The Friday File: US tariffs target tech; Musk merges Xes

Mobile World Live brings you our top three picks of the week as the global tech industry reeled from US tariff hits, Musk consolidated his companies X and xAI, and global generative AI (genAI) investment was projected to soar.

Trump tariffs take aim at tech

What happened: US President Donald Trump unveiled tariff rates which will impact imports from key smartphone manufacturing hubs including China and Vietnam in a move directly impacting top US vendors Apple and Samsung. Meanwhile, the UK government reportedly offered to reduce digital taxes for major US technology companies to avert the impact of the US tariffs.

Why it matters:  Trump announced the imposition of tariffs on countries including China and Vietnam with rates of 34 per cent and 46 per cent respectively. This will present a significant challenge for Apple and Samsung, both of which dominate the US smartphone market and depend on the countries for manufacturing. Financial Times reported that Apple saw its market value plunge by more than $250 billion on Thursday (3 April) due to Trump’s tariff offensive. CCS Insight chief analyst Ben Wood told Mobile World Live that resulting higher production costs could lead to price hikes for key consumer devices and slimmer profit margins for vendors.

Musk ties up xAI, X in $45B deal

What happened: Elon Musk merged his AI company, xAI, and his social media platform X in a $45 billion all-stock transaction, which includes $12 billion in debt.

Why it matters: The deal marks a strategic consolidation of Musk’s biggest technology ventures, valuing xAI at $80 billion and X at $33 billion. The tech mogul stated the merger aims to combine the “data, models, compute, distribution and talent” from both companies. Financially, the merger could serve to protect investors who supported Musk’s initial acquisition of X, potentially mitigating previous financial losses. However, Angus Allan, senior product manager at tech consultancy CreateFuture, told Forbes the consolidation raises privacy concerns by “removing any remaining barriers between users’ social media activity and AI training data.” Meanwhile, Cheney Hamilton, analyst at Bloor Research, told the news outlet the move underscores Musk’s ambitions to “turn X into a hub for real-time interaction, content, and AI-powered experiences, essentially competing with the likes of Google, Meta, and OpenAI”.

Global genAI spending to hit $644B in 2025​

What happened: Research entity Gartner projected global spending on genAI to reach $644 billion in 2025, a 76 per cent increase from 2024 as industries accelerate their adoption of the technology across consumer products and business operations.

Why it matters: Hardware investments are expected to constitute 80 per cent of the projected expenditure, driven by the integration of AI capabilities into devices like servers, smartphones, and PCs. Gartner’s VP analyst John-David Lovelock highlighted that AI-enabled devices are forecasted to comprise almost the entire consumer device market by 2028. This shift is primarily driven by manufacturers embedding AI as a default feature, compelling consumers to adopt these advanced devices. Despite the optimistic investment outlook, high failure rates in initial proof-of-concept projects and unsatisfactory AI-generated results have led to declining confidence in the short-term efficacy of the technology. Nonetheless, foundational model providers will continue to invest heavily to enhance genAI model sizes, performance, and reliability. Lovelock noted that the paradox of substantial investment amidst cautious optimism is expected to persist through 2026.