Good morning! Another day, another headache for Google. The Verge reports of users complaining that Google’s AI chatbot, Gemini, is generating historically incorrect images in response to specific prompts. For example, a prompt on depicting Nazi-era German soldiers shows racially diverse men and women in uniform. Google has admitted that Gemini is “missing the mark” here and is working to solve it. Seems like the only thing missing the mark here is Google’s ability to crack consumer-facing AI. 

Adarsh Singh and Dinesh Narayanan also contributed to today’s edition.

The Market Signal* 

Stocks & Economy: Once upon a time, it was General Electric. Then Microsoft took its place. Apple followed. Now Nvidia is leading the charge in a sunrise industry that promises to transform the world. Its valuation shot up $277 billion on Thursday and the sentiment it triggered helped benchmark US stock indices smash records. Nvidia co-founder and CEO Jensen Huang’s wealth soared by nearly $10 billion, making him the 21st richest in the world. 

Taking inspiration, Asia was awash in green on Friday morning, although Hong Kong was subdued because of turmoil in Chinese quant funds. Indian equities are likely to continue their rally. Early GIFT Nifty movement indicates a positive start to the day.

EDUCATION

Test Prep Is On Notice

Coaching centres are in their villain era. India’s GST authority has been probing at least 145 coaching and test prep centres for alleged tax violations since January last year. Investigators found these centres collectively evaded more than ₹850 crore (~102.5 million) in taxes in FY21 and FY22 by understating the number of students enrolled or filing false tax exemption claims. 

Bad to worse: Meanwhile, Byju Raveendran, the current mascot of troubled coaching centres, is in further trouble with law enforcement. The Enforcement Directorate has issued a look-out circular against the Byju’s founder as it investigates alleged foreign exchange violations worth over ₹9,000 crore.

Raveendran is juggling law enforcement and angry investors. This week, he secured a high court order staying any resolutions that may be passed at an extraordinary general meeting proposed by Byju’s investors to oust the founder and his wife and take over the company. 

🎧 Byju Raveendran can’t catch a break. Also in today’s episode: Nvidia’s golden run. Tune in to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you listen to podcasts.

FUTURE OF WORK

Salary In The Stars

Victims of the layoff season are relying on friends, coworkers, or union members to overcome adversity. But for some,there’s comfort in the stars. 

Young Indian professionals fearing a loss of jobs are making a beeline for astrologers, tarot readers, and astrology apps to help them navigate the uncertainty ahead, reports The Economic Times. Entrepreneurs, largely known to stake out VCs, are now chasing astrologers for reassurance that all will be well with their funding plans. 

Dim forecast: Your tarot reading can only take you so far. Consulting firm Aon predicts most white collar employees can expect an average hike of 9.5% in 2024, the lowest since 2021. 

Tech, retail, and e-commerce workers are likely to get anaemic raises while folks working in boring, core industries such as engineering and manufacturing will make bank this year.

SEMICONDUCTORS

Tokyo Takeover

Just yesterday, we told you about Japan’s lost glory in manufacturing cutting-edge displays. Its mantle, taken over by South Korea, is now within the sights of Chinese brands looking to usurp Samsung and LG as leading LCD and OLED makers.

But Japan is taking an aggressive approach in reclaiming its status as a global semiconductor giant. As the world—spurred by the US—decouples from China, at least nine Taiwanese chipmakers, including the world’s largest, TSMC, are flocking to Japan and resuscitating its once-robust ecosystem. TSMC is weighing its third facility there; with it comes an ecosystem of chip suppliers, materials inspectors, and labs, and thousands of jobs in research and development, design, and custom chipmaking.

The biggie, however, is Rapidus. Japan’s state-backed chipmaker has a goal of making advanced 2nm chips by 2027. This is a country where chip expertise stalled at 45nm.

The Signal

Doubts persist over Rapidus’ timelines and ability to compete at scale with market leaders. An ageing Japan is also projected to have a shortage of at least 40,000 workers in this industry over the next decade.

But this is a country that emerged from the ashes of WWII to become a technological powerhouse. Its share in the global chip market may have fallen from 50% in the ‘80s to <10% in 2019 (incidentally, because of US protectionism in that era), but a weak yen, generous subsidies, minimal government interference, and industrious work culture could help it achieve a lost dream. If anyone can do it, Tokyo can.

DEFENCE

Bite That Bullet, Bae

War is big business. In 2022, we’d summed up the bumper stock market runs of some of the biggest players in the military industrial complex thanks to the Russia-Ukraine war: Lockheed Martin, BAE, Raytheon, and Northrop Grumman.

