🕳️ Rabbit Holes and Revenue
The chips didn’t disappear. They just changed addresses.
Good morning!
Nvidia's board spent this week deciding whether to fire Jensen Huang, its chief executive for 33 years. He had just admitted cheating on his wife, after reports linked him to Alice Huang, a businesswoman US officials suspect of working for Chinese intelligence. The headlines are in the bedroom. The story is in the warehouse. Alice Huang once ran Megaspeed, a Singapore outfit that American investigators and the city-state's police have been examining for over a year on suspicion of feeding restricted Nvidia chips to China. Whatever the directors decide, quarterly results are days away and three congressional committee chairs want Jensen Huang in a closed-door briefing.
Megaspeed was born in 2023, when a Chinese gaming company spun off its overseas arm. Within two years it was Nvidia's biggest customer in Southeast Asia, buying some $4.8B of hardware through a Malaysian affiliate. Its data centres there appear to serve customers in China remotely. That is the elegance of the arrangement: American export rules stop a box at the border, not an hour of computing rented down a fibre cable. When US Commerce Department inspectors called in 2024, they found servers still sealed in their crates, which is what a data centre looks like when it is really a waiting room. Megaspeed denies any diversion, and Nvidia insists its client sold a cloud service the rules allow. On that last point Nvidia may well be right, and that is the scandal.
Nvidia's own count of chips sold to Megaspeed, as handed to Washington, came up 50,000 short of the trade records. Pressed, the chipmaker located them in other warehouses, a stocktake precise enough to come with no number. Its general counsel even rang the official in charge of export controls while the inquiry was running. Nvidia had also redrawn the map of its sales: revenue is now booked where a customer keeps its head office, no longer where it pays its invoices. Singapore, which once billed close to a fifth of all sales while receiving under 2% of shipments, vanished from the filings. A chip sold to a Californian server maker and delivered to Malaysia now counts as an American sale. No dollar went missing from the accounts. A whole country did.
The board will most likely punish the founder for the part of the story everyone understands, and leave alone the part that matters. In fairness to Jensen Huang, he did not write the rules. Washington did, betting four years of policy on the idea that power lives in the box rather than in its use, a wager a footnote and a fibre cable have rendered nugatory. If the investigators are right, a Chinese model is training on US chips that never left Malaysia and sit in Nvidia's books as domestic sales. Even with a sex scandal for garnish, that is hard to find funny.
A Free Lunch is looking for a business partner or advertising agency to monetize its ads. Contact us!
🗞️ Top Story
- 🇫🇷 Panic Bells. Bomb threats forced evacuations at three French lycées, just one day after hundreds of schools across Europe faced similar scares. (Ouest-France)
- 🇮🇹 School Alarmism. For the second day in a row, thousands of Italian schools received fake bomb threats, forcing evacuations and widespread disruption with zero actual danger. (De Tijd)
- 🇳🇱 Rich Break. The Dutch government faces collapse after the VVD votes against its own coalition’s wealth tax plan, exposing a rift over taxing millionaires. (De Tijd)
- 🇧🇪 Cold Case. Belgium joins France in blaming Iran for cyberattacks that sabotaged supermarket freezers, causing millions in losses and a fresh diplomatic freeze. (El Pais)
- 🇪🇺 Table Manners. Volodymyr Zelensky welcomes a US pledge to bring delegates into the next Russia-Ukraine peace talks, giving Europe a long-sought seat at the negotiating table. (BBC)
- 🇲🇩 Data Platter. Hackers stole personal data from 450,000 Moldovans by breaching official records, prompting the government to suspect Russian involvement and promise a digital overhaul. (Libé)
