Business

Mexico is now America’s number one exporter

The US has bought more from China than any other country for the past two decades, but not any longer. Mexico blew past China as the top exporter to the US last year for the first time in 20 years, according to data the Census Bureau shared yesterday.

Who deserves the credit?

As much as Mexico deserves some kudos, China definitely helped them achieve the milestone. The US-China trade deficit (aka the difference between imports and exports) shrank to the lowest level last year since 2010.

While this may be in part due to Americans slowing down their shopping craze after the pandemic, according to the WSJ, it may mark a new era where China isn’t the US’s top trade partner.

Why is this happening?

• Tariffs set during the Trump administration on certain products, and the Biden administration’s aims at limiting dependence on clean tech from China have made the country’s imports more expensive.

  • However, a group of economists showed that US imports of many Chinese goods unaffected by tariffs kept growing after the trade war began in 2018.

• Strains in the US and China’s political relationship prompted some manufacturers that serve the American market to relocate to Mexico, Jesús Carmona, Mexico and Central America president at Schneider Electric, told the NYT.

• As China’s GDP grew, employers found hiring new workers got more expensive, which resulted in less supply.

The new frontier

Foreign investment in Mexico rose 21% last year, partially due to exporters leaving China. Other countries are also trying to become the US’s next interest, as the share of US imports coming from South Korea and India grew over the past year.

But still, China continually plays a major role in making the products that get shipped to US ports. Even for US imports made elsewhere, Chinese companies often supply the components, and they’ve been pouring billions into manufacturing facilities in Mexico as a way to curb the US’s tariffs.

This guy wants to raise $7 trillion… for chips?

And no, not the chips you just had at your Super Bowl party. Sam Altman, the head of OpenAI, has been trying to raise as much as $7 trillion to expand global production capacity of semiconductor chips, WSJ reported this week.

Yes, I said trillions… an astounding ambition given that only $527 billion worth of chips were sold across the world last year. Chip designer Nvidia, which sells many of the microprocessors that are enabling the AI craze, has been struggling to meet the demand presented by OpenAI.

And as the company is chomping at the bit to get more supply from manufacturers to power its AI models, it’s looking for a whole new way to do it.

A new strategy

Altman wants to create OpenAI’s very own semiconductor supplier, but he’s going to need a bit of help:

• Altman has reportedly tried to convince Silicon Valley VCs, government-linked investors in Saudi Arabia and the United Arab Emirates, as well as the sharks at SoftBank to bankroll the venture.

• He’s also talking to chip behemoth Taiwan Semiconductor Manufacturing Company about establishing production facilities worldwide.

WaPo says he’s also been in contact with US lawmakers to discuss where the ideal locations to build chip factories would be. Microprocessor availability has also been a major priority for the White House.

On another note: Microsoft and Alphabet are designing their own chips, while legacy chipmakers like Intel and Advanced Micro Devices vie to challenge Nvidia’s dominance in the AI space.

Pirating videos is becoming popular again

With streaming services increasing prices across the board, many are turning back to illegal sites to stream content. Not only that, but the password-sharing crackdowns, upcharges to dodge ads, and “subscription fatigue” from a plethora of services has a lot of people fed up.

The cost of watching content via streaming services has hit an all time high. As a result, people are heading back to illegal streaming sites, according to Bloomberg.

The piracy industry has faced some obstacles

Finding free content online has always been a foundational aspect of using the internet, but entering this decade, illegal video streaming sites faced some pretty big challenges:

• Many consumers left unsecure, ad-ridden sites for the ease and (relative) affordability of legitimate streaming services.

• 2020 legislation turned running a streaming operation from a misdemeanor into a felony.

• Since 2018, the Motion Picture Association has taken over 1,200 illegal streamers offline in North America alone.

In 2020, global visits to video piracy sites had dropped to 104 billion. By 2023, that number rose back to around 141 billion.

Will it stick around?

