Tech Brew Ride Home - Mon. 02/24 – Apple’s $500B Investment In The US

Episode Date: February 24, 2025

Apple makes a huge investment in US manufacturing and hiring. Are SMS messages as 2-factor authentication on the way out? The biggest crypto theft of all time happened over the last few days. And why some school districts are turning to AI counseling for students. Sponsors: RobinHood.com/gold Links: Apple Will Add 20,000 US Jobs Amid Threat from Trump Tariffs (Bloomberg) Apple Abandons Budget Smartphone Market With the iPhone 16e (Bloomberg) Google Confirms Gmail To Ditch SMS Code Authentication (Forbes) Bybit Hit by Crypto’s Worst Hack With Almost $1.5 Billion Stolen (Bloomberg) Bybit Hack (CoinDesk) Microsoft Dropped Some AI Data Center Leases, TD Cowen Says (Bloomberg) When There’s No School Counselor, There’s a Bot (WSJ) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home from Monday, February 24th, 2025. I'm Brian McCullough today. Apple makes a huge investment in U.S. manufacturing and hiring. Our SMS messages as two-factor authentication on the way out. The biggest crypto theft of all time happened over the last few days and why some school districts are turning to AI counseling for students. Here's what you miss today in the world of tech. There was word over the weekend that Tim Cook recently met with President Trump, and this seems to be the fruit of that meeting. Apple says it will spend $500 billion, $500 billion. in the U.S. over the next four years, hire 20,000 new U.S. workers, and produce AI servers in Texas. Quoting Bloomberg, the company said Monday that it plans to spend $500 billion domestically over the

next four years, which will include work on a new server manufacturing facility in Houston, a supplier academy in Michigan, and additional spending with its existing suppliers in the country. The disclosure comes days after Trump and Apple chief executive officer Tim Cook met in the Oval Office. He's investing hundreds of billions of dollars, Trump said after the meeting last week. he implied that the iPhone maker is investing locally because it does not want to pay tariffs. Trump has threatened an additional 10% tax on items imported from China where Apple builds the vast majority of iPhones and other products, but he has traded investment in the U.S. for relief in the past. The $500 billion investment and 20,000 new jobs over the next four years marks Apple's biggest U.S.

commitment to date. Apple said it hired 20,000 research and development workers over the last five years and said in 2021, it would invest $430 billion locally over the next half decade, and quote. and quoting 9 to 5 Mac. Apple is also doubling the U.S. Advanced Manufacturing Fund, which it says supports world-class innovation and high-skilled manufacturing jobs across America. The fund will increase from $5 billion to $10 billion. The fund incorporates Apple investments such as supporting the new TSM Fab in Arizona, which will manufacture some Apple Silicon chips. Apple is also opening a new Apple Manufacturing Academy in Detroit. Experts from Apple and top universities will work with small and medium-sized businesses on how to implement AI and smart. manufacturing methods in their supply chains. The Academy will also offer free in-person and online

courses, end quote. And quoting Axios. Apple says it now supports nearly three million jobs across the U.S. through direct employment, work with suppliers and manufacturers, and developer jobs in the iOS app economy, end quote. Real quick, Mark German, Apple Scoop Monday. His sources say Apple aims to eventually meld the modem into the main processor on its devices, but likely no sooner than 2028. And the M4 MacBook Air may launch in March. quote, unless you closely read Apple's press release for the iPhone 16E or scrutinize the company's announcement video, you'd have no idea that the device has a groundbreaking new piece of technology, the first in-house modem chip. Apple has spent several billion dollars and over

seven years working on the component, which replaces a part from Qualcomm. The company even bought a portion of Intel, hired several hundred new employees and opened multiple offices globally to make it happen. But during the iPhone 16E unveiling, the new C1 chip was just a bullet point in the announcement. It's unlike Apple to down. its chip advances multiple times a year it puts Johnny Shrugi and other executives on its virtual stage to talk up speed increases in its M-Series computer chips, A-series mobile device components, or H-series, AirPods processors. The fact that Apple barely acknowledged the new C-1 is notable. There are few reasons why this might be happening. Apple is worried that Qualcomm may seek new

royalties for what the company thinks is use of its technology. The chip is inferior to Qualcomm's. Apple is worried about YouTubers pitting the C-1 up against the Qualcomm chips, in other iPhones and posting unflattering reviews. Apple intends to eventually meld the modem component into the main processor. That should make the electronics more energy efficient and reduce the cost. I'd expect this in 2028 at the earliest. With the iPhone 16E now announced, Apple is turning its attention to another product, the M4 MacBook Air. I've written a lot about this upgrade, which will bring a more powerful chip to the 13 and 15-inch versions of the company's most popular laptop. I'm told the company is now gearing up for a release in March and has

