📊 Generative AI Tools Gain Mainstream Adoption: Survey Reveals Rapid Growth

📝 Update 2023-04-11

Headlines for today’s Business Edge update.

• Tesla to Construct New Megafactory in Shanghai with 40 GWh Energy Storage Capacity

• TSMC Sales Disappoint for Second Consecutive Quarter Amid Weak Global Electronics Demand

• Apple Personal Computer Shipments Declined by 40.5% in Q1

• Google's Privacy Sandbox Aims to Balance User Privacy with Advertiser Needs by Replacing Third-Party Cookies

• Tesla Co-founder Nominated for Board, New SVP Appointed Amid Succession Worries

• Foxconn to Invest $700M in India Plant, Diversifying from China Manufacturing

• Emirates Telecommunications Group Acquires $400M Stake in Careem's Super App

• UK Watchdog Calls for Probe into Microsoft and Amazon's Cloud Computing Dominance

• Microsoft Cloud Price Increase Begins on April 1, 2023, Affecting Azure, Dynamics 365, and Microsoft 365

• Survey Reveals Mainstream Adoption of Generative AI Tools

• Auto-Prompting in Generative AI Ushers in New Era of Advanced Automation and Intelligent Assistants

• Amazon Responds to Speculation Over AI Chatbot Absence Amid Google and Microsoft's Generative AI Race

• Expedia Introduces ChatGPT-Powered Travel Planning

• Microsoft Edge Integrates OpenAI's Dall-E for On-Demand AI-Generated Images

• AI Threatens Spreadsheet Specialists, but Challenges Remain

• Fintech Valuations Decline in Q1, with Further Decreases Expected

• Asian Venture Funding Plummets in Q1 2023: Late-Stage Rounds Hit Hardest Amid Global Uncertainty

• Third Week of Declining US Investment Rounds Sees

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🐘 Big Tech

The Big Tech companies that move the market, FANG, and more.

Tesla to Construct New Megafactory in Shanghai with 40 GWh Energy Storage Capacity

Tesla has announced plans to construct a new Megafactory in Shanghai, capable of producing 10,000 Megapacks per year, equating to approximately 40 GWh of energy storage. The facility will complement Tesla's Gigafactory Shanghai, which manufactures the Model 3 and Model Y vehicles. The new plant is expected to break ground in Q3 2023 and start production in Q2 2024.

TSMC Sales Disappoint for Second Consecutive Quarter Amid Weak Global Electronics Demand

Taiwan Semiconductor Manufacturing Co. (TSMC) reported below-expected sales for the second quarter in a row, reflecting the continued slump in global electronics demand. TSMC's Q1 revenue was NT$508.6 billion ($16.7 billion), lower than the average analyst forecast of NT$525.5 billion. This shortfall indicates that the chip industry's downturn has not yet bottomed out, as rising interest rates, surging inflation, and an ongoing banking crisis dampen consumer sentiment. TSMC's sales are heavily reliant on Apple, PC manufacturers, and consumer electronics brands like Nintendo.

In response to the current market conditions, TSMC has reduced its capital spending plans for 2023 to a range of $32 billion to $36 billion, down from $36.3 billion last year. Executives stated in January that they expect the company's sales in H1 to decline by a mid-to-high single-digit percentage in US dollar terms, but foresee a rebound in H2.

Apple Personal Computer Shipments Declined by 40.5% in Q1

Apple Inc.'s personal computer shipments declined by 40.5% in the first quarter, while total PC shipments slumped by 29% to 56.9 million units, according to IDC's latest report. Major market leaders, including Lenovo, Dell, and HP, also experienced significant drops in shipments. The slowdown in consumer spending has resulted in double-digit declines in smartphone shipments and an accumulating glut among memory chip suppliers. Jitesh Ubrani, IDC research manager, said that elevated inventory could persist into the third quarter of the year. The cooling demand is allowing manufacturers to explore production options outside China.

Google's Privacy Sandbox Aims to Balance User Privacy with Advertiser Needs by Replacing Third-Party Cookies

Google is working on a new technology called "Privacy Sandbox" to replace third-party cookies, which are used to track users' online activity. The Privacy Sandbox is a set of proposed changes that will improve user privacy while still allowing advertisers to target relevant audiences. Utilizing machine learning algorithms, the technology will group users with similar interests without revealing personal information. While Google claims this will provide more privacy for users, some critics remain skeptical of the company's motives. The effectiveness of Privacy Sandbox in preserving privacy and meeting advertiser needs is yet to be determined.

Tesla Co-founder Nominated for Board, New SVP Appointed Amid Succession Worries

Tesla announced the nomination of co-founder and former CTO, JB Straubel, to its board of directors, addressing investors' concerns about succession planning at the company. Additionally, Tesla appointed Tom Zhu as Senior Vice President for Automotive Operations, joining Elon Musk, CFO Zachary Kirkhorn, and Powertrain Head Andrew Baglino as executive officers.

