self-driving efforts.

The stock trades at about 59 times its 12-month forward earnings estimates, compared with 6.3 times for Ford and General Motors’ 4.2.

“The current market valuation appears to rest on the specious assumption that the hundreds of EVs slated for launch by 2025 will all be flops. Tesla does not operate in a vacuum,” said Craig Irwin, senior research analyst at Roth Capital.

(Reporting by Aditya Soni and Akash Sriram in Bengaluru; Additional reporting by Yuvraj Malik; Editing by Anil D’Silva and Shounak Dasgupta)

By Helen Coster

NEW YORK (Reuters) -You may never have to read another news story in your life, if you have artificial intelligence that can digest all the web’s information and serve up a summary on demand.

That’s the stuff of nightmares for media barons as Google and others experiment with what’s called generative AI, which creates new content drawing from past data.

Since May, Google has begun rolling out a new form of search powered by generative AI, after industry observers questioned the tech giant’s future prominence in providing consumers with information following the rise of OpenAI’s query-answering chatbot, ChatGPT.

The product, called Search Generative Experience (SGE), uses AI to create summaries in response to some search queries, triggered by whether Google’s system determines the format would be helpful. Those summaries appear on the top of the Google search homepage, with links to “dig deeper,” according to Google’s overview of SGE.

If publishers want to prevent their content from being used by Google’s AI to help generate those summaries, they must use the same tool that would also prevent them from appearing in Google search results, rendering them virtually invisible on the web.

Searching for “Who is Jon Fosse” – the recent Nobel Prize in Literature winner – for instance, generates three paragraphs on the writer and his work. Drop-down buttons provide links to Fosse content on Wikipedia, NPR, The New York Times and other websites; additional links appear to the right of the summary.

Google says that the AI-generated overviews are synthesized from multiple web pages and that the links are designed to be a jumping off point to learn more. It describes SGE as an opt-in experiment for users, to help it evolve and improve the product, while it incorporates feedback from news publishers and others.

To publishers, the new search tool is the latest red flag in a decades-long relationship in which they have both struggled to compete against Google for online advertising, and relied on the tech giant for search traffic.

The still-evolving product – now available in the United States, India and Japan – has raised concerns among publishers as they try to figure out their place in a world where AI could dominate how users find and pay for information, according to four major publishers who spoke to Reuters on the condition of anonymity to avoid complicating ongoing negotiations with Google.

Those concerns relate to web traffic, whether publishers will be credited as the source of information that appears in the SGE summaries, and the accuracy of those summaries, those publishers say. Most significantly, publishers want to be compensated for the content on which Google and other AI companies train their AI tools – a major sticking point around AI.

A Google spokesperson said in a statement: “As we bring generative AI into Search, we’re continuing to prioritize approaches that send valuable traffic to a wide range of creators, including news publishers, to support a healthy, open web.”

On compensation, Google says it is working to develop a better understanding of the business model of generative AI applications and get input from publishers and others.

In late September Google announced a new tool, called Google-Extended, that gives publishers the option to block their content from being used by Google to train its AI models.

Giving publishers the option to opt out of being crawled for AI is a “good faith gesture,” said Danielle Coffey, president and chief executive of the News Media Alliance, an industry trade group that has been lobbying Congress over these issues. “Whether payments will follow is a question mark, and to what extent there is openness to having a healthier value exchange.”

The new tool doesn’t allow publishers to block their content from being crawled for SGE, either the summaries or the links that appear with them, without disappearing from traditional Google search.

Publishers want clicks to secure advertisers, and showing up in Google search is key to their business. The design for SGE has pushed the links that appear in traditional search further down the page, with potential to reduce traffic to those links by as much as 40%, according to an executive at one of the publishers.

More alarming is the possibility that web surfers will avoid clicking any of the links if the SGE passage fulfills the users’ need for information – satisfied, for example, to learn the best time of year to go to Paris, without having to click on a travel publication’s website.

SGE is “definitely going to decrease publishers’ organic traffic and they’re going to have to think about a different way to measure the value of that content, if not click through rate,” said Forrester Research Senior Analyst Nikhil Lai. Even so, he believes publishers’ reputations will remain strong as a result of their links appearing in SGE.