- 🇷🇺 Life on the Line. Leaked Russian records show nearly 450,000 Russians killed in Ukraine by mid-2025, exposing the staggering human cost of Putin’s war for minimal territorial gain. (Financial Times)
- 🇺🇸 Class Act. The Democrats' latest electoral triumphs owe a debt to Bernie Sanders, whose kitchen-table populism has finally become the party's main course. (El Pais)
- 🇺🇸 Pivot to Nowhere. Trump scraps Vance’s Iran peace efforts, insisting his vice president investigate Democratic “corruption” at home instead of pursuing foreign diplomacy. (New York Times)
- 🇺🇸 Current Affairs. Five people were shot near Logan Circle in Washington, D.C., prompting a massive police lockdown and a shelter-in-place alert for the neighborhood. (New York Times)
- 🇹🇷 Speechless. Prosecutions for "insulting the president" are surging in Turkey as citizens like Kemal face police visits for old Facebook posts criticizing Recep Tayyip Erdogan. (Le Figaro)
🇬🇧 United Kingdom
- 🇬🇧 Trust Issues. After MI5 was caught lying to three courts about a violent informant, Lord Leveson says judges will now demand proof instead of deference. (BBC)
- 🇬🇧 Gag Reflex. Ministers consider fast-tracking new rules to prevent NDAs from shielding misconduct, spurred by claims involving TV personality David Walliams. (The Guardian)
🇺🇸 United States
- 🇲🇽 Cover Blown. Guillermo Zuany Portillo, who allowed C.I.A. agents to operate in his state, has slipped across the border and is under US government protection. (New York Times)
🏛️ Economy
- 🇬🇧 Deal or No Deal. Andy Burnham claims a "win-win" UK-EU agreement is within reach, promising a Brexit outcome closer to what voters expected back in 2016. (BBC)
- 🇬🇧 Code Surge. The UK economy grew 0.7% in Q3, its fastest pace in over two years, as AI and cloud investment powered a surge in computer programming. (BBC)
- 🇪🇺 Value Judgment. The European Parliament has rejected new rules aimed at banning low-value financial products and tightening oversight of financial advisors, leaving consumer protections unchanged for now. (Die Zeit)
- 🇪🇺 Rate Expectations. The European Central Bank is widely expected to deliver one last rate hike in December, but economists warn inflation risks are far from over. (Boursier)
- 🇺🇸 Wall Street. Trump warns Mexico of immediate tariff hikes if it fails to stop migrant caravans at its southern border, turning economic leverage into immigration policy. (Le Monde)
- 🇺🇸 Crude Custody. The State Department revealed it managed over $12B in Venezuelan oil revenue through a Treasury account, finally lifting the lid on months of secrecy. (Washington Post)
- 🇧🇷 Debt to Rights. Lula eyes a $14B fiscal boost for 2025, as Brasília scrambles to convince markets it still remembers what “discipline” means. (Bloomberg)
- 🇨🇳 Policy Shift. China plans to launch a $15B maritime insurance alternative, hoping to steer global shipping coverage away from Lloyd’s and other Western firms. (Wall Street Journal)
🇺🇸 United States
- 🇺🇸 Chip Shot. Commerce Secretary Howard Lutnick faces bipartisan outrage after failing to control Nvidia's AI chip exports, with Congress demanding accountability and heads already rolling. (Le Temps)
- 🇺🇸 Unwelcome Uptick. The Labor Department reported 200,000 new unemployment claims last week, outpacing expectations and breaking the streak of declines, but still not alarming. (Wall Street Journal)
🏢 Real Estate
- 🇪🇸 Eviction Notice. Spain’s Parliament approves a law suspending evictions for vulnerable people until 2030 and targeting so-called vulture funds, as the right vows to repeal it if elected. (Le Monde)
- 🇺🇸 House Arrest. existing home sales dropped to 3.75M in October, missing forecasts and hitting their lowest level since 2010, with prices barely moving. (Boursier)
- 🇺🇸 Concrete Plans. Meta 🇺🇸 will buy certificates for 180,000 tonnes of low-carbon cement from Sublime Systems, aiming to shrink emissions from its data centre building spree without pouring a single slab. (Financial Times)
🇬🇧 United Kingdom