Despite these moves, some investors worry about Musk's leadership and his recent acquisition of Twitter for $44 billion, fearing it may distract him from Tesla's responsibilities. Tesla's stock experienced its largest annual decline last year due to concerns over Musk's Twitter usage and decreasing demand for electric vehicles.

📈 Startups and Technology

The latest from the world of startups and technology companies.

Foxconn to Invest $700M in India Plant, Diversifying from China Manufacturing

Foxconn plans to invest around $700 million in a new plant in India, increasing local production and shifting away from Chinese manufacturing amid rising tensions between Washington and Beijing. The 300-acre site near Bengaluru's airport may produce parts for Foxconn's electric vehicle business and assemble Apple handsets. This investment is Foxconn's largest in India to date and may threaten China's status as the world's largest consumer electronics producer. The move is a win for India's government as Western corporations grow wary of Beijing's crackdowns on private companies.

Emirates Telecommunications Group Acquires $400M Stake in Careem's Super App

Emirates Telecommunications Group will purchase a $400 million stake in the super app developed by Uber's Middle Eastern subsidiary, Careem. The Abu Dhabi-based firm aims to reinvent itself as a global technology investor. The deal involves acquiring a 50.03% stake in the super app spin-out, with Uber and Careem's co-founders retaining shares. Careem's super app offers a range of services, including food and grocery delivery, remittances, and third-party services in 10 countries across the Middle East, North Africa, and South Asia.

☁️ SaaS and Cloud

Software-as-a-Service and Cloud-based company news.

UK Watchdog Calls for Probe into Microsoft and Amazon's Cloud Computing Dominance

Ofcom, the UK's communications watchdog, has expressed concerns over Amazon Web Services and Microsoft's control of 60-70% of the country's cloud market and has proposed referring the sector to the Competition and Markets Authority for further investigation. With demand for cloud services slowing and customers complaining of rising prices and difficulty in switching providers, Ofcom's move adds to the growing global scrutiny of the cloud market. The regulator is concerned that the concentration of cloud computing supply among large US companies could lead to higher prices for British customers and smaller groups being pushed out of the market. Ofcom's final decision on whether to refer the case to the CMA is expected by October 2023.

Microsoft Cloud Price Increase Begins on April 1, 2023, Affecting Azure, Dynamics 365, and Microsoft 365

Microsoft has announced a price increase for its cloud services, including popular offerings like Azure, Dynamics 365, and Microsoft 365, starting on April 1, 2023. The company explains that the change is necessary to maintain consistent global pricing for their cloud services. Customers with certain contracts, such as EA, SCE, or EAS, will have price protection for a limited period, depending on the subscription. However, usage-based services will see price increases, regardless of existing commitments. To offset these cost increases, customers are advised to focus on effective software asset management and explore viable cost-saving alternatives, such as third-party Microsoft support.

🤖 AI

Keeping you updated on the latest in AI.

Survey Reveals Mainstream Adoption of Generative AI Tools

A recent survey by Onepulse on behalf of TechRadar Pro revealed that generative AI tools have become mainstream in less than a year. Out of 890 US and UK respondents, 27% had tried ChatGPT, and another 12% had used other generative AI tools.

Since ChatGPT's general availability in November 2022, OpenAI has become one of the most popular websites globally, with over 1.6 billion visits in March 2023. The survey showed that 5% of respondents are daily users of one or more AI services, a figure that jumps to 15% for those using AI tools several times per week. The introduction of paid services has not yet affected the demand for AI tools, and businesses are likely to adopt AI technology to cut costs through automation and chatbots. A slim majority of respondents believe that generative AI will not replace their jobs, with 5.5% acknowledging that AI may make them redundant within the next year.

Auto-Prompting in Generative AI Ushers in New Era of Advanced Automation and Intelligent Assistants

Auto-prompting or self-prompting in generative AI has introduced powerful new capabilities in the AI landscape. By combining language models with tools like web search or code testing, AI can act as an automatic assistant with broader functionality than just text or code generation. This technology includes the open-source application Auto-GPT, which develops and manages business ideas, and similar projects like Baby-AGI or Jarvis (HuggingGPT).

These projects network language models and functions to automate complex tasks, with the language model acting as a controller to achieve goals autonomously. Language models are being used beyond text generation, like controlling robots or providing intelligent brainstorming. Auto-prompting has paved the way for advanced artificial intelligence that can cover sophisticated AI tasks across language, vision, speech, and more.

Amazon Responds to Speculation Over AI Chatbot Absence Amid Google and Microsoft's Generative AI Race

Amazon Web Services executives recently reassured employees that the company had not fallen behind in the generative AI race, despite competitors Google and Microsoft launching AI chatbots Bard and Bing. With over 100,000 machine-learning customers, Amazon has expressed interest in using AI technology for personalization, search engine results, and call center automation. As questions on Amazon's AI innovation arise, the company has emphasized its focus on customer needs and success in the rapidly evolving AI space.