Google says that it designed SGE to highlight web content. “Any estimates about specific traffic impacts are speculative and not representative, as what you see today in SGE may look quite different from what ultimately launches more broadly in Search,” a company spokesperson said in a statement.

While publishers and other industries have spent decades adjusting their websites to show up prominently in traditional Google search, they don’t have enough information to do the same for the new SGE summaries, these publishers say.

“The new AI section is a black box for us,” said an executive at one publisher. “We don’t know how to make sure we’re a part of it or the algorithm behind it.”

Google said publishers do not need to do anything different than what they have been doing to appear in search.

Publishers have long allowed Google to “crawl” their content for the purposes of appearing in search results – using a bot, or piece of software, to automatically scan and index it. “Crawling” is how Google indexes the web to make content show up in search.

Publishers’ concerns with SGE boil down to a key point: They say that Google is crawling their content, for free, to create summaries that users may read instead of clicking on their links, and that Google hasn’t been clear about how they can block content from being crawled for SGE.

Google’s new search tool, said one publisher, “is even more threatening to us and our business than a crawler that is crawling our business illegally.”

Google did not comment on that assessment.

When given the option, websites are blocking their content from being used for AI if doing so doesn’t impact search, according to exclusive data from AI content detector Originality.ai. Since its Aug. 7 release, 27.4% of top websites are blocking ChatGPT’s bot – including The New York Times and Washington Post. That’s compared to 6% that are blocking Google-Extended since its Sept. 28 release.

(Reporting by Helen Coster; editing by Kenneth Li and Claudia Parsons)

By Blake Brittain

(Reuters) – Music publishers Universal Music, ABKCO and Concord Publishing sued artificial intelligence company Anthropic in Tennessee federal court on Wednesday, accusing it of misusing an “innumerable” amount of copyrighted song lyrics to train its chatbot Claude.

The lawsuit said Anthropic violates the publishers’ rights through its use of lyrics from at least 500 songs ranging from the Beach Boys’ “God Only Knows” and the Rolling Stones’ “Gimme Shelter” to Mark Ronson and Bruno Mars’ “Uptown Funk” and Beyonce’s “Halo.”

Representatives for Anthropic did not immediately respond to a request for comment.

The publishers’ attorney Matt Oppenheim declined to comment on the litigation but said it is “well-established by copyright law that an entity cannot reproduce, distribute, and display someone else’s copyrighted works to build its own business unless it secures permission from rightsholders.”

Many copyright owners including authors and visual artists have sued tech companies such as Meta Platforms and Microsoft-backed OpenAI over the use of their work to train generative-AI systems.

The music publishers’ lawsuit appears to be the first case over song lyrics and the first against Anthropic, which has drawn financial backing from Google, Amazon and former cryptocurrency billionaire Sam Bankman-Fried.

The lawsuit accused Anthropic of infringing the publishers’ copyrights by copying their lyrics without permission as part of the “massive amounts of text” that it scrapes from the internet to train Claude to respond to human prompts.

The publishers also say that Claude illegally reproduces the lyrics by request, and in response to “a whole range of prompts that do not seek Publishers’ lyrics,” including “requests to write a song about a certain topic, provide chord progressions for a given musical composition, or write poetry or short fiction in the style of a certain artist or songwriter.”

For example, the lawsuit said that Claude will provide relevant lyrics from Don McLean’s “American Pie” when asked to write a song about the death of rock pioneer Buddy Holly.

The publishers asked the court for money damages and an order to stop the alleged infringement.

(Reporting by Blake Brittain in Washington; Editing by David Bario and Bill Berkrot)

LONDON (Reuters) – A major cyber attack on a financial services payments system could lead to global losses of $3.5 trillion, with much of it not covered by insurance, commercial insurance market Lloyd’s of London said on Wednesday.

The United States would suffer losses of $1.1 trillion over a five-year period from such an attack, which would cause widespread disruption to global business, according to a systemic risk scenario developed by Lloyd’s and the Cambridge Centre for Risk Studies.

China would face $470 billion in losses and Japan $200 billion over the same period, Lloyd’s said.

“The global interconnectedness of cyber means it is too substantial a risk for one sector to face alone and therefore we must continue to share knowledge, expertise and innovative ideas across government, industry and the insurance market to ensure we build society’s resilience against the potential scale of this risk,” Lloyd’s chairman Bruce Carnegie-Brown said.

