02/06/2025

BIZ & FINANCE MONDAY | JUNE 2, 2025

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Saab CEO sees Europe streamlining defence demands amid spending push SINGAPORE: The European defence market needs to align requirements and demand in order to create scale as it attempts to boost capability, the CEO of Swedish defence group Saab said. “The important thing is that you cannot have every country, sort of tailoring the requirements to different sorts of versions, then it becomes difficult,” Micael Johansson told Reuters in an interview on Saturday on the sidelines of the Shangri-La Dialogue security meeting in Singapore. The European Union’s 23 members are expected to agree at a summit in June to raise the defence spending target above the current 2% of national output as countries bend to pressure from US President Donald Trump to spend more. “Europe has a big catch up to do in terms of capability that we need to have in place to take care of our own security,” Johansson said, adding that defence capabilities will still need to be built up even if a peace deal in Ukraine is achieved. Beyond improving capabilities in Europe, he said that he has seen a greater willingness for collaboration between countries other than the US for defence products, and that European players are prepared to establish sovereign capabilities in the countries they partner. “That’s what we’re prepared to do, if we’re part of this of course, to help, and that includes technology transfer and collaboration, and not just selling.” The Thai Air Force chose to purchase its Gripen fighter jets in August last year, selecting Saab over Lockheed Martin’s F-16 fighter jets even though Thailand is a security ally of the United States. Johansson also noted that the company’s fighter jet programme is building more unmanned capabilities as air defence systems and lethal weapons capabilities improve. “Because of the congested environment that you have to operate in, the suppression of enemy air defence systems, you have to take bigger risks and you have to think about attrition. “Then you don’t want to send your fighter pilots into something that’s really, really dangerous,” he said. – Reuters

Silicon Valley VCs navigate uncertain AI future o Venture capitalists struggle to find viable opportunities in excruciatingly expensive market

VANCOUVER: For Silicon Valley venture capitalists (VCs), the world has split into two camps – those with deep enough pockets to invest in artificial intelligence behemoths, and everyone else waiting to see where the AI revolution leads. The generative AI frenzy unleashed by ChatGPT in 2022 has propelled a handful of venture-backed companies to eye-watering valuations. Leading the pack is OpenAI, which raised US$40 billion (RM170 billion) in its latest funding round at a US$300 billion valuation – unprecedented largesse in Silicon Valley’s history. Other AI giants are following suit. Anthropic now commands a US$61.5 billion valuation, while Elon Musk’s xAI is reportedly in talks to raise US$20 billion at a US$120 billion price tag. The stakes have grown so high that even major venture capital firms – the same ones that helped birth the internet revolution – can no longer compete. Mostly, only the deepest pockets remain in the game – big tech companies, Japan’s SoftBank and Middle Eastern investment funds betting big on a post-fossil fuel future. “There’s a really clear split between the haves and the have-nots,” says Emily Zheng, senior analyst at PitchBook, told AFP at the Web Summit in Vancouver. “Even though the top-line figures are very high, it’s not necessarily representative of venture overall, because there’s just a few elite startups and a lot of them happen to be AI.” Given Silicon Valley’s confidence that AI represents an era-defining shift, venture capitalists face a crucial challenge – finding viable opportunities in an excruciatingly expensive market that is rife with disruption. Simon Wu of Cathay Innovation sees clear customer demand for AI improvements,

even if most spending flows to the biggest players. “AI across the board, if you’re selling a product that makes you more efficient, that’s flying off the shelves.” People will find money to spend on OpenAI” and the big players, Wu said. The real challenge, according to Andy McLoughlin, managing partner at San Francisco-based Uncork Capital, is determining “where the opportunities are against the mega platforms”. “If you’re OpenAI or Anthropic, the amount that you can do is huge. “So where are the places that those companies cannot play?” Finding that answer is not easy. In an industry where large language models behind ChatGPT, Claude and Google’s Gemini seem to have limitless potential, everything moves at breakneck speed. AI giants including Google, Microsoft, and Amazon are releasing tools and products at a furious pace. ChatGPT and its rivals now handle search, translation, and coding all within one chatbot – raising doubts among investors about what new ideas could possibly survive the competition. Generative AI has also democratised software development, allowing non-professionals to code new applications from simple prompts. This completely disrupts traditional startup organisation models. “Every day I think, what am I going to wake up to today in terms of something that has changed or (was) announced geopolitically or within our world as tech investors,” reflected