Just as the cost of watching good quality, legal media has risen, the illegal streaming industry has grown more sophisticated itself… and more captivating for those not looking to shell out extra dough.

• In 2022, piracy increased 39% for films and 9% for TV shows globally.

Some illegal streaming sites are making around $2 billion per year through ads and subscriptions while growing harder to shut down with the use of cryptocurrency and VPNs.

Legal media has had enough

The head of the MPA, Charlie Rivkin, told Bloomberg, “This is organized crime.” The MPA’s special anti-piracy unit is led by a Marine Corps and Interpol veteran who previously fought drug trafficking.

It’s a big issue: A US Chamber of Commerce estimate says the American economy loses $30 billion in annual revenue, and around 250,000 jobs, to illegal streaming.

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There’s a McBoycott in the Middle East

The Israel-Hamas war has found an unlikely target… McDonalds. Its sales have slowed in the Middle East as some consumers forgo the fast-food giant over an apparent pro-Israel position.

A few months ago, reports surfaced of an Israel-based McDonald’s franchisee donating meals to IDF soldiers. Despite McDonald’s franchisees operating independently from the fast-food chain, the backlash has hurt the company’s business in the Middle East and beyond, contributing to its posting its first quarterly sales miss in four years yesterday.

• Sales in other Muslim-majority countries like Indonesia and Malaysia were impacted, as well as in France, McDonald’s CEO Chris Kempczinski told shareholders.

• Kempczinski called the war’s impact on local franchisees “disheartening and ill-founded.”

McDonalds isn’t the only franchise that's hurting

Ideological clashes have also hurt Starbucks’s revenue, not just in the Middle East, but in the US as well. The coffee chain sued the Workers United union for trademark violation after a group of Starbucks employee members posted a pro-Palestine message during the first days of the war.

Some activists then claimed that Starbucks supports Israel’s actions in Gaza and has sent money to the country. Starbucks said it has “no political agenda” and does not use its “profits to fund any government or military operations.”

Your school might start using holograms

Instead of attending a snoozefest like a Zoom call, schools might opt in for a more engaging form of education… holograms. At Loughborough University in England, the university is experimenting with holograms in the classroom, according to The Guardian.

The innovative tech allows individuals to be present (in hologram form) from anywhere in the world using their smartphones, appearing life-sized and in real time inside a hologram box within a classroom. This solves a ton of issues for higher education institutions:

• It’s more sustainable than flying in guest lecturers for short speaking periods.

• Holograms can be more effective for showcasing complex, 3D equipment than traditional video calls.

The university says it wants to use the tech to have scientists from MIT teach its fashion students about immersive shows and run business students through exercises… all the way from Boston. The tech is still being tested, and will be officially added to the school’s curriculum in 2025.

Futuristic tech

The holograms are made by Proto, a Los Angeles based company which also supplies its tech to companies like IBM and H&M (for interactive product displays).

And Proto has another, weirdly strange goal… bringing the dead back to life.

• The hologram box could display an image of a deceased celebrity and train AI on their books, lectures, and social media, allowing users to interact with them in real time.

While transporting in holographic lecturers to teach freshmen might seem like a one and done thing, the tech is here to stay in education. Just this month, Arizona State University became the first college institution to partner with OpenAI. Look forward to your kid telling you about their new holo-lectures sometime soon.

Fast Facts

Snowy Sleep: A napping polar bear took the people’s choice prize in the Wildlife Photographer of the Year Awards.

Record Rescinded: Man who spent years recreating the Eiffel Tower using 706,900 matchsticks was disqualified by the Guiness book of world records because he didn’t use matches that were “commercially available”.

Money Makers: The combined wealth of adults under forty has shot up 80% since 2019, compared to 10% for people 40–54 and 30% for the over-55 set, according to economists at the New York Fed.

Public Profit: Uber reported its first annual profit since going public in 2019. College kids must be keeping them in business single-handedly.

Potent Poll: A new poll shows the divide between generations over what’s acceptable behavior in a Zoom meeting.

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