Cyber insurance saw over $9 billion in gross written premiums in 2022 and is forecast to grow to $13 billion to $25 billion by 2025, Lloyd’s said.

Concern about the cost of such insurance and whether it will provide cover in the case of war are deterring some potential customers, brokers say.

Over 20% of the world’s cyber premium is placed in the Lloyd’s market, Lloyd’s said.

Major cyber insurers Beazley and Hiscox are among more than 50 insurance companies in the Lloyd’s market.

(Reporting by Carolyn Cohn; editing by Jonathan Oatis)

By Lisa Richwine and Dawn Chmielewski

LOS ANGELES (Reuters) -Netflix increased subscription prices for some streaming plans in the United States, Britain and France on Wednesday as it shattered expectations for new customers, sending its shares surging 13%.

Almost 9 million subscribers joined Netflix around the globe in the third quarter, surpassing Wall Street analysts’ forecast for 6 million, according to LSEG. Netflix said it expected a similar number of additions in the current quarter.

The strong performance showed Netflix was thriving despite Hollywood labor tensions that shut down a large swath of U.S. production. Netflix makes many of its shows and movies overseas, which accounted for the bulk of its new sign-ups.

Netflix pointed to the global success of “One Piece,” a live-action adaptation of the venerable Japanese manga series and an example of its hefty investment in stories with local resonance that travel the world. The streaming giant also attracted new audiences to long-running television shows, such as the legal drama “Suits,” which it licensed from Comcast, and HBO’s World War Two series “Band of Brothers.”

“These are the times I’m glad we have such a rich and deep and broad programming selection,” Netflix co-CEO Ted Sarandos said after the release of the quarterly results. “The same was true during COVID, when we were able to manage the slate through a prolonged and pretty unpredictable production interruption.”

Hollywood’s film and television writers ratified a new contract this month, but actors remain on strike. Sarandos said Netflix was “totally committed to ending this strike.”

The company’s third-quarter customer gains represented its strongest quarterly uptick since the second quarter of 2020, when lockdowns early in the global pandemic led to an unprecedented surge in streaming subscriptions.

Netflix increased the U.S. price of its premium ad-free plan by $3 per month to $22.99. The cost for premium rose by 2 pounds to 17.99 pounds in Britain and by 2 euros to 19.99 euros in France.

Investors welcomed the news, sending Netflix shares climbing to $390.80 in extended trading from a close of $346.19.

PP Foresight analyst Paolo Pescatore said the third-quarter growth at Netflix was a testament to its recent crackdown on password sharing and the opportunities for growth as it moves into advertising.

“It is firing on all cylinders, with recent efforts all heading in the right direction,” he said.

GLOBAL GAINS

The price hikes were announced in an earnings report that showed the company’s global subscriber base reached 247 million at the end of September.

Substantial subscriber gains came in Europe, the Middle East and Africa, where Netflix added nearly 4 million subscribers. More than 70% of its members now reside outside the United States.

During the quarter, “Suits” became the most-watched title across film, original TV and acquired TV on streaming in the U.S. for 12 straight weeks after it hit Netflix. The series, starring Prince Harry’s wife, Meghan Markle, originally aired on the USA cable network from 2011 to 2019.

“As the competitive environment evolves, we may have increased opportunities to license more hit titles,” Netflix said in its quarterly letter to shareholders.

The company posted revenue of $8.54 billion, in line with analyst forecasts. Earnings came in at $3.73 per share, ahead of Wall Street’s expectation of $3.49.

Netflix’s forecast for fourth-quarter revenue of $8.69 billion was slightly below analysts’ estimates of $8.77 billion.

The writer and actor strikes prompted Netflix to revise its projections on content spending to $13 billion in 2023, assuming the studios reach a settlement with striking actors “in the near future.”

That was down from the $17 billion it expected to spend.

Netflix said it continued to dominate viewership. Netflix programming accounted for 8% of television screen time, second only to YouTube, the company said, citing Nielsen data.

(Reporting by Lisa Richwine; Editing by Aurora Ellis, Bill Berkrot and Leslie Adler)

By Sarah Wu and Ben Blanchard

TAIPEI (Reuters) – Taiwan’s Foxconn, the world’s largest contract electronics maker, will build a new kind of data centre using Nvidia chips and software for a range of applications including self-driving cars, the companies said on Wednesday.