started preparing its marketing, sales, and retail teams for the debut. The current models are also seeing inventory being drawn down at stores. Another sign the launch is nearing, end quote. Google says it plans to use QR codes for Gmail account authentication, ditching SMS to, quote, reduce the impact of rampant global SMS abuse. I wonder if this is the start of a trend, if people are going to start moving away from SMS for two-factor authentication. Folks have wanted to for a while, but maybe this is the signal it is beginning. quoting Forbes, just like we want to move past passwords with the use of things like past keys, Gmail spokesperson Ross Rickenfelder told me, we want to move away from sending SMS messages

for authentication. Google currently uses SMS verification primarily for two distinct purposes, security and abuse control. The former Rickenfelder explained is to verify that we're dealing with the same user as before, while the latter ensures fraudsters don't abuse Google's services. An example of this, as provided by Google, was when criminals create thousands of Gmail accounts in order to distribute spam and malware. SMS codes present numerous security challenges, according to Rick and Feltar and his colleague at Google Kimberly Samra. They can be fished. People don't always have access to the device the codes are sent to, and they are reliant on the security practices of the user's carrier. If a fraudster can easily trick a carrier into getting hold of someone's phone number, Rick and Fultor said, any security value of SMS goes away. Then there's the fact that SMS verification codes are also

often at the very heart of many criminal operations. One relatively new scam that Google has observed across the last couple of years is what it refers to as traffic pumping. I've also heard this called artificial traffic inflation and troll fraud, but the methodology is always the same. Over to Rick and Fulter and Samra to explain. It's where fraudsters try to get online service providers to originate large numbers of SMS messages, two numbers they control, thereby getting paid every time one of these messages is delivered. Over the next few months, we will be reimagining how we verify phone numbers, RickonFolder told me.

Specifically, instead of entering your number and receiving a six-digit code, you'll see a QR code being displayed, which you need to scan with the camera app on your phone. The benefits that QR codes for authentication can offer are twofold, according to Google One, reducing the fishing risk of Gmail users being tricked into sharing their security codes with a threat actor, primarily and rather obviously, since there's no such code to share in the first place. Two, removing reliance, in most cases, at least of Google users on their phone carrier for anti-abuse protections. SMS codes are a source of heightened risk for users. Rick and Fulter concluded, we're pleased to introduce an innovative new approach to shrink the surface area for attackers

and keep users safer from malicious activity. Signing off with an intriguing look for more from us on this in the near future, but without an actual date for implementing the changes for Google account holders and Gmail users, it's something I'm sure we can all agree. cannot come soon enough, end quote. Something we missed over the last few days was, well, the biggest single theft of crypto in history. Crypto Exchange Bybit says a hacker took control of one of its cold Ethereum wallets resulting in what analysts estimate was the loss of around $1.5 billion worth of tokens, quoting Bloomberg. A hacker took control of one of Bybitt's offline Ethereum wallets. The exchange's chief executive officer Ben Zhao announced in a post on X on Friday,

an estimated $1.46 billion in assets flowed out of the wallet in a series of suspicious transactions, according to post by on-chain analyst Zach XPT on Telegram. Research firm Arkham Intelligence confirmed around $1.4 billion in outflows from the exchange, posting on X that the funds have begun to move to new addresses where they are being sold. The hack is the largest ever crypto theft, according to blockchain analytics firm, Elliptic, surpassing the $611 million stolen from Polly Network in 2021. It was likely the largest incident ever, not just crypto, said Rob Benke, co-founder and executive chairman of blockchain security firm Halburn, end quote.

Now, Bybit currently says it can cover those losses, but Defy Lama says that Bybit experienced a bank run of more than $4 billion after the hack leading to around $5.5 billion in total outflow. ByBit's CEO says about 50% of funds were withdrawn, quoting CoinDesk. In an X-Spaces session, Bybit's CEO Ben Zhao revealed that shortly after the incident, he called for all hands-on-deck to serve their clients with processing withdrawals and responding to inquiries about what was going on. During the session, Zhao revealed that the security breach saw the hackers make-off with

roughly 70% of their clients' Ether, which meant that By-Bit needed to quickly secure a loan to be able to process withdrawals. Yet, Zhao found that Ether wasn't the most withdrawn token, with most users instead withdrawing stablecoin from By-bit. Exchange, Zhao noted, has reserves to cover these withdrawals, but the crisis deepened as in response to the incident, safe move to temporarily shut down its smart wallet functionalities to ensure absolute confidence in our platform's security, end quote. Now, various analysts say they have proof that North Korea's Lazarus Group is behind Bybitt's

hack, quoting the block. At 1909 UTC today, Zach XBT submitted definitive proof that this attack on Bybitt was performed by the Lazarus Group, Arkham said in a post on X, His submission included a detailed analysis of test transactions and connected wallets used ahead of the exploit, as well as multiple forensics, graphs, and timing analyses. The submission has been shared with the Bybit team in support of their investigation. Lazarus Group, a notorious unit of crypto protocol hackers, was thought to also be behind the hack, DMM Bitcoin hack. It is suspected that Lazar's Group is behind the hack due to similarities in laundering techniques

