Military Applications Without Devoted Serving Other Customers Is Not Enough: The collapse of an IT giant Atos

"The IT group Atos was once Europe's hope under current EU Commissioner Breton, and the company's computers are still world class. But the share price is falling and falling. Will this continue?

 

It is a picture from better times that Thierry Breton shows in autumn 2019 in Angers in western France at the inauguration ceremony of the new Atos test center for supercomputers. After more than ten years at the helm of the IT group, the Frenchman viewed the investment as a contribution to securing Europe's leading role in the field of high-performance computers. Euphoria spread, and the local trade press even talked about the “Hermès the supercomputer”.

 

However, Breton didn't last long at the top of Atos. At the end of 2019 he moved to Brussels as EU Internal Market Commissioner. And shortly afterwards things went downhill for the once celebrated IT champion. 

 

Improprieties in the accounting became known, but above all it became increasingly clear that Atos had already missed the cloud megatrend under Breton - and the rapidly growing future business with supercomputers, cybersecurity and public data clouds was not enough to cover the losses in the business with fewer and fewer to compensate for in-demand IT services such as classic hosting.

 

Investors lost confidence and Atos's market value has evaporated from around 10 billion euros to barely more than 500 million euros since the end of 2020. 

 

The CEO has been replaced three times since then. On Monday night, Bertrand Meunier, who took office as Chairman of the Board of Directors after Breton's departure, also vacated his chair. At the same time, the group announced that it would postpone the implementation of the restructuring plan presented in August until the second quarter of 2024. It envisages splitting the group into two independent companies. The loss-making old business is to be sold completely to investors under the name Tech Foundations and the profitable future business called Eviden is to be sold proportionately to investors.

 

It is still uncertain what will happen next with Atos. With around 107,000 employees, the company is still an industry heavyweight and is no stranger to Germany since it took over the Siemens IT subsidiary SIS twelve years ago. But it continued to be in the red in the first half of the year and, with its plans to split up, has become the subject of a bidding war in which politics is also heavily involved. 

 

The background: Atos is responsible for a number of military-sensitive activities and, among other things, develops applications for processing large amounts of data for the French armed forces. The company is involved in the simulation calculations for the atomic bomb tests, and the French Atomic Energy Commission (CEA) is Atos' largest customer in the supercomputer business.

 

A recent call by 82 Republican representatives and senators in the newspaper “Le Figaro” shows the results of the political struggle. Atos must "absolutely remain in French hands" because the group is a "key factor" of strategic autonomy through its computer business and, in the future, quantum technology, it said. They criticized the fact that the Elysée Palace and the Atos management were not negotiating a sale to a group of French investors, but rather with a group led by the Czech businessman Daniel Kretínský - a "powerful foreign actor" - according to the break-up plan drawn up by the consulting firm McKinsey, who had little experience in information and communications technology, unlike areas such as energy, media and retail, said the Republicans.

 

Warning of a “fatal breakup”

 

The government denies any influence on Atos' sensitive activities through the planned transaction. But the plan to give Kretínský's holding company EPEI all of the old business, including the brand name Atos, and also up to 7.5 percent of the new company Eviden, is also enraging other parties. These include two Atos minority shareholders, the Alix AM and CIAM funds, which have filed a lawsuit with the French financial prosecutor's office for active and passive bribery and false or misleading information. The Udaac shareholders' association also recently voiced its anger loudly. Politically, a letter from former CEA boss Daniel Verwaerde to the Elysée Palace, quoted by the business magazine “Challenges,” also caused a stir. In it he warned of a “fatal breakup” of Atos.

 

In addition to Yves Bernaert, who was appointed to the top management of Atos at the beginning of October from competitor Accenture, it is now up to the new chairman of the board, Jean Pierre Mustier, to lead the group into calmer waters and return to dialogue with politicians and shareholders. Mustier is no stranger to the financial scene. In 2009, he was head of the scandal banker Jérôme Kerviel's department at the French credit institution Société Générale, which earned him a conviction for insider trading. Between 2016 and 2021 he led the Italian bank Unicredit. He was recently appointed chairman of the supervisory board of the Wiesbaden real estate financier Aareal Bank.

 

On Monday, the management emphasized that it wanted to stick to the planned split and had already submitted most of the documents for official approval. The exclusive negotiations are expected to be completed at the end of this year and the binding agreements are in place. A general meeting is planned for the beginning of the second quarter of 2024. Atos announced on Monday that liquidity requirements for the coming year could be met based on the latest business forecasts.