Sharing a stage at Foxconn’s annual tech showcase in Taipei, Foxconn Chairman Liu Young-way and Nvidia CEO Jensen Huang said their companies would build these “AI factories” together.

“A new type of manufacturing has emerged – the production of intelligence. And the data centres that produce it are AI factories,” Huang said, adding that Foxconn had the expertise and scale to build them globally.

Showing a hand-drawn sketch, Huang – sporting his signature black leather jacket – explained how “AI factories” could continuously receive and process data from autonomous electric vehicles to make them smarter.

“This car would of course go through life experience and collect more data. The data would go to the AI factory. The AI factory would improve the software and update the entire AI fleet,” said the Taiwan-born Huang. “In the future, every company, every industry, will have AI factories.”

Nvidia, the world’s most valuable chip company, said in a statement that the AI factories would use its chips and software, including its cutting-edge GH200 superchip that it is barred from selling in China.

The announcement comes after Nvidia on Tuesday said new U.S. export restrictions would also block sales of two less powerful high-end AI chips it created for the Chinese market along with one of its top-of-the-line gaming chips.

Nvidia’s shares have tripled in 2023, giving the company a market value of more than $1 trillion, driven by excitement over the central role of the company’s chips in AI applications.

Foxconn, the largest supplier of Apple’s iPhones, wants to replicate its level of success in assembling personal computers and smartphones as it expands into making electric vehicles for other companies.

In January, Foxconn and Nvidia announced a partnership to develop autonomous vehicle platforms, in which Foxconn would manufacture electronic control units (ECUs) for cars based on Nvidia’s DRIVE Orin chip to sell to the global market.

Liu, standing next to Huang, said Foxconn is “trying to convert itself from a manufacturing service company to a platform solution company,” citing smart cities and smart manufacturing as other applications for AI factories.

Foxconn on Wednesday unveiled a new electric cargo van called Model N, the sixth prototype in its EV push that has set ambitious goals but has so far only seen limited orders.

Jun Seki, head of Foxconn’s EV business, said the company was talking to 14 potential customers, without naming them, and sees India and Japan as promising countries for EV development.

Initially targeting 5% of the global EV market and the equivalent of $33 billion in revenue from manufacturing EVs and components by 2025, Foxconn’s aggressive longer-term ambition is to make nearly half the world’s EVs.

Foxconn’s Tech Day takes place on the birthday of its billionaire founder, Terry Gou, who stepped down as the company’s chief in 2019.

He is now running as an independent candidate for Taiwan’s president at elections in January and did not appear at the event, unlike last year when he drove on stage in a prototype EV.

Foxconn’s shares closed down 0.9% on Wednesday, compared with a 1.2% fall on the broader market.

(Reporting by Sarah Wu and Ben Blanchard; Editing by Christian Schmollinger and Jamie Freed)

By Lisa Richwine and Dawn Chmielewski

LOS ANGELES (Reuters) -Netflix increased subscription prices for some streaming plans in the United States, Britain and France on Wednesday as it shattered expectations for new customers, sending its shares surging 13%.

Almost 9 million subscribers joined Netflix around the globe in the third quarter, surpassing Wall Street analysts’ forecast for 6 million, according to LSEG. Netflix said it expected a similar number of additions in the current quarter.

The strong performance showed Netflix was thriving despite Hollywood labor tensions that shut down a large swath of U.S. production. Netflix makes many of its shows and movies overseas, which accounted for the bulk of its new sign-ups.

Netflix pointed to the global success of “One Piece,” a live-action adaptation of the venerable Japanese manga series and an example of its hefty investment in stories with local resonance that travel the world. The streaming giant also attracted new audiences to long-running television shows, such as the legal drama “Suits,” which it licensed from Comcast, and HBO’s World War Two series “Band of Brothers.”

“These are the times I’m glad we have such a rich and deep and broad programming selection,” Netflix co-CEO Ted Sarandos said after the release of the quarterly results. “The same was true during COVID, when we were able to manage the slate through a prolonged and pretty unpredictable production interruption.”

Hollywood’s film and television writers ratified a new contract this month, but actors remain on strike. Sarandos said Netflix was “totally committed to ending this strike.”

The company’s third-quarter customer gains represented its strongest quarterly uptick since the second quarter of 2020, when lockdowns early in the global pandemic led to an unprecedented surge in streaming subscriptions.