and off-chain indicators, Zach XBT said at the time, end quote. According to T.D. Cohen, Microsoft is canceling leases for a substantial amount of U.S. data centers, potentially due to overinvestment fears. So is this the first sign of that KAPX pullback people are fearing? Maybe not. Maybe this is just another sign of the divorce between Microsoft and OpenAI. Remember, if OpenAI gets that big soft bank investment, the idea is they will use that money to get their own compute. Quoting Bloomberg, Open AI's biggest backer has voided leases in the U.S. totaling a couple of hundred megawatts. of capacity, the equivalent of roughly two data centers, canceling agreements with at least a couple of private operators. The U.S. brokerage wrote Friday citing channel checks or inquiries with

supply chain providers. T.D. Cohen said its checks also suggest Microsoft has pulled back on converting so-called statement of qualifications agreements that usually lead to formal leases. Exactly why Microsoft may be pulling some leases is unclear. T.D. Cohen posited in a second report on Monday that OpenA.I. is shifting workloads from Microsoft to Oracle as part of a relevant relatively new partnership. The tech giant is also among the largest owners and operators of data centers in its own right and is spending billions of dollars on its own capacity. T.D. Cohen separately suggested that Microsoft may be reallocating some of that in-house investment to the U.S. from abroad. A potential lease pullback by Microsoft raises broader questions about whether the

company, one of the frontwriters among big tech in AI, is growing cautious about the outlook for overall demand. The company has said it expects to spend $80 billion this fiscal year on AI data centers and on a late January earnings call, Chief Executive Officer Sachin Adela, said Microsoft has to sustain spending to meet exponentially more demand. In Friday's report, T.D. Cohen's analysts wrote that their channel checks had unearthed a number of signs that Microsoft is gradually retreating. They learned that Microsoft had let more than a gigawatt of agreements on larger sites expire and walked away from multiple deals involving about 100 megawatts each. Data center capacity is often stated in terms of the power they need to stay up and running. T.D. Cohen said Microsoft

Microsoft use facility and power delays as justification for the termination of leases. That was a tactic rivals such as META previously employed when curbing capital spending, the firm wrote, to me this all looks and sounds like business as usual. Mizzou securities analyst Jordan Klein said in a note, a company this large and with $80 billion of annual spend has the right to move in and out of data center leases, many of which were never officially signed. Microsoft's alliance with OpenAI may also be evolving in ways that mean the software giant won't need the same kind of investments.

January, OpenAI and SoftBank announced a joint venture to spend at least $100 billion and possibly $500 billion on data centers at other AI infrastructure. In January, Microsoft said it would alter its multi-year deal with Open AI so the AI startup could use cloud computing services from rival providers. Microsoft, which had been the company's exclusive cloud provider, still has the right of first refusal when Open AI seeks computing horsepower to train and run its AI models, end quote. Finally, today, the journal points to how some U.S. school districts are adopting Sunny, an AI well-being companion to provide mental health support to students when there aren't enough counselors. Quote, Sonar Mental Health, the developer of the AI-powered well-being companion

named Sunny is rolling out its hybrid model to school districts which are struggling to meet student demand for mental health services. Sonar says Sunny's selling point is that humans with backgrounds in psychology, social work, and crisis line support are always in the mix, reviewing the chats and taking cues from AI to inform their replies to students. It's like a co-pilot or assistant to the human, says Sonar Chief Executive Drew Bar-Vir, who co-founded the company with a classmate while attending the Stanford Graduate School of Business. At a time of rising rates of youth, anxiety, and depression, Bar-Vir is betting that meeting teens where they are on their phones is the way to catch problems early. And speaking to teens, like a cool, older sibling,

he says, carries more cred, which is why the AI has learned to talk in teen-speak. The hybrid chatbot is now available to more than 4,500 public, middle, and high school students in nine districts across the country, many of which are in low-income and rural areas where mental health services are lacking. The American School Counselor Association recommends schools employ at least one counselor for every 250 students but says the national average is one counselor for every 376 students, and 17% of high schools don't have a counselor, according to the education department. The AI suggests responses to student texts, but humans can edit them or write their own. Sonar's staff monitors 15 to 25 chats at a time.

Students have access to sunny between 8 a.m. and 2 a.m. in Eastern time when six people on staff across shifts monitor the chats. Barvier hopes to eventually hire enough people to enable 24-7 access. The AI has been built on several different large language models and trained in motivational interviewing and cognitive behavioral therapy techniques by a team of mental health clinicians and research scientists at Stanford and the University of California, Irvine, end quote. I hope you had a good weekend. Talk to you tomorrow.