 

At the same time, the company is trying to get away from the negative headlines and focus on promising business areas such as the production of ever more powerful high-performance computers. When it comes to large machines, Atos is among the three largest manufacturers in the world after Hewlett Packard Enterprise (HPE) from the USA and Lenovo from China. The Angers site was recently proudly presented to journalists, where an 80 million euro investment is expected to increase the production capacity of supercomputers by around a third.

 

There is no shortage of demand, both from car manufacturers who simulate crash tests and fine-tune aerodynamics and from scientific institutions that produce increasingly complex weather and climate analyses. Just a few days ago, a consortium led by Atos was awarded the contract to build the first exascale supercomputer in Europe. The system will be located at the Jülich Research Center on an area the size of around four tennis courts and will have three times the computing capacity of the currently most powerful European supercomputer." [1]

 

1. Der Absturz eines IT-Riesen. Frankfurter Allgemeine Zeitung (online) Frankfurter Allgemeine Zeitung GmbH. Oct 16, 2023. Von Niklas Záboji, Angers

 

JAV bando sunaikinti Kinijos sugebėjimą konkuruoti

   „Tolimesni siuntų apribojimai gali pakenkti Pekino dirbtinio intelekto (A.I.) ambicijoms ir sumažinti JAV lustų gamintojų pajamas, sakė analitikai.

 

     Bideno administracija antradienį paskelbė apie papildomus Amerikos firmų pažangių puslaidininkių pardavimo apribojimus, sustiprindama pernai spalį paskelbtus apribojimus, apribodama Kinijos pažangą superkompiuterių ir dirbtinio intelekto srityje.

 

     Panašu, kad taisyklės sustabdys daugumą pažangių puslaidininkių siuntų iš JAV į Kinijos duomenų centrus, kurie juos naudoja dirbtinio intelekto modeliams gaminti. Daugiau JAV kompanijų, norinčių parduoti Kinijoje pažangius lustus ar jiems gaminti naudojamą įrangą, turės pranešti vyriausybei apie savo planus arba gauti specialią licenciją.

 

     Siekdamos išvengti rizikos, kad pažangūs JAV lustai nukeliaus į Kiniją per trečiąsias šalis, Jungtinės Valstijos taip pat reikalaus, kad lustų gamintojai gautų licencijas gabenti į daugybę kitų šalių, kurioms taikomi JAV ginklų embargai.

 

     Bideno administracija tvirtina, kad Kinijos prieiga prie tokių pažangių technologijų yra pavojinga, nes ji gali padėti šalies kariuomenei atlikti tokias užduotis kaip hipergarsinių raketų valdymas, pažangių stebėjimo sistemų kūrimas ar itin slaptų JAV kodų nulaužimas. Vadovaujantys A.I. ekspertai perspėjo, kad netinkamai valdoma technologija gali kelti egzistencinę grėsmę žmonijai.

 

     Tačiau dirbtinis intelektas taip pat turi vertingų komercinių pritaikymų, o griežtesni apribojimai gali turėti įtakos Kinijos įmonėms, kurios bandė kurti A.I. pokalbių robotus, tokipms kaip „ByteDance“, pagrindinė „TikTok“ įmonė arba interneto milžinė „Baidu“, teigė pramonės analitikai. Ilgainiui apribojimai taip pat gali susilpninti Kinijos ekonomiką, atsižvelgiant į tai, kad A.I. keičia pramonės šakas nuo mažmeninės prekybos iki sveikatos priežiūros.

 

     Panašu, kad apribojimai taip pat gali turėti įtakos JAV lustų gamintojų, tokių, kaip „Nvidia“, AMD ir „Intel“, pardavimui į Kiniją. Kai kurie lustų gamintojai uždirba net trečdalį jų pajamų iš Kinijos pirkėjų ir pastaruosius mėnesius praleido, lobindami prieš griežtesnius apribojimus.

 

     JAV pareigūnai teigė, kad taisyklės netiks lustams, skirtiems naudoti tik komercinėse programose, pavyzdžiui, išmaniuosiuose telefonuose, nešiojamuosiuose kompiuteriuose, elektrinėse transporto priemonėse ir žaidimų sistemose. Dauguma taisyklių įsigalios po 30 dienų, nors kai kurios įsigalios anksčiau.

 

     Puslaidininkių pramonės asociacija, atstovaujanti pagrindiniams lustų gamintojams, pareiškime teigė, kad bando įvertinti atnaujintų taisyklių poveikį.