Netflix increased the U.S. price of its premium ad-free plan by $3 per month to $22.99. The cost for premium rose by 2 pounds to 17.99 pounds in Britain and by 2 euros to 19.99 euros in France.

Investors welcomed the news, sending Netflix shares climbing to $390.80 in extended trading from a close of $346.19.

PP Foresight analyst Paolo Pescatore said the third-quarter growth at Netflix was a testament to its recent crackdown on password sharing and the opportunities for growth as it moves into advertising.

“It is firing on all cylinders, with recent efforts all heading in the right direction,” he said.

GLOBAL GAINS

The price hikes were announced in an earnings report that showed the company’s global subscriber base reached 247 million at the end of September.

Substantial subscriber gains came in Europe, the Middle East and Africa, where Netflix added nearly 4 million subscribers. More than 70% of its members now reside outside the United States.

During the quarter, “Suits” became the most-watched title across film, original TV and acquired TV on streaming in the U.S. for 12 straight weeks after it hit Netflix. The series, starring Prince Harry’s wife, Meghan Markle, originally aired on the USA cable network from 2011 to 2019.

“As the competitive environment evolves, we may have increased opportunities to license more hit titles,” Netflix said in its quarterly letter to shareholders.

The company posted revenue of $8.54 billion, in line with analyst forecasts. Earnings came in at $3.73 per share, ahead of Wall Street’s expectation of $3.49.

Netflix’s forecast for fourth-quarter revenue of $8.69 billion was slightly below analysts’ estimates of $8.77 billion.

The writer and actor strikes prompted Netflix to revise its projections on content spending to $13 billion in 2023, assuming the studios reach a settlement with striking actors “in the near future.”

That was down from the $17 billion it expected to spend.

Netflix said it continued to dominate viewership. Netflix programming accounted for 8% of television screen time, second only to YouTube, the company said, citing Nielsen data.

(Reporting by Lisa Richwine; Editing by Aurora Ellis, Bill Berkrot and Leslie Adler)

By Fanny Potkin and Yelin Mo

SINGAPORE/BEIJING (Reuters) -As the U.S. tightens its restrictions on China’s semiconductor industry, Chinese manufacturers of tools used to make chips are benefiting, with orders from the country’s foundries accelerating in recent months.

Domestic equipment manufacturers, such as toolmaker Naura and etching equipment maker AMEC, are winning a much higher proportion of tenders from Chinese foundries than in previous years, as chipmakers race to replace foreign-made equipment with domestically made alternatives, research showed.

Nearly half, or 47.25%, of all machinery equipment tenders by Chinese foundries from January to August 2023 were won by local manufacturers, according to an analysis of 182 tenders by Huatai Securities last month.

From July to August 2023, 62% were won by Chinese suppliers compared to only 36.3% from March to April, the brokerage’s analysts said.

It marks a turning point for the industry, reflecting acceptance that U.S. restrictions on technology imports are unlikely to ease and could get worse and that self-reliance – as urged by Chinese President Xi Jinping – is the way forward.

The Biden administration on Tuesday expanded measures aimed at China’s chip industry that seek to stop Beijing from receiving cutting-edge U.S. technologies to strengthen its military. The measures are expected to be updated annually.

China’s foreign ministry said on Wednesday that it has lodged a stern rebuke over the latest chip restrictions, saying that they violated the principles of the market economy and fair competition.

“Before the sanctions, top Chinese foundries would use a small amount of machines from Chinese suppliers, but they would really only experiment with new equipment when they would add new capacity,” one source briefed by the companies told Reuters.

“Now, foundries are testing out Chinese-made equipment for every foreign machine they own and if they find that it meets their needs, they replace all of them,” he said. “They want as few foreign machines as feasible.”

AMEC and Naura in particular were receiving more orders from China’s largest foundries SMIC and Hua Hong Semiconductor, he added.

AMEC, Naura, SMIC, and Hua Hong did not immediately respond to requests for comment.

SALES SOAR

The equipment-related revenue of China’s top 10 domestic equipment manufacturers grew 39% year-on-year for the first half of 2023, representing $2.2 billion in sales, according to a report by CINNO Research.