- 🇬🇧 Green Light, Red Faces. Angela Rayner approves plans for an asylum centre in Piddington despite vocal local resistance, but the Home Office still holds the final stamp. (The Guardian)
🇺🇸 United States
- 🇺🇸 Locked Out. With mortgage rates still above 7 percent and home prices high, buyers and sellers alike are sitting on the sidelines, waiting for relief that never comes. (New York Times)
- 🇺🇸 Still Processing. Voters may have tried to pull the plug, but analysts predict data center construction will mostly keep humming along, even after the midterm pushback. (New York Times)
- 🇺🇸 Ground Floor. home sales in October sank to their lowest level since 2010, as the housing market finds new ways to disappoint after four years in the basement. (Wall Street Journal)
🔗 On-chain
- 🇨🇭 Crypto by the Lake. Lugano’s mayor hails Tether 🇭🇰 as the city’s savior after private banking faded, but not everyone is convinced the “orange pill” is the cure for economic malaise. (Financial Times)
- 🇺🇸 Double or Nothing. Donald Trump Jr is out at Kalshi 🇺🇸 after joining competitor Polymarket 🇺🇸, with the midterm results making prediction market alliances look riskier than ever. (Financial Times)
💱 Listed Markets
- 🇩🇪 Freeze Frame. Mercedes-Benz halts all investment in its German plants, demanding unions accept lower year-end bonuses and longer workweeks with no extra pay. (De Tijd)
- 🇩🇪 Migration Pains. Deutsche Bank 🇩🇪 faces an €8M fine from Bafin for sluggish complaint handling and delayed account transfers after merging Postbank systems, showing that digital upgrades can bring analog headaches. (Die Zeit)
- 🇺🇸 Out of Office. Microsoft 365 tools including Outlook and Teams went dark for hours, leaving businesses and agencies in forced digital silence and employees in unexpected limbo. (New York Times)
- 🇺🇸 Out of Stock. Nvidia’s CEO Jensen Huang steps down, sparking a 4.3% share slide as the board scrambles to find a permanent replacement. (Wall Street Journal)
- 🇺🇸 Cut and Profit. prosecutors accuse Cravath’s word processing specialist Chetram Balli of trading on inside information from the firm’s corporate transactions, netting under $100K. (Financial Times)
- 🇺🇸 Chip Shot. Cerebras Systems shares jumped 17% after beating revenue forecasts and unveiling a new deal with Microsoft, giving Nvidia a fresh rival in the AI chip race. (CNBC)
- 🇺🇸 Call of Duty. Meta’s Muse AI can now phone businesses for users, but only if you pay up: customer service, outsourced and monetized. (TechCrunch)
- 🇺🇸 Cooked Up. Donald Trump publicly suggests that Tim Cook should replace Jensen Huang as CEO of Nvidia 🇺🇸 after Huang's resignation over personal scandals. (CNBC)
🛎️ Big Deals (M&A)
- Cinven 🇬🇧 is exploring a sale of UK wealth manager True Potential 🇬🇧.
- Metro Bank 🇬🇧 is up for sale at a valuation of about £1.3B, three years after its near-collapse. Colombian billionaire investor Jaime Gilinski Bacal 🇨🇴 could receive a £420M windfall.
- Crédit Agricole 🇫🇷 has informally floated selling Anima Holding 🇮🇹 to investors favored by the Italian government if its proposed integration with Banco BPM proceeds.
- RWE 🇩🇪 and KKR 🇺🇸 agreed to invest $16B in UK offshore wind projects.
- Iberdrola 🇪🇸 is exploring a $220M sale of its solar assets in Germany.
- Intermex 🇺🇸 rejected Western Union 🇺🇸’s decision to terminate their $500M merger.
- iHeartMedia 🇺🇸 is exploring a partial or complete sale of its podcast business.
- Fairfax Financial 🇨🇦 plans to sell its 11% stake in IIFL Finance 🇮🇳 and purchase a 60% stake in IDBI Bank 🇮🇳 for $5.6B.
- MMG 🇨🇳 will revise proposed remedies to secure EU approval for its $500M bid to acquire Anglo American 🇬🇧's Brazilian nickel business.
- JD.com 🇨🇳 has completed its €1.3B acquisition of Ceconomy 🇩🇪, acquiring a 59.8% stake and voting rights in the German electronics retailer.
- Yamada 🇯🇵 is considering selling a portfolio of stores for $630M.
- Nomura 🇯🇵 is exploring a sale of its crypto business Laser Digital Holdings 🇦🇪.
- Haji Isam 🇮🇩 is considering buying Eramet 🇫🇷’s 39% stake in Weda Bay Nickel 🇮🇩 at a $4B valuation.
🇺🇸 United States
- Erie Strategic Ventures 🇺🇸 invests in AI infrastructure startup Blitzy 🇺🇸.