 

     „Pripažįstame būtinybę apsaugoti nacionalinį saugumą ir manome, kad sveikos JAV puslaidininkių pramonės palaikymas yra esminis komponentas siekiant šio tikslo“, – teigė grupė. „Per plati, vienašališka kontrolė gali pakenkti JAV puslaidininkių ekosistemai nepadidindama nacionalinio saugumo, nes skatina užsienio klientus ieškoti galimybių kitur."

 

     „Nvidia“ atstovas teigė, kad bendrovė laikosi visų taikomų taisyklių ir nesitiki reikšmingo poveikio jos finansiniams rezultatams artimiausiu metu, atsižvelgiant į pasaulinę „Nvidia“ produktų paklausą.

 

     Pirmadienį pokalbyje su žurnalistais aukšto rango administracijos pareigūnas sakė, kad Jungtinės Valstijos matė, kaip žmonės bando apeiti ankstesnes taisykles ir kad pastaruoju metu įvykę generatyvaus A.I. pasiekimai reguliuotojams suteikė daugiau informacijos apie tai, kaip buvo kuriami ir naudojami vadinamieji didieji kalbų modeliai.

 

     Komercijos sekretorė Gina M. Raimondo teigė, kad pakeitimai buvo padaryti „siekiant užtikrinti, kad šios taisyklės būtų kuo veiksmingesnės“ ir tikisi, kad jos bus atnaujinamos bent kartą per metus.

 

     Kalbėdama apie Kinijos Liaudies Respubliką, ji sakė: „Tikslas yra tas pats, koks visada buvo, ty apriboti Kinijos prieigą prie pažangių puslaidininkių, kurie galėtų paskatinti dirbtinio intelekto proveržį ir sudėtingus kompiuterius, kurie yra labai svarbūs Kinijos karinėms programoms. “

 

     Ji pridūrė: „Technologijų valdymas yra svarbesnis, nei bet kada anksčiau, nes tai susiję su nacionaliniu saugumu“.

 

     Griežtesnės taisyklės gali supykdyti Kinijos pareigūnus, kai Bideno administracija bandys pagerinti santykius ir ruoštis galimam prezidento Bideno ir aukščiausiojo Kinijos lyderio Xi Jinpingo susitikimui kitą mėnesį Kalifornijoje.

 

     Bideno administracija bandė atremti Kinijos augantį daugelio pažangiausių technologijų meistriškumą pumpuodama pinigus į naujas lustų gamyklas JAV. Tuo pat metu ji bandė nustatyti griežtus, bet siaurus apribojimus technologijų eksportui į Kiniją, kurios galėtų būti naudojamos karinėms reikmėms, tuo pačiu leisdamos laisvai judėti kitai prekybai. JAV pareigūnai šią strategiją apibūdina kaip amerikietiškų technologijų apsaugą su „mažu kiemu ir aukšta tvora“.

 

     Tačiau nustatyti, kurios technologijos iš tikrųjų kelia grėsmę nacionaliniam saugumui, buvo ginčytinas uždavinys.

 

     Didžiosios puslaidininkių kompanijos įrodinėjo, kad pernelyg griežti prekybos draudimai gali jas sužlugdyti, palikdami jas be pajamų, kurių jiems reikia investuoti į naujas gamyklas ir tyrimų įrenginius Jungtinėse Valstijose.

 

     Kai kurie kritikai teigia, kad ribos taip pat gali paskatinti Kinijos pastangas kurti alternatyvias technologijas, galiausiai susilpnindamos JAV įtaką pasauliniu mastu. Kinijos mokslininkai padarė didelę pažangą kurdami vietines pažangių lustų versijas, tačiau ekspertai teigia, kad šalis daug metų atsilieka nuo Vakarų pajėgumų.

 

     Panašu, kad antradienį paskelbti pakeitimai turi ypač reikšmingų pasekmių „Nvidia“, kuri yra didžiausia dirbtinio intelekto bumo naudos gavėja.

 

     Reaguodama į Bideno administracijos pirmuosius didelius apribojimus dirbtinio intelekto lustams prieš metus, „Nvidia“ Kinijos rinkai sukūrė naujus lustus A800 ir H800, kurie veikė lėtesniu greičiu, tačiau Kinijos įmonės vis tiek galėjo juos naudoti mokydamos A.I. modelius. Vyresnysis administracijos pareigūnas teigė, kad naujosios taisyklės apribos šiuos pardavimus.

 

     „Nvidia“ teigė, kad Kinija paprastai generuoja 20–25 procentus bendrovės duomenų centro pajamų, į kurias įeina ir kiti produktai, be lustų, leidžiančių A.I. Analitikai teigė, kad auganti pasaulinė Nvidia lustų, naudojamų A.I. gali leisti įmonei kompensuoti tuos nuostolius parduodant į kitas rinkas. Tačiau dėl susirūpinimo dėl naujų našumo apribojimų poveikio platesniam „Nvidia“ lustų rinkiniui jos akcijų kaina antradienį nukrito daugiau, nei 3 proc.