Chinese companies have been stockpiling foreign-made chip equipment from Japan and the Netherlands, but those avenues are also set to close with those countries expected to join the U.S. in enacting restrictions in coming months.

Analysts said that Chinese manufacturers were getting better at producing equipment in areas such as etching and cleansing, where they compete globally with the likes of U.S. firms Applied Materials Inc and Lam Research Corp.

Some AMEC machines have entered production lines for chips as advanced as those using 5 nanometer technology, it has disclosed in earnings reports. Its etching equipment is used to remove excess material from the surface of silicon wafers. 

One China-based semiconductor analyst, who declined to be named as he was not allowed to speak to the media, said the quality of Chinese-made chip equipment was improving faster than he had anticipated, estimating that they were two years ahead of his original estimates.

“There is definitely huge progress happening in the Chinese semiconductor equipment space, as reflected in the strong revenue growth metrics,” he said.

Still some pain points remain, particularly lithography, which requires extremely complex optics and process precision. China has not been able to procure extreme ultraviolet (EUV) lithography machines needed to make the most advanced chips, and the U.S. has now barred even some less advanced deep ultraviolet (DUV) lithography systems from entering China.

The Huatai Securities report revealed that for the first eight months of 2023, only one tender for lithography equipment was awarded to a Chinese company, out of many bids.

China’s imports of lithography machines and components used in such machines from the Netherlands rose 81.2% year-over-year to $3.3 billion from January to August, according to Reuters’ calculations based on data from China’s customs.

The Netherlands’ ASML, Europe’s largest technology company and a maker of the advanced technology, on Wednesday reported that sales to China represented nearly half of its revenue for the third quarter of 2023.

But the lithography challenge has not stopped Chinese firms from achieving some breakthroughs. Analysts believe that Huawei Technologies and SMIC were able to make an advanced chip for the Mate 60 Pro phone by tweaking DUV machines they were still able to purchase from ASML.

“Local players still lack capability to supply a full set of equipment, such as EUV,” said Nori Chiou, investment director at White Oak Capital, saying Chinese manufacturers are focused on covering mature node equipment.

“It’s a long way to go to see advanced semiconductor equipment made in China.”

(Reporting by Fanny Potkin in Singapore and Yelin Mo in Beijing; Additional reporting by Ellen Zhang in Beijing; Editing by Brenda Goh and Sharon Singleton)

By Blake Brittain

(Reuters) – Music publishers Universal Music, ABKCO and Concord Publishing sued artificial intelligence company Anthropic in Tennessee federal court on Wednesday, accusing it of misusing an “innumerable” amount of copyrighted song lyrics to train its chatbot Claude.

The lawsuit said Anthropic violates the publishers’ rights through its use of lyrics from at least 500 songs ranging from the Beach Boys’ “God Only Knows” and the Rolling Stones’ “Gimme Shelter” to Mark Ronson and Bruno Mars’ “Uptown Funk” and Beyonce’s “Halo.”

Representatives for Anthropic did not immediately respond to a request for comment.

The publishers’ attorney Matt Oppenheim declined to comment on the litigation but said it is “well-established by copyright law that an entity cannot reproduce, distribute, and display someone else’s copyrighted works to build its own business unless it secures permission from rightsholders.”

Many copyright owners including authors and visual artists have sued tech companies such as Meta Platforms and Microsoft-backed OpenAI over the use of their work to train generative-AI systems.

The music publishers’ lawsuit appears to be the first case over song lyrics and the first against Anthropic, which has drawn financial backing from Google, Amazon and former cryptocurrency billionaire Sam Bankman-Fried.

The lawsuit accused Anthropic of infringing the publishers’ copyrights by copying their lyrics without permission as part of the “massive amounts of text” that it scrapes from the internet to train Claude to respond to human prompts.

The publishers also say that Claude illegally reproduces the lyrics by request, and in response to “a whole range of prompts that do not seek Publishers’ lyrics,” including “requests to write a song about a certain topic, provide chord progressions for a given musical composition, or write poetry or short fiction in the style of a certain artist or songwriter.”

For example, the lawsuit said that Claude will provide relevant lyrics from Don McLean’s “American Pie” when asked to write a song about the death of rock pioneer Buddy Holly.

The publishers asked the court for money damages and an order to stop the alleged infringement.

(Reporting by Blake Brittain in Washington; Editing by David Bario and Bill Berkrot)