Silicon Valley also set its eyes on the prize as war droned on. US venture funding in defence tech startups went from $16 billion in 2019 to $33 billion in 2022 after Palantir, ShieldAI, Anduril, and few others bagged plum Pentagon contracts. The opportunity became more ripe as AI entered the fray and the US embraced tech protectionism against China.

Now that West Asia is in turmoil, BAE has again reported a boost in sales and earnings in 2023 and expects the run to continue. Even VC firm a16z, which platformed Web3-everything, is now lobbying for official spending in its portfolio of military, aerospace, and defence startups.

Peace was never an option.

LOGISTICS

Fast Fashion, Bulky Freight

China’s annual exports shrank for the first time in seven years in 2023, yet its e-commerce consignments likely pushed up global air freight rates.

The US Bureau of Labor Statistics’ air freight index rose to 184.8 in December 2023 from 161 in August that year. It dipped in January though. 

E-commerce shipments are sent directly to customers and hence occupy more space because of individual packing. Shein, Temu, Alibaba, and TikTok Shop send nearly 11,000 tonnes of fast fashion cargo every day. Chinese e-commerce shipments corner a third of global long-haul cargo planes. 

The Red Sea conflict has pushed up global freight rates anyway. The Drewry Container index rose from a low of $1,382 on November 30, 2023, to $3,964 on January 24, 2024, for a 40ft box. Year on year, Shanghai-Rotterdam container rates are up 153% and Shanghai-Los Angeles, 135%.

FYI

Plugged in: Ride-hailing major Uber will join India’s Open Network for Digital Commerce (ONDC). The initial integration will feature intercity bus ticketing across the country and Metro Rail as a “buyer application,” per TechCrunch.

Setting shop: Birla-owned Grasim Industries launched a decorative paint called Birla Opus. The company will open three plants in Haryana, Punjab, and Tamil Nadu.

Fresh dough?: Indebted telecom operator Vodafone Idea (Vi) is reportedly mulling raising fresh funds through several equity routes such as rights issues.

Crowded moon: A spacecraft operated by Houston firm Intuitive Machines has successfully landed on the moon, making it the first by a private company and the first US lunar landing in over half a century. Pixxel, the Google-backed spacetech startup, will launch six ‘Fireflies’ satellites in June through Isro's PSLV or SpaceX vehicle. 

Scrape me: Reddit has struck a $60 million-a-year content licensing deal with search giant Google, per Reuters. The deal involves Google paying Reddit for content to train its artificial intelligence data.

Free speech?: X, the Elon Musk-owned social media company, said that it had taken down posts related to the farmers’ protest after the Indian government issued “emergency blocking orders” last week.

THE DAILY DIGIT

500

The number of targets the US has identified in a new set of sanctions against Russia. It could impact Indian and Chinese exports to that country. (Reuters) 

FWIW

Change beckons: Everyone knows that change is the only constant and now, the world’s oldest logo has succumbed to that maxim. For more than 140 years, Lyle’s Golden Syrup has had the image of a lion’s carcass with bees hovering over it as its logo, a nod to the story of Samson from the Old Testament. It’s now being replaced by an animated version of a lion’s head. However, the old logo will continue to retain its place on canned varieties of the sugar-syrup, ensuring a smooth connection between old and new. 

Smell it: That’s the latest trope being tried by companies to bring employees back to offices. Hines, a commercial real-estate company, is introducing a custom fragrance in its ventilation system across all its properties. The idea seeks to imitate the relaxing feel of spas and luxury resorts in the hope of attracting employees. To be fair, it’s not all mumbo jumbo. Several research studies have shown mixed-floral smells to have positive impacts on learning and productivity. Not all combinations are fine for office though; lavender and pumpkin pie have been linked with sexual arousal. Seems like a risky idea. 

Citizen Science: LeDNA (Lake DNA) is perhaps the most unique research project in the world right now. Led by environmental scientists at the Swiss Federal Institute of Technology in Zurich, it looks to collect environmental DNA (eDNA) from lakes. eDNAs are shed by all organisms, which makes it the perfect tool to evaluate the presence of species in a given environment. Recently, a Brazilian frog species deemed to be extinct in the 1960s, was found using this technique. What makes it all so unique is that scientists are enrolling common citizens from across the world to collect these samples from their local lakes on the same day: May 22. They’ve already onboarded 500 people, laying the groundwork for the ultimate team exercise.