Expedia Introduces ChatGPT-Powered Travel Planning

Expedia announced a new chatbot tool powered by OpenAI's ChatGPT, allowing users to plan trips through conversations in the Expedia app. The AI recommends destinations, hotels, transportation, and activities and automatically favorites suggested hotels. This integration follows Expedia's ChatGPT plugin, which allows users to plan trips using Expedia's travel data on the ChatGPT site. The ChatGPT feature aims to make a travel booking more convenient and is currently in beta, globally available on iOS.

Microsoft Edge Integrates OpenAI's Dall-E for On-Demand AI-Generated Images

Microsoft has announced the integration of OpenAI's Dall-E, an AI-powered image creator, into its Edge browser. Users can now generate custom images directly from the Microsoft Edge sidebar, making it the first and only browser to offer an integrated AI image generator. Dall-E, akin to ChatGPT but for images, generates visuals based on textual prompts provided by users.

Previously available only on the web, Dall-E is now integrated into Edge and accessible via Bing Chat. To access this feature, users need a Microsoft account and the latest version of Microsoft Edge. The image creator tool should appear as an icon in the browser's sidebar. Users can input a prompt, create AI-generated images, and access share and download options.

Although the service is free to use, it offers a limited number of "boosts" per month to speed up the AI generation process. Users can replenish their boosts through the Microsoft Rewards system, and previously created images are saved in the panel for easy access.

AI Threatens Spreadsheet Specialists, but Challenges Remain

Artificial intelligence can potentially disrupt the need for spreadsheet skills in accountancy. According to research by the University of Pennsylvania and OpenAI, accountancy is one of the professions most vulnerable to generative AI. Microsoft has already started integrating AI tools, such as a generative AI "co-pilot" in Excel, allowing users to ask data questions in their own language. While AI could drive $200bn of spending online in the U.S. over three years, challenges remain in training AI and producing reliable results. Concerns over privacy, temporary bans, and calls to pause experiments further hinder AI's rapid advancement in replacing human jobs in the sector.

 💵 Fintech

What is up in the world of Fintech?

Fintech Valuations Decline in Q1, with Further Decreases Expected

Private fintech multiples have declined in Q1 compared to 2022, following the trend of public fintech company multiples. Neo-banks, brokers, high-growth fintech, high-growth payments, and insurtech have all experienced declines in revenue multiples. The path of inflation and rates and the severity of a potential recession are uncertain, making it difficult to predict how far public fintech multiples will fall.

However, multiples from 2016-2019 could provide a rough guide for where fintech valuations might settle if the Fed and ECB can tame inflation and reduce rates by 200-350 bps. Late-stage VCs are expected to focus on valuations, profitability, and unit economics due to high rates. Limited partners may consider reallocating from public equities and private equity into fixed income if VC returns lag and short-term rates remain above zero. This could reduce VC capital and refocus investment on higher-potential startups.

Lower valuations have led to healthy fintech M&A activity, with Acorns, Marqeta, and SoFi making significant acquisitions. M&A could continue and even accelerate if multiples decline further. Late-stage private fintech valuations are expected to follow public peers until rates decrease, as seen with Stripe's valuation step-down.

💰 Venture Capital and M&A

Follow the market trends in Venture Capital and the latest tech M&A.

Asian Venture Funding Plummets in Q1 2023: Late-Stage Rounds Hit Hardest Amid Global Uncertainty

Venture funding in Asia experienced a brutal start in 2023, with a 33% decline from the previous quarter and a massive 57% drop from Q1 2022. Total funding dropped to $15.2 billion, the lowest in at least three years. Late-stage and growth rounds saw the most significant decline, with a 64% drop from Q1 2022, and early-stage rounds also suffered.

China and India, the region's largest venture markets, experienced substantial decreases in venture funding. China's funding dropped 38% both year-over-year and quarter-over-quarter, while India saw a 75% drop from Q1 2022. Other countries with significant declines include Japan, Hong Kong, South Korea, and Israel.

The strained relationship between the U.S. and China, China's struggle to recover from the pandemic, and political upheaval in Israel contribute to the decline in Asia's private market. However, recent interest from Chinese tech companies in going public and potential foreign investor return could help turn the situation around.

Third Week of Declining US Investment Rounds Sees

In the third week of declining investment rounds in the U.S., only two rounds exceeded $100 million. AI-driven healthcare and layoffs within a cybersecurity company are significant stories of the week.

A heart precision care technology startup secured the largest funding this week, raising $215 million for its noninvasive technology that has been utilized by 180,000 patients worldwide. Meanwhile, Boston-based Cybereason raised funds, but also announced a CEO change and job cuts, following its confidential filing for an IPO last year.

Investments in logistics startups cooled off, with Everstream Analytics raising an undisclosed amount. Other funding rounds included Covariant's additional $75 million for its robotics platform, Honeycomb's $50 million Series D, Mercy BioAnalytics' $41 million Series A for early cancer diagnosis, and Phlow's Series B to manufacture affordable medicines.

Several larger funding rounds took place abroad, as U.S. investment rounds experienced a decline for the third consecutive week.