 

     Administracija taip pat įtraukė dvi Kinijos mikroschemų projektavimo įmones ir jų dukterines įmones – „Moore Threads Technology“ ir „Biren Technology“ padalinius – į „subjektų sąrašą“, kuriame reikalaujama, kad JAV bendrovės gautų specialų leidimą, prieš gabendamos joms medžiagas.

 

     Jungtinės Valstijos taip pat pareiškė, kad sudarys naują „pilkąjį sąrašą“, pagal kurį tam tikrų mažiau pažangių lustų gamintojai turi pranešti vyriausybei, jei parduoda juos Kinijai, Iranui ar kitoms šalims, kurioms taikomas JAV ginklų embargas.

 

     „Mane stebina reikšminga šalių, į kurias eksportuoti dabar reikės licencijos, plėtra“, – sakė Vašingtono ekspertų grupės Strateginių ir tarptautinių studijų centro analitikė Emily Benson.

 

     Panašu, kad taisyklės neapriboja Kinijos įmonių prieigos prie „Amazon“ ir „Microsoft“ valdomų užsienio debesijos paslaugų. Administracija pastaraisiais mėnesiais svarstė galimybę apriboti šį verslą, nes Kinijos įmonės naudojo tokias paslaugas, kaip tam tikras užpakalines duris, kad galėtų pasiekti pažangius dirbtinio intelekto lustus už Kinijos ribų. Tačiau M. Benson sakė, kad tokia priemonė vėliau galėtų būti priimta, kaip vykdomasis įsakymas.

 

     Praėjusią savaitę išplatintame pranešime klientams Julianas Evansas-Pritchardas, tyrimų įmonės „Capital Economics“ Kinijos ekonomikos vadovas, teigė, kad kontrolės poveikis išryškės, kai ne Kinijos įmonės pradės naudoti pažangesnes savo dabartinių produktų versijas.

 

     „Rezultatas yra tai, kad Kinijos gebėjimui pasiekti technologinę ribą, kuriant didelio masto A.I. modelius bus trukdoma JAV eksporto kontrolės dėka“, – rašė ponas Evansas-Pritchardas. Jis pridūrė, kad tai gali turėti platesnių pasekmių Kinijos ekonomikai, nes „manome, kad A.I. gali iš esmės pakeisti produktyvumo augimą per ateinančius kelis dešimtmečius.“ [1]

 

1. U.S. Adds Restrictions On Chips For China: [Business/Financial Desk]. Swanson, Ana.  New York Times, Late Edition (East Coast); New York, N.Y.. 18 Oct 2023: B.1.

U.S. Is Trying to Eliminate China' Ability to Compete

"The further limits on shipments could cripple Beijing's artificial intelligence (A.I.) ambitions and dampen revenues for U.S. chip makers, analysts said.

The Biden administration on Tuesday announced additional limits on sales of advanced semiconductors by American firms, shoring up restrictions issued last October to limit China's progress on supercomputing and artificial intelligence.

The rules appear likely to halt most shipments of advanced semiconductors from the United States to Chinese data centers, which use them to produce models capable of artificial intelligence. More U.S. companies seeking to sell China advanced chips, or the machinery used to make them, will be required to notify the government of their plans, or obtain a special license.

To prevent the risk that advanced U.S. chips travel to China through third countries, the United States will also require chip makers to obtain licenses to ship to dozens of other countries that are subject to U.S. arms embargoes.

The Biden administration argues that China's access to such advanced technology is dangerous because it could aid the country's military in tasks like guiding hypersonic missiles, setting up advanced surveillance systems or cracking top-secret U.S. codes. Leading A.I. experts have warned that the technology, if not properly managed, could pose existential threats to humanity.

But artificial intelligence also has valuable commercial applications, and the tougher restrictions may affect Chinese companies that have been trying to develop A.I. chatbots like ByteDance, the parent company of TikTok, or the internet giant Baidu, industry analysts said. In the longer run, the limits could also weaken China's economy, given that A.I. is transforming industries ranging from retail to health care.

The limits also appear likely to affect sales to China of U.S. chip makers such as Nvidia, AMD and Intel. Some chip makers earn as much as a third of their revenue from Chinese buyers and spent recent months lobbying against tighter restrictions.