🧳 Private Markets & VC
- 🇬🇧 IPO IOU. Nscale, the Nvidia-backed UK data center group, says it needs more cash to meet its obligations just months before its planned $35B New York IPO. (Financial Times)
- 🇺🇸 Future Tense. Nebius promises $40B in new data center spending by 2027, relying on prepayments and loans, while Microsoft’s patience with delays wears thin. (TechCrunch)
- 🇺🇸 Note to Self. A cyberattack on Fireworks AI 🇺🇸 let hackers steal Notion AI chat transcripts and billing info, proving even your notes are never truly private. (TechCrunch)
Fundraising
- Applied Intuition 🇺🇸 (AI): $1.5B (General Catalyst)
- Mirendil 🇺🇸 (AI): $1B (Kleiner Perkins, Clearlake Capital, Battery Ventures, Doerr Capital, Gil & Co, Google, M13, Pear VC, S32)
- Fractile 🇬🇧 (Semiconductors): $720M (Thrive Capital, Founders Fund, Conviction, CapitalG, Lightspeed)
- UFORCE 🇺🇦 (Defence): $700M (Valor Equity Partners, UK National Wealth Fund, U.S.-Ukraine Reconstruction Investment Fund, Menlo Ventures, Xantium, Hiro Capital, Shield Capital, Ballistic Ventures, Lakestar, Squadra)
- Agile Robots 🇩🇪 (Robotics): $500M (SoftBank, Nvidia)
- Q-Ctrl 🇦🇺 (Quantum): $290M (Salesforce Ventures, In-Q-Tel, Lockheed Martin Ventures, Affinity Partners, AMD Ventures, Edge Group, Bullhound Capital)
- Amity 🇹🇭 (AI): $100M (Krungsri Finnovate)
- Rox 🇺🇸 (AI): $100M (General Catalyst, March Capital)
- Databento 🇺🇸 (Fintech): $100M (Fifth Down Capital, NEA, DRW Venture Capital, Tribe Capital, Hedosophia, Fitch Ventures)
- Reflect Orbital 🇺🇸 (Space): $73.5M (Sequoia, Lux Capital, Starship Ventures)
- Edelbyte (Data infrastructure): $70M (Sequoia, Quiet Capital)
- Operand (AI): $31M (Khosla Ventures)
- SE3 🇩🇪 (Defence): $30M (Accel, Keen Venture Partners, Seedcamp, Lakestar)
- Kindo 🇺🇸 (AI): $30M (Crosspoint Capital, Forgepoint Capital, TFX Capital, CircleRock Capital, Drive Capital, Riot Ventures, RRE Ventures, Eniac Ventures, Marlinspike Partners, New Era Ventures, Sunset Venture)
- Coreshell Technologies 🇺🇸 (Batteries): $30M (Ferroglobe, Access Industries, ADS, Helios Ventures, Pegasus Tech Ventures, Mana Ventures, Entrada Ventures)
- Luminal 🇺🇸 (AI infrastructure): $25M (Standard Capital, Y Combinator, Felicis, SagaVC, Liquid)
- Hatz AI 🇺🇸 (AI): $24M (Nadia Partners, Vestigo Ventures, The Private Shares Fund)
- Subdial 🇬🇧 (Luxury): $20M (Gresham House Ventures)
- Biomatter 🇱🇹 (Biotech): $18M (Astanor, UVC Partners, Inventure, Metaplanet)
- Gama 🇫🇷 (Space): €15M (Transition, Planet A, Draper Associates, Manta Ray)
- Greenjoules 🇮🇳 (Renewable energy): $16M (Amazon’s Smbhav Venture Fund, Climate Pledge Fund)
- Clawlab 🇨🇳 (Hardware): Over $15M (miHoYo, Vision Plus Capital, Shunwei Capital)
- Plurai 🇮🇱 (AI): $13M (Team8)
- Tristar AI 🇺🇸 (Manufacturing): $12.4M (Isogon Ventures, Blackhorn Ventures, Ford Street Ventures, ISAI Cap Venture, Capgemini Ventures, Las Olas VC, NextView Ventures, Seraph Partners, SNR Ventures, TenOneTen)
- Axle 🇺🇸 (Fintech): $9M (Eniac, Bonfire Ventures)
- Athlete To Athlete 🇺🇸 (Sports): $8M (Rally Ventures, Newbound VC, Scrum Ventures, UpHonest Capital)
- Delphina 🇺🇸 (AI): $7.5M (Radical Ventures, Costanoa, Tenacity Capital, Fei-Fei Li, Guido Imbens, Anthropic and OpenAI employees)
- Araceli Biosciences 🇺🇸 (Biotech): $4.5M (Jeff Swickard)
- Mondrio 🇳🇱 (AI): $3.75M (Heartcore Capital, Pretiosum VC, Hersir Ventures, Cambrena Capital, Momo VC)
- Opdo 🇩🇪🇺🇸 (AI): $2.3M (Angular Ventures, Inflection, Tiny.vc)
- Salad 🇬🇧 (Fintech): £1.5M (City Bridge Foundation, Fair4All Finance)
- Humbird 🇫🇷 (Mobility): €1.1M (Private investors, company executives)
Fund Watch
- Avatar Capital Partners 🇭🇰: $156M (Fund II, Japan living sector, first close; $300M target)
- 81 Collection 🇺🇸: $82M (2nd VC fund)
- BC Partners 🇬🇧: acquiring Investcorp Credit Management BDC at a 10% discount to NAV
🔔IPO
- Czechoslovak Group 🇨🇿 (Defense): IPO has soured for investors.