Christine Tsai, founding partner and CEO at 500 Global. In Silicon Valley parlance, companies are struggling to find a “moat” – that unique feature or breakthrough like Microsoft Windows in the 1990s or Google Search in the 2000s that’s so successful it takes competitors years to catch up, if ever. When it comes to business software, AI is “shaking up the topology of what makes sense and what’s investable”, noted Brett Gibson, managing partner at Initialized Capital. The risks seem particularly acute given that generative AI’s economics remain unproven. Even the biggest players see a very uncertain path to profitability given the massive sums involved. The huge valuations for OpenAI and others are causing “a lot of squinting of the eyes, with people wondering ‘is this really going to replace labour costs’” at the levels needed to justify the investments, Wu said. Despite AI’s importance, “I think everyone’s starting to see how this might fall short of the magical” even if its early days, he added. Still, only the rare contrarians believe generative AI is not here to stay. In five years, “we won’t be talking about AI the same way we’re talking about it now, the same way we don’t talk about mobile or cloud”, predicted McLoughlin. “It’ll become a fabric of how everything gets built.” But who will be building remains an open question. – AFP

Opec+ announces sharp increase in July oil production VIENNA: Saudi Arabia, Russia and six other key Opec+ members announced on Saturday a huge increase in crude production for July. to be bowing to Donald Trump’s requests.”

Shortly after taking office, the US president called on Riyadh to ramp up production in order to bring down oil prices, meaning cheaper prices at the pump for American consumers. Saturday’s decision comes after a meeting of all Opec ministers on Wednesday, where the alliance’s collective production policy was reaffirmed. The decision is officially justified by “healthy market fundamentals” covering oil reserves and structural demand growth during coming months. But markets have met this view with scepticism amid concerns about demand and a trade war launched by the United States. Analysts see several possible motivations for the production hikes, one of them being Saudi Arabia and others penalising members for not keeping to their quotas under the cuts first agreed in 2022. The increase is all the more likely due to“the latest statements of Kazakh Energy Minister Yerlan Akkenzhenov, who has apparently already informed Opec that his country will not reduce production”, said Commerzbank analyst Thu Lan Nguyen.

They will produce an additional 411,000 barrels a day – the same target set for May and then June – according to a statement, which is more than three times greater than the group had previously planned. In recent years the 22-nation group had agreed to daily reductions of 2.2 million barrels with the aim of boosting prices. But in early 2025, leading members of the group known as the “Voluntary Eight”, or V8, decided on the gradual output increase and subsequently began to accelerate the pace. The moves have resulted in oil prices plummeting to around US$60 per barrel, the lowest level in four years. Opec+ “struck three times – (the output target for) May was a warning, June a confirmation and July a warning shot”, Rystad Energy analyst Jorge Leon told AFP. “The scale of the production increase reflects more than just internal supply dynamics. “This is a strategic adjustment with geopolitical aims: Saudi Arabia seems

The Dangote oil refinery in the outskirts of Lagos, Nigeria. – REUTERSPIC

“Saudi Arabia is angry with Kazakhstan”, which is seen as one of the main laggards, and which “produced 300,000 barrels per day more than its quota,” said Bjarne

Schieldrop, an analyst at SEB. Analysts, meanwhile, do not foresee a plunge in oil prices when markets open today as the announcement was largely anticipated, instead

resulting in a “moderate” reaction. On Friday, the benchmark Brent crude futures price had settled at US$62.61 per barrel, while West Texas Intermediate was at US$60.79. – AFP