U.S. officials said the rules would exempt chips that were purely for use in commercial applications, like smartphones, laptops, electric vehicles and gaming systems. Most of the rules will take effect in 30 days, though some will be effective sooner.

In a statement, the Semiconductor Industry Association, which represents major chip makers, said it was evaluating the impact of the updated rules.

"We recognize the need to protect national security and believe maintaining a healthy U.S. semiconductor industry is an essential component to achieving that goal," the group said. "Overly broad, unilateral controls risk harming the U.S. semiconductor ecosystem without advancing national security as they encourage overseas customers to look elsewhere."

A spokesperson for Nvidia said that the company complied with all applicable regulations and that it did not expect a meaningful near-term effect on its financial results, given worldwide demand for Nvidia's products.

In a call with reporters on Monday, a senior administration official said that the United States had seen people try to work around the earlier rules, and that recent breakthroughs in generative A.I. had given regulators more insight into how the so-called large language models behind it were being developed and used.

Gina M. Raimondo, the secretary of commerce, said the changes had been made "to ensure that these rules are as effective as possible" and that she expected the rules to be updated at least annually as technology advanced.

Referring to the People's Republic of China, she said, "The goal is the same goal that it's always been, which is to limit P.R.C. access to advanced semiconductors that could fuel breakthroughs in artificial intelligence and sophisticated computers that are critical to P.R.C. military applications."

She added, "Controlling technology is more important than ever as it relates to national security."

The tougher rules could anger Chinese officials when the Biden administration is trying to improve relations and prepare for a potential meeting between President Biden and China's top leader, Xi Jinping, in California next month.

The Biden administration has been trying to counter China's growing mastery of many cutting-edge technologies by pumping money into new chip factories in the United States. It has simultaneously been trying to set tough but narrow restrictions on exports of technology to China that could have military uses, while allowing other trade to flow freely. U.S. officials describe the strategy as protecting American technology with "a small yard and high fence."

But determining which technologies really pose a threat to national security has been a contentious task.

Major semiconductor companies have argued that overly restrictive trade bans can sap them of the revenue they need to invest in new plants and research facilities in the United States.

Some critics say the limits could also fuel China's efforts to develop alternative technologies, ultimately weakening U.S. influence globally. Chinese researchers have made significant progress in developing domestic versions of advanced chips, but experts say the country remains years behind Western capabilities.

The changes announced Tuesday appear to have particularly significant implications for Nvidia, the biggest beneficiary of the artificial intelligence boom.

In response to the Biden administration's first major restrictions on artificial intelligence chips a year ago, Nvidia designed new chips, the A800 and H800, for the Chinese market that worked at slower speeds but could still be used by Chinese firms to train A.I. models. A senior administration official said the new rules would restrict those sales.

Nvidia has said that China typically generates 20 percent to 25 percent of the company's data center revenue, which includes other products in addition to chips that enable A.I. Analysts said that growing global demand for Nvidia chips for use in A.I. might allow the company to offset those losses by selling to other markets instead. But concerns about the impact of new performance limits on a wider set of Nvidia chips caused its stock price to fall more than 3 percent Tuesday.

The administration also placed two Chinese chip design companies and their subsidiaries -- units of Moore Threads Technology and Biren Technology -- on an "entity list" that requires U.S. companies to receive special permission before they can ship materials to them.

The United States also said it would create a new "gray list" that requires makers of certain less advanced chips to notify the government if they are selling them to China, Iran or other countries subject to a U.S. arms embargo.

"What strikes me is the significant expansion of countries to which exports will now require a license," said Emily Benson, an analyst at the Center for Strategic and International Studies, a Washington think tank.

The rules did not appear to limit Chinese firms' access to foreign cloud services run by Amazon and Microsoft. The administration had considered clamping down on that business in recent months because Chinese firms had used such services as a kind of backdoor to access advanced artificial intelligence chips outside of China. But Ms. Benson said such a measure could come later in the form of an executive order.

In a note to clients last week, Julian Evans-Pritchard, the head of China economics at the research firm Capital Economics, said the effects of the controls would become more apparent as non-Chinese companies rolled out more advanced versions of their current products.

"The upshot is that China's ability to reach the technological frontier in the development of large-scale A.I. models will be hampered by U.S. export controls," Mr. Evans-Pritchard wrote. That could have broader implications for the Chinese economy, he added, since "we think A.I. has the potential to be a game changer for productivity growth over the next couple decades."" [1]

1. U.S. Adds Restrictions On Chips For China: [Business/Financial Desk]. Swanson, Ana.  New York Times, Late Edition (East Coast); New York, N.Y.. 18 Oct 2023: B.1.