- Anthropic 🇺🇸 (AI): its IPO is multiple times oversubscribed by anchor investors at a $90B valuation.
- YMTC 🇨🇳 (Semiconductors): postponing its $5B China IPO to the first quarter.
- Hosin Electronics 🇨🇳 (Semiconductors): raised part of a combined $227M in Hong Kong IPOs.
- AS Watson 🇭🇰 (Pharmacy): paused its planned $2B dual IPO.
- Bajaj Finance 🇮🇳 (Banking): launched a $1.25B share sale at a 5% discount.
- First Abu Dhabi Bank 🇦🇪 (Banking): seeking to raise $4B through a rights issue at a 30% discount.
- Dubai Investments Park 🇦🇪 (Real Estate): raised $530M in the UAE’s first IPO of the year.
🧳 Debt
- CoreWeave 🇺🇸: plans to sell $4B in investment-grade bonds.
- Crunch Fitness 🇺🇸: seeking $800M in an ABF bond sale.
- Newton Commercial Finance 🇺🇸: in early talks for a $180M bond sale backed by AI chip loans.
- Arauco 🇨🇱: sold a $400M sustainable hybrid bond to fund a $4.6B Brazilian mill.
- China 🇨🇳: plans to sell $2B of dollar-denominated bonds in Hong Kong.
- Tata Capital 🇮🇳: among Indian non-bank lenders seeking to raise a combined $3B bonds.
- United Saudi Company 🇸🇦: raised $150M from Goldman Sachs, HSBC, Fortress, Ruya Partners, and Amwal Capital Partners.
🇺🇸 United States
- Centalion Americas 🇺🇸: refinanced and expanded its credit facility to $3.5B.
- Stonehenge Investment 🇺🇸: secured $233.3M to refinance a Midtown West multifamily asset.
- Exus Renewables North America 🇺🇸: raised $345M in senior secured debt led by Goldman Sachs Alternatives.
- Aline Accounting Partners 🇺🇸: raised $206M in financing led by Square Nine Capital.
- Kennedy Funding 🇺🇸: closed a $5.625M loan for a Dominican Republic project.
- Peak 10 Energy 🇺🇸: secured up to $500M in acquisition financing.
❌ Failures
- Intersnack Group 🇩🇪: a $1B acquisition loan is trading at a steep discount ahead of its planned $2.9B Utz Brands deal.
🇬🇧 United Kingdom
- Poundland 🇬🇧: secured two more weeks of creditor protection while its owner assesses three bids to save the 600-store chain.
🎯 For a Few More Minutes…
- 🇲🇹 Truth Pending. The sons of Daphne Caruana Galizia continue their relentless campaign for justice after her 2017 assassination, as Malta’s institutions stall. (Le Monde)
- 🇪🇺 Star Charts. The European Space Agency released data from its Euclid space telescope, unveiling the largest 3D map of the universe ever assembled and pushing cosmic cartography into a new dimension. (Die Zeit)
- 🇺🇸 Cash Vader. The lightsaber wielded by Darth Vader in the original Star Wars trilogy just sold for $4.88M, proving the Force is no match for a bidding war. (Le Monde)
- 🇮🇳 Booked by AI. Hundreds of books have been pulled from Tamil Nadu libraries after suspicions they were written by artificial intelligence, prompting a court-ordered corruption probe and account freezes for publishers. (Libé)
🇬🇧 United Kingdom
- 🌏 Asia Gets the Point. Eurovision brings its signature spectacle to Bangkok this weekend, hoping Southeast Asia will embrace the contest before the confetti settles. (BBC)
